The Council for Medical Schemes (CMS) has softened its stance on medical schemes that have publicised planned products for 2024 ahead of its approval, saying it acknowledges their need to communicate with consumers and saying they must make it clear they are still waiting for sign-off.
The CMS is the watchdog agency for the medical schemes industry, charged with regulating 71 medical schemes and safeguarding the interests of 8.95-million beneficiaries.
Last week its then acting registrar, Zongezile Baloyi, sent letters to SA’s five biggest open medical schemes, instructing them to retract all communication about their planned premiums and benefits for 2024 because they had not yet been given the green light by the regulator.
The move stunned the industry because for the past 25 years medical schemes have publicised their plans for the following year in September, to give financial advisers, employers and consumers time to consider their options ahead of changes that take effect on January 1.
The regulator appears to have targeted only five schemes — Discovery Health Medical Scheme (DHMS), Bonitas, Momentum, Bestmed and Medihelp — and turned a blind eye to smaller schemes that have also communicated their plans, such as Profmed and Camaf.
On Thursday the CMS, which declined to answer Business Day’s questions about the rationale for the letters sent to the five schemes, issued a statement in which it said: “CMS acknowledges that medical schemes may want to communicate the planned or proposed changes to benefits ahead of the approval by the regulator. However, it is important for medical schemes to clearly communicate that the proposed changes are subject to approval by the regulator.”
Discovery Health CEO Ryan Noach said the approach taken by schemes is in line with the Medical Schemes Act’s requirements to communicate clearly with members.
“The communication typically also includes clear disclaimers that the implementation of proposed benefit changes is conditional on approval by the CMS.
“Failure to communicate timeously could leave schemes in breach of their obligation to inform members; could leave financial advisers with inadequate time for analysis, technical engagement and advisory consultations; and could expose members to an unfair deadline to make their changes,” he said on Thursday.
Discovery Health is one of SA’s biggest medical scheme administrators, with DHMS its biggest client.
“The Medical Schemes Act is explicit that benefit amendments may not be implemented without the formal approval of the CMS. The act, however, makes no statement about the requirement for formal CMS approval prior to communication of intended changes, whatsoever,” he said.
DHMS has filed an appeal against the directive contained in the letter it received.
In a separate development, CMS registrar Sipho Kabane told parliament on Thursday afternoon that the regulator has finalised its work on low-cost benefit options and expects to present its report and recommendations to health minister Joe Phaahla in two weeks’ time.
He declined to provide MPs with any further detail.
Low-cost benefit options are cheap, pared-down options that provide less cover than the minimum requirements stipulated in the Medical Schemes Act.
He told parliament’s portfolio committee on health that the CMS’s section 59 investigation into allegations of racial profiling by schemes probing potentially fraudulent claims is almost complete and a final report is expected by the end of November.
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