Discovery, the Government Employees Medical Scheme (Gems) and Medscheme acted unfairly and in a racially discriminatory manner towards black healthcare providers.
These are findings of the long-awaited Section 59 inquiry, the final report of which was handed to health minister Aaron Motsoaledi in Centurion on Monday.
The Council for Medical Schemes (CMS) appointed the investigative panel in 2019 in response to allegations from black healthcare providers that they were being treated unfairly by medical schemes based on race.
Chaired by advocate Tembeka Ngcukaitobi, the independent panel found that the systems used by SA’s biggest medical schemes to detect and punish fraud were both procedurally unfair and resulted in discriminatory outcomes.
According to Ngcukaitobi, statistical analysis of risk ratios over several years showed that black practitioners faced a disproportionately higher likelihood of investigation and sanction compared to their white counterparts.
He explained that a risk ratio was the likelihood that a black practitioner would be subject to an investigation, finding and penalty compared to a white practitioner. He also clarified that “black” was used as a generic term encompassing coloured, Indian and black African individuals.
Regarding Gems, Ngcukaitobi said that black dental therapists in 2014 experienced risk ratios of “between 2.7 and 3.7; in other words, they were generally approximately three times — 300% — more likely than non-black dental therapists to be guilty of fraud, waste and abuse (FWA). So they were more likely to be investigated and found guilty of fraud waste and abuse”, he said.
For Discovery, black psychiatrists experienced risk ratios of “between 3.44 and 3.77; in other words, black psychiatrists were generally approximately three-and-a-half times — 350% — more likely than non-black psychiatrists to be guilty of FWA”.
In 2018, black anaesthetists contracted by Medscheme were more than six times (650%) more likely to be found guilty of FWA than non-black anaesthetists, Ngcukaitobi said.
Ngcukaitobi stressed that while the panel was not a court and did not adjudicate individual complaints, the factual evidence of these disparities was clear.
“We do not need to make scientifically certain determinations of the risk ratios. Findings based on what is probable is enough for the purposes of this final report,” he said.
“All of the explanations and the expert reports that have been given to us by the schemes were not sufficient, in our respectful view, to displace the findings that, on the facts, the risk ratios show racial discrimination against black service providers,” he said.
The inquiry also found that FWA processes used to audit and claw back funds from practitioners violated rights to fair treatment.
“The FWA procedures are unfair and it violates the rights of procedural fairness of individual practitioners,” Ngcukaitobi said.
According to Ngcukaitobi, the legislation governing these processes — the Medical Schemes Act — lacks clear rules, leaving schemes to impose their own systems without sufficient oversight or accountability.
The inquiry has also made proposals to reform how schemes investigate fraud:
- Legal amendments: Section 59(3) of the Medical Schemes Act should be overhauled to include clear procedural safeguards, as the current framework is “light on regulatory detail” and does not keep pace with the increasingly intrusive technological tools used by administrators.
- Independent tribunal: A dedicated mechanism should be established to support healthcare providers accused of fraud, ensuring they are not left to defend themselves against the overwhelming power of the schemes.
- Transparency of algorithms: Schemes must disclose the software and artificial intelligence programs they rely on to detect suspect claims. At present, neither the department of health nor the Council for Medical Schemes (CMS) has any insight into how these systems work or whether they entrench bias. If this cannot be achieved voluntarily, Ngcukaitobi recommended legislative changes to compel disclosure.
- Annual racial monitoring: Schemes should conduct yearly assessments of the racial profile of providers investigated for fraud and publish the data broken down by discipline, so discriminatory patterns don’t go undetected for years.
CMS chair Dr Thandi Mabeba called the release of the report “a milestone that closes a critical chapter and opens a new chapter for policy reform and transformation”.
Motsoaledi used the opportunity to push for National Health Insurance, the highly controversial government initiative he has actively championed, which aims to provide universal access to high-quality healthcare for all citizens.
Motsoaledi said the “whole system is going to be reviewed”, adding that “it is very painful ... that now we are dealing here with racial discrimination, so many years after 1994….”
Business Day approached Discovery, GEMS and Medscheme for comment.
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