In a shock move, the medical schemes regulator has instructed some of the industry’s most prominent players to withdraw announcements about their contribution increases and products for 2024, saying they should have waited until it signed them off.
The move by the Council for Medical Schemes (CMS) has stunned the targeted schemes. For the past two decades they have consistently publicised their plans for the following year in September to give consumers, brokers and employers time to consider the various offerings on the market before changes take effect in January.
Schemes generally indicate that the products they are promoting are subject to regulatory approval, which is usually granted in late November or December. It is extremely rare for the CMS to reject their plans.
Last week CMS acting registrar Zongezile Baloyi wrote to some of SA’s biggest open medical schemes, including Discovery Health Medical Scheme, Bonitas, Momentum, Bestmed and Medihelp, accusing them of undermining the authority of the regulator and ordering them to withdraw their product announcements for 2024.
CMS registrar Sipho Kabane said Baloyi was in an acting registrar position last week because he had been in Namibia.
In the letter, a copy of which has been seen by Business Day, Baloyi said schemes were advised in an industry circular issued in July not to communicate benefit changes and contribution increases before they were approved by the CMS, and it would finalise approvals or rejections in November.
‘Unnecessary confusion’
He said their action is likely to “cause unnecessary confusion” among consumers and appears to be aimed at influencing the regulator’s position.
“It is my view that your communication ... is intended to undermine the authority of this office and interfere with [its] independence in assessing your submission,” he said.
The CMS had not responded to Business Day’s questions at the time of publication, saying it needs more time.
SA’s biggest medical scheme administrator Discovery Health — which counts Discovery Health Medical Scheme among its clients — said the scheme intends to appeal against the CMS directive. Once an appeal has been lodged, as per the Medical Schemes Act, it would suspend the directive, said Discovery Health CEO Ryan Noach.
“No law has been broken. The regulator is aggrieved that open schemes across the industry have not adhered to guidance in a circular — but it is not legally binding,” said Noach.
Discovery Health Medical Scheme executives were in regular contact with CMS staff in the run-up to its 2024 product launch in September and nothing in the announcement would have come as a surprise to the regulator, he said.
“There is nothing new or different about this year’s process: it has the same cadence and timing as it has had for the past 25 years and takes into account the needs of financial advisers and members who must be equipped to make year end decisions.”
The Board of Healthcare Funders (BHF), an industry association for medical schemes, said the CMS’s instructions are impractical and its threat of fines for schemes that failed to comply is at odds with the act.
BHF head of research Charlton Murove said the instructions from the CMS are not in the interest of medical scheme beneficiaries.
“People need time to consider, consult with their brokers. Waiting until the CMS approves [plans] in December is completely impractical,” he said.
Medihelp principal officer Johan Viljoen said that as in previous years, the scheme clearly emphasised that the contents of launch presentations, broker sessions and marketing material are subject to approval from the CMS. “It will be impossible to advise members on benefits for the following year only after obtaining final approval towards November,” he said.
Momentum Health Solutions executive for marketing Damian McHugh said the regulator would have to sign off on products much earlier in the year if it wanted schemes to market those that have been approved.
Bestmed principal officer Leo Dlamini and Bonitas principal officer Lee Callakoppen confirmed receiving the letter but declined to comment.
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