CMS: Intention to declare certain practices irregular & undesirable

Press release 11 of 2017: Stakeholders to restrict submissions on Undesirable Business Practice (UDBP) to Notice 435 of 2017

Following the publication of Circular 39 of 2017, inviting interested persons to make written representations concerning the intended declaration of certain practices by medical schemes as irregular or undesirable practices, the Council for Medical Schemes (CMS) has been receiving numerous pro-forma documents that have been distributed by pharmacies and brokers to various persons, with content that is not aligned to the abovementioned Circular and Government Notice no 435 of 2017.

The CMS has noted that the pro-forma questionnaires require clients to merely indicate whether co-payments are levied when they use non-designated service providers for medication, sign their names and provide their personal details. Some of the forms also record complaints relating to access to designated service providers and formulary drugs. These are then submitted to the CMS as representations in response to the Circular and Government Notice.

The CMS is concerned about this practice as it defeats the purpose and intention which the proposed Undesirable Business Practice Declaration (UDBP) seeks to achieve. The right of a medical scheme to select Designated Service Providers (DSPs) and levy co-payments is legislated as per Regulations 7 and 8 to the Medical Schemes Act 131 of 1998, in the interests of enabling medical schemes to mitigate their exposure to the costs of funding the Prescribed Minimum Benefits. The Regulations adequately provide protection to members in instances where a designated service provider is not within a reasonable distance of the member’s work or place of residence as well as instances where formulary drugs are not effective. The notice published by the CMS is intended to deal exclusively with a specific narrow issue, namely allegations that certain medical schemes do not apply fair practices and procedures when appointing DSPs and that some co-payments are excessive while non-DSPs can render the services at the same price as a DSP. The CMS accordingly advises that only written representations strictly related to this issue are to be submitted.

Stakeholders are accordingly requested to restrict their submissions to the issues contained in the UDBP as per the aforementioned Circular and Government Notice no 435 of 2017. No representations falling outside this ambit will be considered. Entities that hand out pro-forma documents are also cautioned to properly explain the purpose of the submissions to their clients.