The Government Employees Medical Scheme (Gems) has told parliament it did not target black doctors for fraud investigations based on their ethnicity and would co-operate with the industry regulator to ensure there is no racial discrimination in future probes.
Gems provides cover to members of the public service and their dependents, and is the largest restricted medical scheme in SA, with about 2.4-million beneficiaries.
Along with medical scheme administrators Medscheme and Discovery Health, it was subjected to a lengthy investigation by a panel appointed by the Council for Medical Schemes for alleged racial discrimination against black healthcare providers suspected of fraud.
The investigation panel, appointed in terms of Section 59 of the Medical Schemes Act, began work in 2019 and released its final report last week. It concluded the systems used by Gems, Medscheme and Discovery Health to investigate fraud, waste and abuse were procedurally unfair and disproportionately affected black healthcare providers.
With Gems, for example, it found black dental therapists were about three times more likely to be investigated and found guilty of fraud, waste and abuse than their white counterparts.
Gems principal officer Stan Moloabi emphasised that the scheme’s fraud detection systems relied on practice codes and were not based on surnames or race.
“We don’t identify people as black or white — we use the practice code numbering system (PCNS),” he told parliament’s portfolio committee on public service and administration on Wednesday.
We don’t identify people as black or white — we use the practice code numbering system.
— Gems principal officer Stan Moloabi
The PCNS assigns a unique code to each healthcare provider in private practice, and does not contain demographic information such as their age, race or gender. The expert appointed by the panel to assess whether schemes and administrators unfairly discriminated against black healthcare providers used practitioners’ surnames as a proxy for race.
This approach was contested by Discovery and the Board of Healthcare Funders, who said it was unreliable and flawed. The BHF is an industry association that includes Medscheme and Gems.
Between 5% and 15% of the funds paid out by the medical schemes industry were estimated to be for fraudulent claims, Moloabi said. For Gems, which paid out R60bn in claims in 2024, this likely meant R6bn was lost to fraud, he said.
The CMS met on Monday to discuss the report’s findings, but has yet to indicate how it intends to proceed. The report recommended that schemes be required to disclose the software, algorithms and artificial intelligence programmes they used to detect suspicious claims, and that they publish yearly assessments of the racial profile of the providers they investigated for fraud.
It also recommended that the Medical Schemes Act be amended to include clear procedural safeguards and that a dedicated mechanism or tribunal be established to support healthcare providers accused of fraud.
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