Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Section 59 findings under the spotlight

27 January 2021 Gareth Stokes

The Investigation Panel responsible for a Section 59 investigation into allegations of race profiling by private medical schemes has opened itself to criticism for its handling of the Interim Report launch. The panel made the full 300-page report available to the Council for Medical Schemes (CMS) and the Investigation Steering Committee on 15 January 2021 without first sharing the document with the medical schemes implicated in the report. On 19 January, the panel convened a media conference to announce the report findings and simultaneously published the report on its website.

A sea of negative sentiment

The report findings have already been lapped up by local news platforms. Times Live led with ‘Panel finds unfair discrimination against black practitioners by medical schemes’; reported ‘Interim report finds GEMS, Discovery and Medscheme guilty of unfair discrimination’; and with ‘Black doctors overwhelmingly racially profiled by medical aids’. When approached for comment, Discovery Health issued a statement saying they had not been given time to access and analyse the contents of the Interim Report prior its release. They say that the panel’s decision to place the report in the public domain was “in contravention of the terms of reference which provided that parties would be given an opportunity to comment over 30 days”. 

The panel concludes that there is unfair discrimination in the forensic investigations of fraud, waste and billing abuse (FWA) by the broader medical schemes industry. This finding, says Discovery, was made on the basis that “there was a higher proportion of Black African, Indian and Coloured healthcare professionals amongst those found to have breached industry rules in their billing”. But there are many ways to slice the statistics. Discovery is concerned that the panel reached its conclusion “despite the fact that there was no specific evidence of even a single case wherein the methodology or approach [taken by the scheme] in the identification and investigation of FWA matters was found to be inappropriate”. 

The Interim Report, in calling out medical schemes for apparent racial biases, casts a pall over medical practitioners too. “We must point out that a small number of healthcare professionals, on the margin of the profession, have been investigated and have had to refund medical schemes,” observes Discovery. “The vast majority of healthcare professionals are focused entirely on delivering excellent care and demonstrating a committed and honest work ethic”. The question becomes why the Investigation Panel would lead with an unfair discrimination angle without substantive evidence? This is a risky strategy in a country where the media, goaded by segments of the public, make frequent errors of judgement when reporting on sensitive issues. 

The beginnings of the Section 59 investigation

Allegations of racial bias and discrimination in medical schemes’ management of FWA first surfaced during May 2019. Then Minister of Health, Dr Aaron Motsoaledi, instructed the CMS to investigate these allegations. By 25 June, the CMS had issued its terms of reference for the Section 59 Investigation Panel, per Circular 45 of 2019. The opening sentence of that circular reads: “The Investigation, called the Section 59 Investigation, follows allegations by members of the National Health Care Professional Association that they were being unfairly treated and their claims withheld by medical aid schemes based on race and ethnicity”. The panel was independent of the regulator, constituted as an advisory panel to the CMS and the Minister of Health. 

The need to clamp down on corruption, fraud, waste and billing abuse is an imperative to extend lower cost options to a broader representative group of South Africans at all affordability levels. In 2019, the CMS estimated that FWA claims accounted for up to 15% of all claims paid out by medical schemes locally, totalling more than R20 billion; but Discovery reckons their losses under this heading are between 3% and 7.5% of annual claims, or between R700 million and R1.7 billion for the scheme. On either accounting, industry needs to tackle such abuses without undue concern over potentially hurt feelings. 

Discovery Health, based on their  19 January statement, will continue to take tough action to stamp out abuses by medical practitioners. “We will not be daunted in our efforts to ensure that the hard-earned funds belonging to the diverse membership of the medical schemes we administer are protected from corrupt and dishonest practices,” they write. “As a country and as an industry, the zero-tolerance approach to corruption, fraud, waste and abuse is essential to ensure sustainability and to protect members’ hard-earned money”. 

Proportionality of racial distribution

Discovery Health notes that “the panel was clear in recognising that there is no evidence of deliberate, explicit racial bias in the methods and algorithms employed by schemes and their administrators used to identify and investigate FWA”. But this fact did not appear to alter the tone of the report. “Whilst the panel supported our strong view that our processes are robust and independent, nevertheless they reached the conclusion based on the proportionality of the racial distribution in the outcomes, and not on the actual underlying processes applied to the investigations,” writes Discovery. A layperson would find this outcome absurd. 

Reason with me, step-by-step. An inquiry approaches a medical scheme with allegations of racial bias in their FWA processes. The medical scheme responds that it believes its processes to be sound and submits its fraud-detecting algorithms to the panel for scrutiny. The panel says that it cannot find evidence of racial bias or any reason to have concern in the scheme’s fraud algorithms. Case closed? Not in South Africa. In our country a damning conclusion is made public and the medical scheme instructed to review its processes, despite them being found to be sound. And then the scheme graciously accepts a public dressing down. Exemplary conduct is undone by baseless and damaging allegations which are repeated online and in print without the necessary context. 

Taking it on the chin

Medscheme, which also features in the Interim Report, has rejected claims that it practises any form of racial profiling when assisting or auditing healthcare claims. Discovery, meanwhile, takes a dismissive but conciliatory stance. “We do not accept any racial discrimination in our processes; but we will accept and respect the panel’s recommendations and endeavour to work hard within the healthcare system to ensure that outcomes are more satisfactory, balanced and representative,” they write. What happens next? The panel wants the CMS and the Health Professions Council of South Africa (HPCSA) to have greater oversight in the FWA space. We doubt they would find much resistance among schemes that have little to hide. “We support this as we are strongly of the view that corruption, fraud, waste and billing abuse must be firmly rooted out of our society, requiring the joint commitment of all stakeholders,” writes Discovery. 

There was some good news for medical schemes in that the panel decided not to amend the sections of the Medical Schemes Act that pertain to a medical schemes’ ability to recover funds inappropriately dispersed. They have, however, requested the CMS and HPCSA to produce ‘rules of engagement’ for the future practical implementation of this section of the act. “In the context of this support for the industry’s interpretation of Section 59, and the recommendations to strengthen FWA processes, we are pleased to confirm that we now routinely ensure the participation of an independent observer at all healthcare provider hearings, to ensure fairness,” concludes Discovery. The medical scheme will study the Interim Report findings and recommendations and comment within the six weeks set out for schemes to do so. 

Writer’s thoughts:
Stakeholders in the financial services industry are familiar with how easily statistics can be skewed to support a certain position. Fund managers often choose specific time periods to make return comparisons ‘pop’ while product providers frequently highlight positive aspects of their offerings, glossing over the negatives. Are you concerned that the Section 59 Investigation is using statistics to support a narrow, predetermined view? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts


Added by Brian Shear, 28 Jan 2021
the narrow viewpoint and the need for the panel to interpret results according to demographics indicate that racism is alive even by those in authority who profess to be non-racist. Its the old story; "when you have no case, play the race-card". Remember it's our money that the abusers are fraudulently claiming
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Added by Cliff Taylor, 27 Jan 2021
Facts or race card ? Surely the relevant part of the exercise should have been addressing and combatting the fraud element.
As a general comment authorities should rather concentrate on the state of some of the government hospitals where there is real hardship to many of our citizens
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Added by John Bezuidenhout, 27 Jan 2021
The medical arena transformed and obviously more incidences of ANY SORT ( good or bad ) will be per % more in the larger representative group. = fact of life .


In my 40 + years in the financial services sector and once on the forefront of transformation , unfortunately the fraudulant exposure amongst the transformed sections , increased = fact of Africa

The report has no significance , as the facts are real , not fabricated - deal with it
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