SA’s medical scheme regulator has deepened its probe into a multimillion-rand vitamin tender awarded by SA’s biggest medical scheme for civil servants to an Afrocentric subsidiary, with a formal inspection into the matter now under way.
The Council for Medical Schemes (CMS) announced last May that it had initiated an inquiry into the Government Employees Medical Scheme (GEMS) in the wake of media reports that it had spent R400m on a multivitamin contract with Activo Health, which is fully owned by Afrocentric.
GEMS had raised eyebrows about the nature of the contract and the process by which it was awarded. Medical schemes usually cover benefits for members that have been recommended by healthcare professionals, but in this case it offered each of its members a five-month supply of multivitamins without the involvement of healthcare providers. It also outsourced the selection of the multivitamin provider to its managed care provider, Medscheme, which is also a subsidiary of Afrocentric, raising questions about a potential conflict of interest.
The initial probe was conducted in terms of Section 43 of the Medical Schemes Act, which empowers the CMS registrar to address inquiries to a medical scheme “in relation to any matter connected with the business or transaction of the scheme”. It is regarded as a relatively soft option as it does not give the regulator the power to ask a scheme to open its financial records and other documents to scrutiny.
The Section 43 inquiry was completed on September 15 and recommended a more detailed investigation be conducted in terms of Section 44 (4)(a) of the act, said the CMS. These provisions empower the registrar to order an inspection of a medical scheme if he believes such an inspection will uncover evidence of irregularity or noncompliance with the act, said CMS spokesperson Stephen Monamodi in a written response to Business Day.
“We hope the investigation will be completed by the end of June 2023, but this is subject to many factors such as how fast the investigators are provided with the information [and] documents they require, access to the people they need to engage with, and possible legal challenges to halt the investigation,” he said.
The CMS declined to elaborate on the outcome of the initial probe, saying the provisions of section 60 of the act prohibited it from disclosing these details.
Independent industry sources told Business Day that GEMS had seen lower than anticipated take-up of the multivitamins, and those members who took up the offer last year had been offered a second five-month supply.
GEMS confirmed to Business Day that it was still providing the multivitamins to members.
“In early 2022, GEMS purchased a one-off order of vitamins [specific quantities] from the supplier that was contracted through a quotation process as previously communicated. In order to avoid wastage, the remaining vitamins from this one-off purchase order are being offered to members until all the units have been dispensed by participating pharmacies,” it said.
GEMS declined to answer Business Day’s questions about how many of its beneficiaries had taken up the vitamin offer, or how much stock it still had on hand.
GEMS principal officer Stan Moloabi said this was “operational business information which should not be in the public domain” as it would not add value. “It may even be information that the other party may regard as confidential,” he said.
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