Inquiry finds schemes discriminated against black healthcare providers

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Some of South Africa’s biggest medical aid schemes practised “unfair racial discrimination” in their fraud, waste and abuse investigations of black healthcare providers, found a Council of Medical Schemes appointed panel, writes MedicalBrief. The interim report was released following a court application by the Board of Healthcare Funders  and the Government Employees Medical Scheme to interdict its publication.

The report was scathing of GEMS, Medscheme and Discovery, notes legal writer Karyn Maughan in a Fin24 report. “After considering all the evidence and responses, we find that between 2012 and 2019 black practitioners were more likely to be found to have committed fraud, waste and abuse than their non-black (white) counterparts, by Discovery, Medscheme and GEMS,” the panel stated.

Advocate Tembeka Ngcukaitobi, the chair, as well as advocates Adila Hassim and Kerry Williams were appointed by the Council for Medical Schemes (CMS) to investigate allegations by members of the National Health Care Professionals Association that they were being unfairly treated by medical schemes and their claims withheld on the basis of their race and ethnicity. Using the data that Discovery, GEMS and Medscheme had provided the panel and its statistical analyst, the panel found “there is a substantial difference in fraud, waste and abuse outcomes between black and non-black practitioners over the period January 2012 to June 2019”.

“Over this period, across all disciplines and the aforementioned three schemes and administrators, black practitioners were 1.4 times more likely to be classified as having committed fraud, waste and abuse than those identified as not black”.

Some of the panel’s findings are listed in the Fin24 report as:

* Black general practitioners are 1.5 times more likely to be identified as fraud, waste and abuse cases than their non-black counterparts.
* The rate at which black physiotherapists are identified as fraud, waste and abuse cases is almost double (1.87) that of their non-black counterparts.
* Black psychologists are three times more likely to be identified as fraud, waste and abuse cases.
* Black registered counsellors and social workers are also three times more likely to be identified as fraud, waste and abuse cases. More than 50% of black registered counsellors have been identified as fraud, waste and abuse cases – this is the highest rate among the disciplines analysed.
* Black dieticians are 2.5 times more likely to be identified as fraud, waste and abuse cases compared to their not black counterparts.

According to the report, Discovery was “35% more likely to identify black providers as having committed fraud, waste and abuse”. GEMS was 80% more likely to identify black providers as such, and Medscheme was 330% more likely to identify black providers.

Medscheme and GEMS disputed these findings. But, based on their own expert’s analysis, the panel notes that Medscheme is 35% more likely to find black providers guilty, while GEMS was 47% more likely.


The interim report was released after GEMS and BHF failed to block it at the eleventh hour with an urgent Gauteng High Court application. Judge Colleen Collison ruled that the applicants had failed to convince her why they had not approached the court earlier, since the report’s release had originally been planned for December. She struck the matter from the roll.

The panel found no evidence of explicit racial bias in the algorithms and methods schemes and administrators used to identify healthcare practitioners who had potentially done wrong. However, the probability that there was no correlation between racial status and the outcome of fraud, waste and abuse proceedings was “for all practical purposes” zero, Ngcukaitobi said, according to a Business Day report.

The panel also concluded that some of the procedures followed by schemes in probing fraud, waste and abuse cases were unfair. Schemes and administrators were performing a function akin to policing, and were given unilateral statutory power to claw back funds from providers.

Ngcukaitobi said part of the panel’s role had been to provide a platform for individuals to express their experience of racial discrimination and unfair treatment. “We had no power to find anyone guilty. Nor were we appointed to investigate the veracity of each individual claim of unfair treatment and unfair discrimination. But we would be failing in our duty if we ignored degrading, humiliating and distressing impact of racism against the individuals who testified before us,” he said. Interested parties have six weeks to comment on the interim report.


The CMS defines “healthcare fraud” as knowingly submitting false claims, or the misrepresentation of the facts in order to get payment of a benefit to which one is not entitled. It defines waste and abuse as claiming healthcare treatment and services that are not absolutely medically necessary, according to a Moneyweb report. One example of racial profiling provided to the panel by the National Health Care Professionals Association was a ‘Black List’, which is published by GEMS.

It is a list of providers that patients should no longer consult after being blacklisted for allegedly committing FWA (fraud, waste and abuse) – 94% of general practitioners and 100% of social workers blacklisted by GEMS were black, according to the report.

However, observes the Mail & Guardian, the report made the pointed distinction that the unfairness was not found to be a deliberate practice, but was nonetheless present in the resulting outcomes. “We believe that it is important to stress that we have not found evidence of deliberate unfair treatment – the evidence shows the unfair discrimination is in the outcomes.”

The report acknowledges that its findings carried an “emotional and reputational charge”. But it adds, mindful perhaps of the possibility of further legal steps by the schemes, that South African law has a wealth of constitutional jurisprudence on the right to equality.

