Updated 19 March 2024
BHF threatens CMS with health ombudsman.
In an unprecedented move, the board of healthcare funders, (BHF), is taking the Council for Medical Schemes, (CMS), and the health minister, to the Health Ombudsman for ‘bullying’ their members.
That is unless the ‘CMS desists and explains the obfuscation, abuse of power and tardiness,’ on long outstanding health reforms that stand to provide cheaper patient care and regulatory clarity.
In a legal letter drawn up by attorneys Bowman, Gilfillan, and Company, the BHF accuses the CMS Registrar Dr Sipho Kabane, of being ‘incompetent’ in key aspects of his legislative duties.
They claim he ‘abuses and unjustifiably exercises his power in an unfair manner,’ by threatening and intimidating several medical schemes with curatorship on flimsy premises. He also allegedly wastes taxpayers’ money on expensive and unnecessary litigation while his council ‘fails or neglects’ to hold him accountable to their own policy directives.
This ‘unjustifiable regulatory action,’ was allegedly in pursuance of NHI objectives before the bill is signed into law – and under instruction of the department of health, the letter claims.
Implementation of regulatory frameworks that embrace low-cost benefit options, (LCBO’s), and specialist tariff ceilings have been long delayed, denying more affordable care to millions of patients as medical inflation continues to soar. Poorly crafted Prescribed Minimum Benefits, PMB’s, enacted to provide continuous free private care for a defined list of conditions, (regardless of plan, but serially abused by healthcare providers), has also not been reviewed bi-annually as required by law, the BHF says. Urgent reform of most of this was recommended by the Heath Market Inquiry on 30 September 2019.
The CMS also failed to implement a risk-based capital solvency framework, and appeal processes to it were ‘ineffective and delayed,’ says the BHF letter.
It further accuses the CMS of failing to seek or obtain concurrence from the Financial Sector Conduct Authority, (FSCA), and the Prudential Authority, (PA), as required by law.
The CMS ‘arbitrarily initiated,’ curatorship, litigation, banned the publication of notices on benefit options and contribution increases, and failed to consult the two authorities on such actions – and before submitting its report to Health Minister Dr Joe Phaahla.
“It has become evident, based on BHF members’ common experience, that the Registrar readily reverts to the threat of the appointment of a curator to intimidate boards of trustees of medical schemes when there is an issue that he cannot resolve. His office demonstrates a marked hostility towards medical schemes themselves, even when the medical schemes indicate a willingness to collaborate with him and the Council on the challenges the medical schemes face,’ the letter says.
Dr Kabane ‘misused the remedy of curatorship’ rather than other more reasonable solutions despite the harm it could cause a medical scheme. This ‘baseless’ curatorship application caused reputational damage, put off potential new scheme members, and prompted existing members to cancel their memberships. Medical schemes were forced to spend millions on legal fees, fighting matters that could have been resolved by other means, further aggravating non-health expenditure, and threatening their financial stability.
The letter cites several court battles between the CMS and medical schemes where the schemes won, or the CMS inexplicably withdrew its application for curatorship.
In one 2020 case against Hosmed Medical Scheme and others, the High Court found that it was ‘inappropriate and unreasonable’ for the registrar to use curatorship, “as a way of scrutinizing the proposed amalgamation agreement.”
The BHF adds, ‘this experience is not uncommon,’ and recently, several other BHF members have experienced the same or similar treatment.
In another punitive cost order for ‘Netcare Plus and another,’ revolving around Netcare and Discovery selling prepaid doctor consultation vouchers to people who could not afford medical aid, the BHF quotes the judge as asking,
“Where is Ubuntu when an organ of state puts parties, whose only sin was to comply with the law, through costly legal action? I do not see the reason why the respondent should be out of pocket.”
The BHF says it logically followed that the Registrar, and the CMS were ‘trying to exhaust smaller schemes into winding-up or consolidation.”
The BHF is requesting from the CMS copies of any policy directives on legal proceedings against medical schemes and related legal costs and confirmation as to whether the CMS had tracked the Registrar’s adherence to these. It wants copies of this or any related report for the past three years. It also wants to know if the CMS has tracked its legal expenditure -and its rate of success in the High Courts over the past decade. If this analysis has not been done, the CMS should explain why not.
The BHF has given the Council and Health Minister until March 8th to respond and “urgently engage one another” in terms of the relevant Act to find solutions.
Kabane previously rejected as false claims that he’s actively undermining medical schemes or that he was deliberately tardy in preparing a report on the Health Market Inquiry recommendations – handed over to the Dr Phaahla in December last year. Phaahla told this journalist last month that “some legal detail is being cleared up,” and that he would decide on action, “within months.”
Emeritus Professor Taole Mokoena, former Head of the Department of Surgery and Chief Surgeon of the Department of General Surgery at the University of Pretoria and Steve Biko Academic Hospital, is the National Health Ombudsman having been appointed in June last year. He took over from Professor William Makgoba who was scathing of public sector dysfunction in many of his findings.
The CMS recently asked medical schemes to canvass their members as to how aware of medical scheme services they are.
Healthcare in South Africa is unnecessarily complex with dismal regulatory oversight in which patients – the very people whom medical aids were set up to serve – suffer financial hardship while struggling to negotiate a healthcare funding ‘jungle’.
A spokesman for the CMS, Stephen Monamodi, said the board was “studying the letter and will comment once they’ve made a resolution.”
He would not speculate on how long this might take.