JAUNDICED EYE

The CEO of one of our biggest medical schemes has warned that the sector is alienating customers with what looks like profiteering and catering for South Africa’s elites. As a result, the schemes unintentionally bolster support for the same National Health Insurance (NHI) that will put them out of business.

Bestmed CEO Leo Dlamini said this week that successive hefty rises in membership fees badly harm the medical aid sector’s reputation. They reinforce in the public mind the idea that the NHI is a cure-all for the nation's healthcare issues.

“We run the risk of an industry that’s unaffordable. It is a real, long term concern. It doesn’t help the narrative against the NHI. ” 

Dlamini defends the fee increases as inescapable because of medical inflation. That is aggravated, he says, by a growing demand for mental health services, rising claims for chronic conditions, increased technology costs, the high incidence of fraud by doctors, and the schemes’ statutory obligation to pay Prescribed Minimum Benefits (PMBs) for a government-determined range of afflictions. ___STEADY_PAYWALL___

Unsurprisingly, Bestmed’s best-preferred solution is to cut PMBs. “This is why we have been pushing [the Council for Medical Schemes] for exemptions from providing PMBs”. 

In other words, the schemes — they all rail against PMBs for hurting the profit margins — want members to pay more for less cover. Bestmed wants to increase fees in 2025 by 12.75%, while Discovery Health (with a 58% market share) is looking at up to 10.9%. Aside from Momentum at 9.4%, all the big funds want hikes of more than 10%, set against a CMS recommendation of 4.4% plus “reasonable” utilisation estimates.

No one begrudges these companies a fair profit for providing medical care at a level that the state is lamentably unable to match. Also, admittedly, medical cover is a grudge purchase. We want the protection it provides but there is a widespread sense that we are being ripped off. 

Unfortunately, there is justification for these suspicions. One of the biggest gripes around the braai fires of the nation — with all agreeing that private medical cover is a necessity and whatever the failings of the schemes, the NHI will be the pits of hell in comparison — is around PMBs. 

The long and the short of it is that the medical schemes regularly make questionable deductions from the medical savings accounts (MSAs) that many have made compulsory for their members. Instead of paying for PMBs out of the scheme’s reserves, they raid the member’s MSA. 

An independent financial adviser with vast medical scheme experience tells me that this happens so often that it is difficult to believe that it is accidental. He says that the schemes are using the MSAs as “a slush fund for their convenience”. Then, on top of it all, they have the cheek to charge an administrative fee for the MSAs, which he says are widely despised by the members.

This adviser regularly intercedes on behalf of distressed clients who have had their savings accounts plundered for services that are supposed to be covered by the major medical benefit provisions of policies. When challenged on these sharp practices — he describes the sector as “completely untrustworthy” and “rife with dishonesty” — the schemes immediately back down and lay the blame on “administrative error”. 

“There are moral and ethical issues here,” he says, “that medical schemes need to acknowledge and address.”

Wendy Knowler, South Africa’s foremost consumer journalist, recently recounted in her News24 column the harrowing experiences of two patients with advanced cancer trying for years to stop Discovery from pillaging their MSAs instead of paying out the benefits according to the stipulations in their plans. Knowler’s intervention resolved, for now, the problems of these two but she tells me that she has since been inundated with “me too” pleas from others with the same experience with the schemes.

“I find the ethics troubling, to put it mildly,” says Knowler. “I suspect that in many cases the ‘mistakes’ are not what they are claimed to be. These are routine occurrences.

“And these are people at their most vulnerable, in a sickly state, often battling alone. The administrative and emotional burden of having to ensure that every claim is correctly allocated, sending off multiple emails and making calls to an unresponsive call centre, is immense. Many people simply give up.”

Such callousness and greed are not confined to the schemes. Many medical practitioners and other health professionals, struggling with slow payments for their services, have handed the entire account management process to medical billing companies. These companies share the no-holds barred, kick-the-door-down ethos of the consumer debt-collecting agencies from which they have sprung.

Whether it's in-house collection by the practitioner’s staff or from an external company, the tone of these communications is often “clipped, rude, and threatening,” says Knowler. Medical professionals, whose entire relationship with a patient is based on trust and mutual respect, seem oblivious to the damage being done to their reputations by the blizzard of emails, SMSes, and phone calls demanding payment.

There is little recognition that there are “many moving parts”, as Knowler puts it, to the process — the practitioner, the patient, the medical scheme administrators — which complicate whether there is a shortfall or not and if so, who owes what and when. As a result, the patient is bombarded with aggressive demands for amounts that will be paid, or even already have been paid, by the medical scheme.

The angst engendered is enormous. To make matters worse, when the patient succumbs to the harassment and there ends up being an overpayment, it is a nightmare to get the money back. Every conceivable administrative impediment is put in one’s way. 

To return the money that their own accounting system has identified as owing to the patient, these entities as a matter of course demand a bank statement showing proof of payment; a letter from the bank confirming the existence of the account; a certified copy of one’s identity document; and a signed indemnity. These are all for “audit” purposes and failure to provide any of the documents means no refund.

A lawyer advises me that there is no legal basis for such excessive and unilateral demands for refunds that the company’s own accounting system reflects as due. “They are acting beyond the law. When faced with such a situation, simply refuse and explain in writing that you will sue for the amount due to you, as well as for the costs of recovery.”

The customer refund process is not only difficult but often tardy, perhaps deliberately so. Personally, I am still trying to extract from Lancet Laboratories a substantial amount owed to me since 2021. Emails go unanswered, documents get “lost”. When I do eventually winkle it out of Lancet — I am told it’s imminent, only one more hurdle to go — one can be damn sure there will be no apology made nor interest paid.

Knowler says that the tone and content of the interactions by medical service providers with their clients “far too often” cause an unnecessary break in the “affinity and trust” needed. But that is to assume that affinity and trust figure large in the calculations of business people who are accustomed to getting away with definitely unethical and possibly illegal actions for a very long time.

It seems unlikely to me that such exploitative and obstructionist behaviour would persist if it were not only tolerated but encouraged by the companies concerned. For example, the longer that a company can delay customer refunds, the longer these sums — cumulatively amounting to a significant sum — earn interest for purse holders. And these administrators who “in error” strip the MSAs of their clients, is this perhaps because of performance bonuses that incentivise their staff possibly illegally, certainly amorally, to claw back as much as possible?

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