The recommendations of the final report will not be binding, but for the CMS, which commissioned it, to implement as it may see fit. “Rather than conclusive, our findings will hopefully provide a basis for the necessary reconstructive work which must be undertaken by the role-players in the medical schemes industry,” the panel said. “We do not see the issue as a binary conflict between schemes and providers, but as reflective of fissures of the past that remain unresolved.”


Medscheme has rejected the report and denied any form of racial profiling when assisting or auditing healthcare claims. Dr Lungi Nyathi, executive director at Medscheme, is quoted by TimesLIVE as saying the scheme was extremely disappointed it had not been afforded an opportunity to review the interim report before it was published.

“We will review the contents of the interim report and make a formal submission in response,” she said. She said Medscheme’s duty will always be towards its beneficiaries to validate and verify healthcare claims. “Our fiduciary duty to safeguard funds entrusted to us remains to ensure members and their dependents continue to receive access to healthcare treatment that is affordable and of the highest quality. This function has become even more critical in current depressing economic times, a function without which private health care would be substantially more expensive for everyone.”

Nyathi said since the start of the investigation, Medscheme had completed internal and external audits to make sure its processes were beyond reproach. A Business Day quotes a Discovery Health statement as saying the panel had concluded that there was bias based on the racial distribution in the outcomes of investigations, rather than the underlying processes applied to the investigations. “It is difficult to rectify processes that were found to be sound, and carry appropriate integrity,” it added.


In a statement, the Health Funders Association (HFA) welcomed the release (on Tuesday) of the Interim Report by the Section 59 Investigation Panel:

[The HFA] is supportive of the Panel’s findings that there is no evidence of explicit or intentional racial bias in the algorithms and methods that administrators and medical schemes use to identify Fraud, Waste and Abuse (FWA).

The Panel has also expressly recognised that FWA is serious and damaging and requires mechanisms to combat it. The Panel confirms that the mechanisms currently utilised by medical schemes, including clawbacks of amounts paid to providers and the placing of providers on an indirect payment system (where the member is paid directly by the medical scheme), are permissible in terms of the Medical Schemes Act, provided that the medical scheme acts reasonably and procedurally fairly.

The HFA is concerned that the Panel has found that there is indirect discrimination in the outcomes of the FWA processes despite there being no explicit or intentional bias.

HFA will be seeking clarity from the Panel on their reasons for discounting the presence of confounding factors (additional variables in cause-and-effect relationships) which may account for the outcomes. An example of a confounding variable is where a higher incidence of smoking in males results in a higher incidence of lung cancer in males, rather than the cause being gender. In submissions to the Panel, it was demonstrated that confounding factors may reduce the race differential almost completely.

Medical schemes serve more than 8.8m South Africans and we believe that a cohesive and well-functioning private health sector is critical to providing access to quality healthcare to these individuals and families.

We therefore welcome the Panel’s intention for further constructive engagement on the findings and recommendations of the report in the interest of a unified industry. This is particularly crucial in light of the need to support our healthcare providers as they tirelessly serve the population in the battle against the COVID-19 pandemic, for which we thank and salute them.

It is the duty of all medical schemes, as recognised by the Panel, to ensure that proper control systems are in place to ensure that member funds are utilized in the provision of healthcare for its members and to protect member funds from FWA.

It is important to note that FWA has a significant impact on the affordability of healthcare in the private sector.

The following extract from the Rapporteurs Report, published by the Council for Medical Schemes and others bears this out. “A 2017 annual report demonstrated that claims that were paid out amounted to R172bn, those that were rejected were around R29bn. If it is true that 15% of all claims are associated with fraud, waste and abuse, this amounts to R29bn. These are funds intended to provide essential healthcare services to scheme members; and yet these funds are being rerouted out of the system to line the pockets of fraudulent and corrupt people.”

It must be emphasised that any funds wasted through fraud, waste or abuse are funds belonging to the members of medical schemes. Any fraud, waste or abuse of these funds therefore negatively impacts access to healthcare in a country where health resources are scarce.

The HFA and its members are committed to acting in a lawful, fair, impartial and transparent manner at all times. To this end, following the FWA Summit in 2019, HFA developed a Code of Good Practice pertaining to the principles relating to prevention and investigation of FWA. This Code was submitted to the Council for Medical Schemes for inclusion into an industry wide code.

The HFA will study the Interim Report including the recommendations made by the Panel and provide detailed input to the Panel on their findings and recommendations.


Full Fin24 report (subscription needed)


Panel’s report


Full Business Day report (subscription needed)


Full Moneyweb report


Full Mail & Guardian report


Full TimesLIVE report


Full Business Day report (subscription needed)


Rapporteur Report

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