Profiling action mooted

Council for Medical Schemes legal head tells MPs findings were ‘quite distasteful’

Private medical aid sector regulator the Council for Medical Schemes has raised the prospect of legal action against medical schemes found to have practised racial profiling against black service providers.

The council’s head of legal affairs, John Letsoalo, said legal advice would be sought on an approach to the equality court or a class action.

Private medical aid sector regulator the Council for Medical Schemes (CMS) has raised the prospect of legal action against medical schemes found to have practised racial profiling against black service providers.

The council’s head of legal affairs, John Letsoalo, said at a meeting of parliament’s health committee that legal advice would be sought on whether an approach could be made to the equality court or whether a class action should be instituted by those negatively affected by racially discriminatory practices by medical schemes.

Some medical practitioners had lost income due to the actions of medical schemes, he said.

There was a need to amend the Medical Schemes Act and its regulations because it had gaps that allowed the medical schemes and the administrators to interpret some sections in a way that suited them, Letsoalo said.

“We find these findings quite distasteful,” he told MPs. “We are taking racial discrimination, especially in private healthcare, very seriously.”

Members of the committee demanded consequence management and for penalties to be imposed on medical schemes found to have acted wrongly, to create a deterrence. They suggested that black medical practitioners be recompensed in some way by the medical schemes.

The question of legal action against medical schemes was also raised.

The CMS and health minister Aaron Motsoaledi briefed the committee on the section 59 panel report released last week which found that three medical aids — Discovery, Medscheme and the Government Employees Medical Scheme — practised racial profiling to detect and punish fraud. The three represent more than 80% of medical aid membership in the country.

The panel found a statistical analysis of risk ratios between 2012 and 2019 showed black practitioners had faced a disproportionately higher likelihood of investigation and sanction for fraud, waste and abuse compared to white ones.

The Board of Healthcare Funders (BHF), Health Funders Association and Discovery have argued the methodology used by the panel was “flawed” and scientifically unsound.

In terms of section 59 (3) of the Medical Schemes Act, the scheme may deduct amounts from any benefit payable to a member or supplier of a health service if they are not entitled to the amount, or for any loss which has been sustained by the medical scheme through theft, fraud, negligence or any misconduct.

Motsoaledi said that investigations into such allegations could take years, with medical practitioners slapped with crippling deductions as medical schemes took action to recoup their money. This often forced many of them out of practice. There needed to be an early warning system that alerted the practitioner about wrongdoing. The minister identified a weakness in section 59 of the Medical Schemes Act in that it did not specify what steps a medical scheme had to take when investigating fraud, wastage or abuse. The different medical schemes had come up with their own methods.

“We will have to look into this,” the minister said, adding that his department would seek legal advice on what could be done and consult about the question of penalties that would need a legislative amendment.

National Health Insurance would also be examined to see if it had to be amended.

CMS chair Thandi Mabeba said legislative changes were necessary to empower the CMS to take action. Its registrar and CEO, Musa Gumede, outlined the processes planned by the CMS to deal with the panel’s findings and recommendations and the systems the CMS had put in place to tackle fraud, wastage and abuse since the release of the panel’s interim report in 2021.

The CMS is to hold a special meeting on Monday to discuss the panel’s final report.

Among the panel’s recommendations were that the Medical Schemes Act include clear procedural safeguards. Also, a dedicated mechanism or tribunal should be established to support healthcare providers accused of fraud, ensuring that they are not left to defend themselves against the overwhelming power of the schemes.

Schemes should be required to disclose the software and AI programs they rely on to detect suspect claims to assess whether they are biased.

The panel also recommended that schemes should conduct yearly assessments of the racial profile of providers investigated for fraud and publish the data broken down by discipline, so that discriminatory patterns don’t go undetected.

ActionSA’s Kgosi Letlape said on Sunday he would lay criminal charges against several medical aid providers.