SA’s biggest medical scheme for public servants has defended its decision to award Afrocentric subsidiary Activo Health a multimillion-rand contract to provide its members with multivitamins, saying it was responding to their demands for immune boosters to fend off Covid-19.
The justification by the Government Employees Medical Scheme (GEMS) follows an announcement earlier on Tuesday by the industry regulator, the Council for Medical Schemes, that it had started a Section 43 enquiry into the matter.
At issue is both the nature of the contract and the process by which GEMS awarded it. It is highly unusual for a medical scheme to provide a benefit to members that hasn’t been recommended by a healthcare professional, and it outsourced the selection of a vitamin provider to its managed-care provider, Medscheme, which is also a subsidiary of JSE-listed Afrocentric.
GEMS is SA’s biggest restricted medical scheme and covers civil servants and their dependants. It is heavily subsidised by the state, and had 1.92 million beneficiaries in 2020.
GEMS principal officer Stan Moloabi said the board had agreed to set aside R400m from its ex-gratia fund to provide adult beneficiaries with a five-month supply of multivitamins during the coronavirus pandemic, in response to demand from members. There had been “immense pressure” from unions represented at the public service bargaining chamber, he said.
A medical scheme has more discretion on how to spend its ex-gratia fund than its contribution income, which is strictly bound by scheme rules and the Medical Schemes Act.
So far, 187 000 of GEMS’ approximately 1-million adult beneficiaries had opted in for the vitamin benefit, which they could have couriered by Medipost, or collect from a designated pharmacy, said Moloabi. “There are definite cost savings. The total price of the [couriered] vitamins, over five months, is R290.50. If you were to buy it directly it is about R110 [a month],” he said. The cost when collected from a pharmacy was R310.50, he added.
GEMS previously amended its benefit design to ensure that vitamin prescriptions for members diagnosed with Covid-19 were covered from the risk-pool, he said. The new benefit was available to all adult beneficiaries, he said.
GEMS had asked Medscheme to source a vitamin provider, based on three criteria: wide use, cost, and sustainability of supply. It only became aware of that Activo Health was also a subsidiary of Afrocentric after the contract had been awarded, said Moloabi.
CMS registrar Sipho Kabane said Gems had alerted the regulator to media inquiries about the matter on Friday. The regulator decided to initiate an enquiry in terms of Section 43 of the Medical Schemes Act, to give GEMS an opportunity to put its side of the story, he said.
“We have given them 30 days to give us all the facts, and then we will make a decision on whether to inspect [the scheme],” Kabane said.
Section 43 gives the registrar power to address inquiries to a medical scheme “in relation to any matter connected with the business or transaction of the scheme”. It is considered a softer option than an inspection in terms of Section 44 of the act, which requires a scheme to open its books, documents and financial records for scrutiny by the regulator.
The Progressive Healthcare Forum (PHF), an association of health activists, said GEMS shouldn’t be providing vitamins directly to its members, as the benefits provided by a medical scheme required mediation by a healthcare professional, such as a pharmacist or doctor. “It’s unheard of. No other scheme does this,” said PHF chairperson Aslam Dasoo.
He questioned the CMS’s decision to start a section 43 inquiry, saying it should have launched an inspection immediately, suspended the trustees and put the scheme under administration. “The CMS has gone in with harder measures in the past,” he said.
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