COID Bill 'catastrophic' for medical sector and injured workers

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The National Employers Association of SA, representing thousands of businesses and well over 300 000 employees, has joined medical professional bodies, trade unions and injured workers groups in opposing section 43 of the COID Amendment Bill, currently before Parliament.

It said in a statement that it was opposed to the Bill, of which section 43 will ban the cession of medical service provider invoices to financial institutions and third-party administrators. NEASA believes this is the only part of the Compensation Fund’s value chain that works, so removing cessions will have a devastating impact on injured workers, medical professionals and employers.

Gerhard Papenfus, CEO of NEASA says: “NEASA is particularly and vehemently opposed to the introduction of section 43 of the Amendment Bill. The reasons for this are simple; the Compensation Fund is, and has been for some time, structurally and operationally dysfunctional. This is evidenced by repeated qualified audits by the Auditor-General and a slew of court orders against the Compensation Fund for non-payment of claims.”

When an employee is injured while performing their duties at work, the employee is able to access necessary specialised private medical care, given that the employer contributes to the Compensation Fund. Medical service providers then claim the fee from the Fund. However, because of the Fund’s dysfunction and rigorous administrative process involved, medical professionals often choose to cede their claims to third-party administrators in return for immediate payment at a fee charged directly to the medical provider, and not the Fund. Third-party administrators assist employers and medical service providers to navigate the complex Fund claiming process in such a way that allows cash flow and ensures that injured workers are treated timeously.

Papenfus says, “Third party cession, debtor as collateral and administration outsourcing is not unique to COIDA but also exists effectively and efficiently within the medical aid industry and commercial banks.

NEASA believes the proposed amendment will exacerbate the known inefficiencies of the Compensation Fund (CF), which has a direct impact on the operational abilities of employers. Section 43 will have a catastrophic impact not only on injured workers and the practices of healthcare professionals, who will suffer a major financial blow, but also on employers who have the right to claim from the Compensation Fund.

“The Amendment will also paralyse the efficient manner in which contributing employers may exercise their right to claim from the Fund and, ultimately, it will undermine the object of COIDA, which is to get injured workers proper healthcare and back to work as soon as possible,” says Papenfus.

“The amendment also has implications for employers who have a right to claim injured workers’ salaries or wages paid while on sick leave, from the Fund. Two issues that are already problematic in the Fund, are businesses that lose contracts because ‘certificates of good standing’ cannot be obtained from the Fund due to maladministration, and medical practitioners who already refuse to treat injury on duty claims as a result of non-payment by the Fund. This amendment will only worsen the situation.”

NEASA has investigated the impact of this proposed amendment and is opposing it in solidarity with other affected and concerned parties who are negatively impacted by the dysfunctionality of the Fund. It has made a submission to the Parliamentary Portfolio Committee on Employment and Labour, imploring the Government to remove section 43.

“It is incomprehensible that a Fund which is known for its administrative failures would support amending legislation which would exacerbate its inabilities to function effectively and transparently. Rather, Government must find measures to rebuild the integrity of the Fund and to ensure it operates efficiently. NEASA has made a number of proposals to this effect in its submission to Parliament, which include:

“Measures through which this can be achieved is to:

relax obstructions for medical service providers in deciding how they manage their businesses;
recruit adequately qualified and skilled employees for the Fund;
improve the system through which claims are lodged; and find a way to make it easier for medical service providers to get paid for their services.”

“Unless an intervention is implemented to stop this section from becoming operational, an entire services sector could be abolished overnight, possibly also infringing on the constitutional right for individuals to freely choose their occupation, trade, or profession. Medical services providers, businesses, and not the government, must decide how they manage their affairs. The proposed amendments will not only foster a culture of unaccountability and worsen the corruption in the Fund, but will cripple medical service providers and other businesses and deny injured workers quality health care,” concludes Papenfus.


About one-third of the R3.2bn payments made by the Compensation Fund in 2019/2020 went to third parties or agents who act on behalf of medical service providers that choose not to deal directly with the fund. But, reports Business Day, the ability of medical service providers to use third-party administrators is threatened by proposed amendments to the Compensation for Occupational Injuries and Diseases Act (COIDA), which will prohibit the cession of claims against the fund. The fund, which pays for the medical costs incurred for injuries or illnesses suffered at work, is funded by a levy paid for by employers.

The report says the amount of the payment to third parties or agents is significant as it indicates the size of the sector that the department of employment & labour wants to diminish by the proposed amendment.

In a briefing to parliament’s employment & labour committee on Friday, Compensation Fund commissioner Vuyo Mafata said a total of R3.2bn had been paid out for medical claims and compensation and pensions benefits in 2019/2020 with about the same amount in April to December 2020. A total of R1bn, or 31%, of this was paid to third parties or agents and R1.2bn, or 37%, directly to medical service providers.

The report says the department of employment & labour has defended the proposal as it wants the Compensation Fund to work directly with clients, as all other insurance companies and medical aid schemes do.

Mafata is quoted as saying that the amendment will not prohibit the use by medical practitioners of third parties to submit claims on behalf of clients and beneficiaries but would ban the ceding of the right to the benefits paid out. The reason the fund does not want to pay into the account of third parties is to eliminate fraud, he said. The fund wants to pay the person who is the client.

Mafata also pointed out that in terms of the Health Professions Act medical practitioners are prohibited from sharing their fees with other parties.

The report says Parliament’s employment & labour committee has called for public comment on the amendment bill and has so far received 57 submissions. The deadline for submissions was Friday but the committee has decided to extend it for two weeks.


Full Business Day report


See also MedicalBrief archives:

COID Amendment Bill bans the cession of medical invoices to third party administrators and financial institutions

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