Report on racial profiling and discrimination by medical schemes delayed again

The final report of the appointed by the Council for Medical Schemes (CMS) to investigate allegations of racial profiling and discrimination by medical schemes and administrators has been further delayed, and is now expected to be finalised by the end of the year.

The CMS in April this year admitted there have been delays in the release of the final report but said the delays had been outside of its control.

The investigating panel concluded its investigation and published an interim report for comment in January 2021, with the period in which to comment closing on 5 March 2021.

The CMS told Moneyweb on Wednesday the final report was near completion for release but a few parties raised objections to the panel.

“Upon assessing these objections, the investigation panel allowed for further submissions from the parties concerned, which invariably prolonged the delay.

“As early as the 29 May 2024, the secretariat of the panel issued a notice that the legal and body of evidence submitted by the concerned parties was extensive and would require time for proper analysis.

“From a CMS perspective, we expect the report to be finalised before the end of the year,” it said.

The CMS said in May that the final expert and legal submissions by Discovery Health and Discovery Medical Scheme were received in February and March 2024 and were being taken into account by the panel in its deliberations.

ALSO READ: WATCH: Discovery accused of racism by medical practitioners

Allegations

The investigation was launched by the CMS after a number of healthcare providers and members of Solutionist Thinkers and the National Health Care Professionals Association in early 2019 made allegations that they were being treated unfairly by medical aid schemes based on race and ethnicity.

The interim report of the investigation panel said the evidence presented by complainants and the schemes was important for the panel’s inquiry regarding how the schemes’ and administrators’ risk management systems worked in practice …

Particularly those systems dealing with fraud, waste and abuse (FWA).

It found that between 2012 and 2019, black practitioners were more likely to be found to have committed FWA than their non-black (white) counterparts by Discovery, Medscheme and the Government Employees Medical Scheme (GEMS), which meant there was unfair racial discrimination.

The interim report said the investigation did not find evidence of explicit racial bias in the algorithms and methods that the administrators and schemes use to identify FWA.

However, it said that using the data that Discovery, GEMS and Medscheme provided, the panel and an independent expert Dr Zaid Kimmie, found “there is a substantial difference in FWA outcomes between black and non-black practitioners over the period January 2012 to June 2019”.

ALSO READ: Medical aid racism destroyed me, says pharmacist

Denials

The interim report said every scheme and administrator implicated in the complaints denied there was unfair racial discrimination in their FWA investigation process.

It said this denial was largely based on the fact the FWA investigations are triggered by either:

• An automated system, underpinned by an algorithm, that flags outlier practices for investigation; or
• Tip-offs and whistleblowers.

The schemes and administrators further argued that only practice numbers are known by the automated system and there is no assignment or identification of race, either explicitly or implicitly, in the system.

The 2023/24 CMS Annual Report released this week highlighted that following a short respite after the release of the interim report by the Section 59 Inquiry Panel, it saw a resurgence of complaints against medical schemes and administrators who were clawing back on losses allegedly incurred by healthcare professionals due to fraud, waste, and abuse.

The report said these complaints are often the result of coding interpretation disputes, scope of practice disagreements, and allegations of over-servicing and claiming for services not rendered.

It said healthcare providers criticise the lack of fairness in the claims audit conducted by medical schemes as well as the methodology applied in quantifying the extent of the alleged losses.

“On the other hand, medical schemes argue that members’ funds are being depleted by the ongoing scourge of FWA.

“The CMS continues to adjudicate these matters while also awaiting the release of the final Section 59 inquiry report,” it said.

ALSO READ: Rising cost of medical aid requires urgent attention

Payment disputes

The CMS added that despite declining complaint volumes, it remains concerned by incidents of payment disputes where beneficiaries incur out-of-pocket payments due to non-payment and/or short payment of claims.

It said in some instances, beneficiaries were unduly denied benefits to which they were entitled, and the CMS correctly ruled in favour of the complainants.

However, the CMS said there were a substantial number of complaints where medical schemes had correctly applied the act and the rules.

“In these cases, rulings were issued against complainants, and it became apparent that their understanding of applicable benefit rules and limits is still lacking,” it said.

Schemes with ‘extravagant’ AGMs

The CMS on Wednesday also provided Moneyweb with an update on the in-depth investigation it launched in January this year into the potential factors contributing to the “extravagant costs” incurred by medical schemes in hosting annual general meetings (AGMs).

The CMS said it has conducted six Section 43 inquiries and these inquiries are still ongoing.

In terms of Section 42 of the Medical Schemes Act, the registrar may address inquiries to a medical scheme in relation to any matter connected with the business or transactions of the medical scheme, with the scheme required to reply in writing to this inquiry within 30 days.

The investigation is being conducted internally by the CMS’s regulation division, together with its compliance and investigations unit.

The CMS said the volume of information which has to be analysed across the six schemes requires more time.

“The time lag between when certain information is also obtained from the different schemes also contributes to the time span of the investigation,” it said.

It is unclear which six schemes are being targeted in the investigation.

The investigation was launched after a new research report published by the CMS provided evidence that some medical schemes are paying exorbitant fees for hosting AGMs.

The research report said 33 of South Africa’s 71 registered medical schemes incurred a total of R29.2 million in expenses related to hosting AGMs for 8.1 million medical scheme beneficiaries.

This means these 33 medical schemes spent an average of R884 848 each to host their AGMs.

The remaining 38 medical schemes, which have 850 248 beneficiaries, did not incur any costs for hosting AGMs, the report said.

The report revealed that five medical schemes exhibited significantly higher spending than other schemes bearing a substantially higher proportion of the total AGM expenditure.

These are:

• Sizwe Hosmed Medical Fund;
• Medipos Medical Scheme;
• Engen Medical Benefit Fund;
• Motohealth Care; and
• Foodmed Medical Scheme.

The report said other schemes with possible high AGM-related expenditure include:

• University of KwaZulu Natal Medical Scheme;
• TFG Medical Aid Scheme;
• Cape Medical Plan;
• SAMWUMed; and
• Discovery Health Medical Scheme.

The CMS said on Wednesday the intention is to complete the investigation before the end of the year.

However, it said it is imperative to note that the report is meant for the registrar and the medical schemes concerned “as per Section 60 of the Medical Schemes Act, which prohibits the publication thereof”.

This article was republished from Moneyweb. Read the original here.