The medical schemes industry regulator has assured parliament it will implement the recommendations of the section 59 investigation into alleged discrimination against black healthcare providers.
It also plans to introduce a legally binding code of conduct to govern future fraud investigations.
The Council for Medical Schemes (CMS) launched the investigation in response to complaints from black healthcare providers alleging they were unfairly targeted for audits conducted by medical schemes and administrators in terms of section 59 of the Medical Schemes Act.
The final section 59 investigation report, published in July 2025, concluded black healthcare providers were more likely to be singled out for fraud investigations but found no evidence they were targeted based on their race.
Medical schemes and administrators had told the inquiry that healthcare providers are identified by their practice number, which does not contain any racial information.
On Wednesday, members of parliament’s health portfolio committee pressed the council to explain why it had yet to act on the recommendations of two key industry probes — the section 59 investigation and the Health Market Inquiry (HMI), which published its final recommendations in 2019.
CMS senior manager for legal services John Letsoalo told MPs that the regulator is drafting a universal code of conduct for fraud investigations conducted by medical schemes and administrators in terms of section 59 of the Medical Schemes Act.
Current investigations have a disproportionate impact on black and smaller practices, he said.
“There is no standardisation in the industry [with] very different practices between different schemes and administrators. We hope to cultivate a uniform, standard approach,” he said.
The council has obtained a legal opinion on its plans for a universal code of conduct for section 59 investigations and issued a circular on March 17 setting out its guidance to the industry pending the finalisation of the code of conduct, he said.
The circular says no part of fraud, waste and abuse audit, recovery or payment processes should directly or indirectly differentiate on race. It directs the industry to review processes to ensure the disparities highlighted by the section 59 investigation panel are not repeated.
Medical schemes and administrators disputed the racial disparities identified by the panel’s statistician on several technical points, including the fact that he used surnames as a proxy for race.
The circular also says schemes and administrators must consider the potential hardship to providers in their recovery decisions and notify providers as soon as anomalies are detected.
In February last year, trade, industry & competition minister Parks Tau published draft regulations to the Competition Act proposing an interim block exemption for medical schemes and healthcare providers to enable them to negotiate tariffs. It was the first regulatory response from the government to the inquiry’s final recommendations.
Public response to the draft regulations has identified several shortcomings, and the regulations are currently being reviewed, said CMS head of policy, research and monitoring Michael Willie. “We are trying to align them with the National Health Act,” he said.
One of the criticisms levelled at the draft block exemption regulations was that they dealt with only one isolated aspect of the inquiry’s recommendations. The inquiry’s final report proposed a set of interlinked reforms that, in addition to establishing an independent tariff negotiating body, included interventions to manage demand, equalise risk between medical schemes, and monitor the quality of the care provided.
The health department’s deputy director-general for regulation and compliance, Anban Pillay, said some of the inquiry’s recommendations intersected with the government’s plans for National Health Insurance (NHI).
“We would need to review whether we could implement the recommendations of the HMI or pursue a similar policy position through the NHI,” he said.
Some recommendations, however, could be pursued with amendments to the Medical Schemes Act, such as improving medical scheme governance. Discussions are under way about a potential review of the act, he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.