CMS decision to allow Discovery Insurance’s medical aid product challenged

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The Board of Healthcare Funders is ‘unhappy’ over the decision of the Council for Medical Schemes to allow Discovery Life to offer medical aid products under its life assurance business, allegedly gaining an unfair advantage over competitors.

According to a Business Times report, this is against demarcation regulations, which state that only medical schemes can offer medical scheme products.

The Board of Healthcare Funders (BHF) said it was investigating how the council had allowed Discovery’s life insurance unit to continue to provide its PrimaryCare product after initially rejecting this.

Discovery Health started PrimaryCare in 2012 for low-income earners with premiums starting at about R160 a month and the product currently covers more than 30,000 people. The BHF is unhappy with the exemption. The BHF “is concerned that the recent granting of the exemption to Discovery Life by the CMS will serve to negate the objectives of the demarcation regulations and allow products other than medical schemes to conduct the business of a medical scheme”, said Katlego Mothudi, MD of the BHF.

Discovery Life CEO Hylton Kallner confirmed in the report that the CMS approved Discovery’s exemption last month but denied this would negate the objectives of the demarcation regulations. “Discovery Life is required to meet similar requirements, including for example not charging higher premiums to higher-risk clients, and only imposing limited waiting periods for pre-existing conditions.

“The Discovery Life PrimaryCare product is very similar to the many others in the market that have been given exemption, and all of these are approved by the CMS in terms of the current demarcation regulations agreed between the CMS and the Financial Services Board. Discovery Life is not in reality a new entrant into the primary care market. It is taking over the policies that have been provided by Discovery Health historically,” said Kallner.

The CMS is developing a low-cost benefit package, which will have mandatory minimum benefits that medical schemes will offer to South Africans who cannot afford high medical scheme contributions. Discovery’s temporary exemption was put in place for existing insurers which were offering health-care products in contravention of the Medical Schemes Act pending the development of the package, the CMS said.

Business Times report (Subscription)


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