The Council for Medical Schemes (CMS) is to launch a forensic investigation into allegedly improper procurement processes at Bonitas, zeroing in on a contract to Private Health Administrators (PHA) to administer its low-income option, Boncap.
Bonitas had denied the allegations. Business Day reports that the decision deepens the watchdog’s initial probe, triggered by a column in Business Day last year about Sanlam’s decision to move its employees from Bonitas to Fedhealth.
Sanlam’s decision came shortly after the Bonitas trustees cancelled a long-standing contract with Afrocentric Distribution Services (ADS) to attract young members and appointed a service provider linked to a former ADS executive.
The trustees also ended a decade-long arrangement with Afrocentric subsidiary Medscheme to administer Boncap, awarding the contract to PHA instead.
Medscheme continued to administer the rest of Bonitas’ options. Sanlam holds a 60% stake in Afrocentric.
After concluding its initial inquiry, the CMS said the findings warranted further inquiry: it has advertised the bid to select a forensic investigator and anticipated the investigation would take at least six months, it said.
The CMS declined to provide details of the findings of its section 43 inquiry, saying they were confidential.
Bonitas said the scheme had co-operated fully with the CMS during its inquiry, and was satisfied that its procurement processes were properly followed. It denied the allegations of irregularities.
“During 2022, it became necessary to consider a new business model for … Boncap. Unfortunately, the current administrator, Medscheme, was unable to consider a lower pricing structure, and the scheme went out on an RFP (request for proposals) to ensure it was able to curb costs,” it said.
PHA, an accredited administrator in which Medscheme owns a minority stake, was the successful bidder and entered into a contract with Bonitas, it said.
Bonitas said it would co-operate with any further investigation. It added that membership growth had been strong this year, rising from 351 000 to 363 000 by end-September. It remained “in an excellent position” to pay claims and currently had a solvency ratio of 34.9%, comfortably above the statutory requirement of 25%, it said.
Business Day article – Medical schemes watchdog deepens Bonitas probe (Restricted access)
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