Discovery Life’s PrimaryCare not exceptional enough for CMS appeal

The BHF appealed the decision to grant Discovery Life an exemption because it believes it undermines the principles of social solidarity and cross-subsidisation, there are no exceptional circumstances justifying the exemption and the exemption was granted for insufficient reasons.

Section 20(1) of the Medical Schemes Act provides that “no person shall carry on the business of a medical scheme unless that person is registered as a medical scheme under section 24”. Section 8(h) gives the CMS the authority to “exempt, in exceptional cases and subject to such terms and conditions and for such period as (it) may determine, a medical scheme or other person upon written application from complying with any provision of (the) Act”.

In 2016 the minister of finance promulgated “Demarcation Regulations”, in terms of the Long-Term and Short-term Insurance Acts, that determines that certain insurance policies with the elements of a business of a medical scheme must be called “health policies” and “accident and health policies”.

These policies would then be regulated under insurance legislation and not the Medical Schemes Act, although the conduct of the policy providers falls within the meaning of “business of a medical scheme” as defined in the Act.

The CMS then published a framework for exemption of providers that conduct the business of a medical scheme from provisions of the Medical Schemes Act, to ameliorate the situation for those providers and clients who had already subscribed for a limited period, while a low-cost benefit option framework was developed.

Discovery Life submitted an application in 2018 for an exemption because it is not a registered medical scheme but an insurer to provide products known as Discovery Comprehensive Primary Care and Discovery Essential Primary Care. Providing these products would amount to conducting the business of a medical scheme.

Discovery Life submitted that the application was exceptional because members who cannot afford medical scheme contributions, and currently access healthcare under Discovery primary healthcare products, would be prejudiced if this product was cancelled.

Employer groups have also enlisted primary healthcare cover for employees who otherwise cannot afford to fund access healthcare from private providers, while interruption of cover would limit continuity of access. This would lead to a lapse in treatment plans, with the products being accessed more than 8000 times in April and May 2018.

The appeals board found that discovery Life did not prove an exceptional case and set aside the decision of the CMS granting Discovery Life exemption until 31 May 2021 or until the development and implementation of the low-cost benefit option framework.

Discovery Life is not allowed to enrol new members for its Comprehensive Primary Care or Essential Primary Care products during the period of the suspension.

“The Discovery Primary Care products have grown strongly since their launch in 2014, meeting a clear need for affordable access to private primary healthcare services by members who would otherwise be unable to reliably access these services. The Board of Healthcare Funder’s action against the Council for Medical Schemes is unfortunate insofar as it will in all likelihood undermine access to much needed health cover for vulnerable people in the long term,” Hylton Kallner, chief executive officer (CEO) of Discovery South Africa, said in response to the ruling.

He emphasised that Discovery remained committed to supporting the continued broadening of access to affordable quality primary healthcare services and working with the CMS to develop and implement a low-cost benefit options framework. Kallner also assured current Primary Care clients that there was no near-term impact for them as a result of this ruling.

Discovery launched Primary Care in September 2014 to provide affordable access to primary healthcare for employees who would otherwise be unable to reliably access these services.

According to Discovery, Primary Care provides affordable access to a range of primary healthcare services in the private sector, including general practitioner (GP) consultations, nurse consultations, health checks, acute and chronic medication, radiology, pathology, basic dentistry and optometry and ambulance services.

The number of employers with Primary Care contracts has grown to more than 330, covering nearly 63 000 employees who could otherwise not afford medical scheme membership. Since its inception, employees of clients with Discovery Primary Care contracts have accessed more than 325 000 GP consultations, 27 000 dental visits and 55 000 pathology tests, including testing for Covid-19 since March 2020.

Discovery Primary Care currently represents 0.4% of the revenues of the Discovery Group.

For more news your way, download The Citizen’s app for iOS and Android.