The cash-strapped medical schemes regulator spent R11.3m in unbudgeted funds on a high-profile probe into allegations of racial profiling by medical schemes and administrators investigating fraud, it emerged last week.
The Council for Medical Schemes (CMS) is a statutory body charged with safeguarding the interests of close to 9-million consumers and ensuring medical schemes, brokers and administrators comply with the Medical Schemes Act.
In a sharp departure from previous years, it reported an accumulated deficit of R19.64m for the 2019/2020 fiscal year, its latest annual report, tabled in parliament earlier in November, shows. It is the first time it has reported an accumulated deficit in more than a decade, according to Business Day’s analysis of prior annual reports.
In the report, CMS registrar Sipho Kabane attributed the deficit to the regulator’s growing mandate, which he said had not been matched with a commensurate increase in its budget, echoing a concern he raised in parliament last year.
One of the key contributors to CMS’s 2019/2020 accumulated deficit was the legal costs of its high-profile investigation into alleged racial profiling by medical schemes and administrators investigating fraud claims, costs which were “unforeseen and unbudgeted for”, according to the notes to the financial statements.
The investigation was launched by the CMS in June 2019 in terms of section 59 of the Medical Schemes Act, following complaints by medical practitioners that they were being unfairly targeted for fraud investigations because of their race. The three-member panel was chaired by advocate Tembeka Ngcukaitobi and conducted a series of public hearings between August 2019 and January 2020.
The CMS’s acting GM for stakeholder relations, Mmatsie Mpshane, provided Business Day with a detailed breakdown of the cost of the investigation. It shows the CMS spent R9.4m on legal fees, R823,900 on media; R444,588 on staff; R307,445 on transcription services; R167,243 on catering; R134,906 on security; and R43,470 on consultants.
Capacity
The CMS had appointed an external panel of lawyers to conduct the investigation because it did not have the capacity to run an investigation of such magnitude, she said. “The section 59 investigation panel constitutes individuals who have the relevant skills and competencies to run the investigation independently and objectively. It was clear from the onset that the CMS would be a respondent in the inquiry and therefore it would not be procedurally fair for the CMS to run the investigation and answer to itself,” she said.
The CMS had not had the capacity to provide the panel with media services, she said. “The CMS’s communication unit consists of two employees: a communications manager and a customer relations officer.
“The communications manager was on incapacity leave from June to November 2019. The unit was still expected to deliver on its targets as per [the] annual performance plan. Seeing this, the panel requested the appointment of a PR firm,” she said.
The panel’s preliminary report has yet to be completed but was “at its tail end”.
The CMS’s latest report shows an uptick in the number of medical scheme beneficiaries in the 2019 calendar year, which rose 0.82% to 8.953-million by the end of December, from 8.916-million the year before. Medical schemes represented 15.08% of the population in 2019, a decline on the 16.5% of the population covered in 2000.
The 78 medical schemes operating in 2019 collected combined contribution income of R205.8bn, compared with R192.3bn the year before.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.