Cash-strapped medical schemes regulator spent R11.3m investigating race profiling

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The cash-strapped Council for Medical Schemes, the medical schemes regulator in South Africa, spent R11.3m in unbudgeted funds on a high profile probe into allegations of racial profiling by medical schemes and administrators investigating fraud, writes Tamar Kahn for Business Day.

The Council for Medical Schemes (CMS) is a statutory body charged with safeguarding the interests of close to nine million consumers and ensuring medical schemes, brokers and administrators comply with the Medical Schemes Act.

In a sharp departure from previous years, it reported an accumulated deficit of R19.64m for the 2019-2020 fiscal year. This was revealed in the council’s latest annual report, tabled in parliament earlier in November. It is the first time it has reported an accumulated deficit in more than a decade, according to Business Day’s analysis of prior annual reports.

In the report, CMS registrar Sipho Kabane attributed the deficit to the regulator’s growing mandate, which he said had not been matched with a commensurate increase in its budget, echoing a concern he raised in parliament last year.

One of the key contributors to CMS’s 2019-2020 accumulated deficit was the legal costs of its high-profile investigation into alleged racial profiling by medical schemes and administrators investigating fraud claims, costs which were “unforeseen and unbudgeted for”, according to the notes to the financial statements.

According to the Business Day article published on 13 November 2020, the investigation was launched by the CMS in June 2019 in terms of section 59 of the Medical Schemes Act, following complaints by medical practitioners that they were being unfairly targeted for fraud investigations because of their race.

The three-member panel was chaired by advocate Tembeka Ngcukaitobi and conducted a series of public hearings between August 2019 and January 2020.

The CMS’s acting general manager for stakeholder relations, Mmatsie Mpshane, provided Business Day with a detailed breakdown of the cost of the investigation. It shows the CMS spent R9.4m on legal fees, R823,900 on media; R444,588 on staff; R307,445 on transcription services; R167,243 on catering; R134,906 on security; and R43,470 on consultants.

The CMS had appointed an external panel of lawyers to conduct the investigation because it did not have the capacity to run an investigation of such magnitude, she said, and to ensure independence and objectivity.

The panel’s preliminary report has yet to be completed but is “at its tail end”.


Full Business Day article (paywall) – Cash-strapped medical schemes regulator spends R11.3m to investigate profiling

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