Discovery Health took a hammering in the media and from its members this week as it made an embarrassing U-turn on its decision to claim back overpayments to thousands amid mounting pressure; a move which has now brought it under the scrutiny of the Council for Medical Schemes (CMS), notes MedicalBrief.
The manner in which Discovery handled the overpayment error to 16 500 members of its Discovery Health Medical Scheme (DHMS), drew scathing responses, forcing the healthcare insurance giant to say it will now cover the costs itself and members will no longer have to cough up the money.
As reported in MedicalBrief last week, a claims system error resulted in the scheme asking the affected members to repay the money it had paid them by mistake – in some cases amounting to thousands of rands.
Moneyweb reports that late in 2025 Discovery Health identified a claims system error that affected the processing of certain Above Threshold Benefit (ATB) claims for some DHMS members on Executive, Comprehensive and Priority plans.
Consequently, ATB benefits for these members accumulated at higher rates, leading to the scheme funding certain medicines and services that ought to have been paid for by members.
Discovery Health CEO Ron Whelan, who has apologised for the debacle, had insisted last week that the scheme was acting lawfully, but in Sunday’s announcement, he said it was “the right decision” for the company to cover the overpayments on the 16 507 members’ behalf, reports News24.
It was the first time the company had revealed the number of affected members on its executive, comprehensive and priority plans. Until Sunday, it would only say that its medication claims processing error had affected just 0.6% of the scheme’s total membership.
The actual number is almost double what Medicheck founder and CEO Mark Hyman had estimated. Medicheck is a local consumer health advocacy organisation.
Although Discovery has still not revealed the total cost of the pay-back, Hyman said all he knew was that it was “less than R180m”.
In a social media post a week ago, Hyman had advised affected members not to pay their alleged “debts”, saying the scheme’s demands were not compliant with the Medical Schemes Act.
Some affected members had already had refunds due to them for medical consultations in December “hijacked” by the scheme to offset what the scheme claimed they owed.
Probe by CMS
Medicheck, which had argued that the liability for the mistake should sit with Discovery, had initially lodged a concern with the Council for Medical Schemes, which had said it would investigate.
Medicheck’s concerns also included allegations concerning systemic claims processing errors, and associated recovery mechanisms. Additionally, it had also raised questions of compliance with Regulation 6 of the Medical Schemes Act and the applicable scheme rules, as well as issues relating to governance and administration oversight under section 57 and Regulation 17, reports The Star.
Regulation 6 of the Medical Schemes Act deals with the PMBs and requires medical schemes to cover the costs of diagnosis, treatment, and care for PMB conditions in full, subject to the scheme’s rules and designated service providers.
The CMS said the Act does allow recovery of funds that have been paid to a member, to which that member may not have been entitled.
“However, as a general principle, a scheme is expected to set clear parameters around Section 59(3) recoveries/ deductions to properly govern the process, ensuring transparency, fairness, courtesy, and clear communication with members,” the CMS said.
The amounts being claimed back from members ranged from about R20 000 to R37 000.
Reversal of decision
In the about-turn statement sent to affected members, Whelan said: “Any deductions made (from) medical savings accounts, personal health fund or HealthPay accounts will be reinstated, and members who have already repaid amounts will be refunded in full.”
Their claims statements would also be updated to reflect Discovery Health’s change of heart.
Whelan said that even though its planned recovery of the overpayments was valid, “having carefully listened to members’ concerns and considered their individual experiences and circumstances”, the company had decided to fund the correction of its mistake in full.
“We apologise unreservedly to members affected by this error,” he said.
“Covering this cost is the right decision, one that reflects our commitment to fairness, integrity and putting members first, especially when we fall short.”
Hyman has welcomed Discovery’s decision to “absorb overpayment recoveries and protect members”.
MediCheck formally acted for more than 1 500 complainants, he said, with written third-party consents from members authorising it to correspond on their behalf.
“This outcome aligns with what members asked for: fairness, clarity and the removal of recovery pressure while the matter was being properly ventilated.”
In a scathing Moneyweb commentary, Hilton Tarrant says Discovery Health’s abrupt about-turn was 'so utterly predictable' and that it 'could not have handled this debacle more ham-fistedly if it tried'.
"Not only were the letters sent to members about the error nearly completely tone deaf – it referred to the mistake it made abstractly as an “error” that was “made” – they weren’t even dated!
"Talk about amateur hour.
"The letters were signed by chief operating officer of Discovery Health, Karen Sanderson, with the final line being the hardly sincere: 'Thank you for your understanding as we make these corrections.'"
Surely an error of this magnitude, regardless of it only affecting 0.6% of the scheme’s total membership, warranted communication from the Whelan, asks Tarrant.
The timing of these letters also frustrated members, he notes.
Discovery had, at least according to the communication, reprocessed the affected claims “as at” 18 December.
But because communication was only sent in early January, members were unable to make changes to the plans they were on.
"The fatal error made by Discovery Health in those letters is that it accepted no real culpability for its error and made the amount owing the member’s problem.
"While not included in the communication, in its other engagements with affected members, Discovery appears to have proposed a number of options to them, including agreeing to a payment plan, or having amounts deducted from reimbursements (such as refunds for doctor consults).
"Another option apparently proposed – being handed over for debt collection."
The second fatal error Discovery appears to have made is that it didn’t inform the CMS about the error. Whether it was legally required to is not clear.
Tarrant says had Discovery started from a position of “fairness, integrity and putting members first” – especially since it did fall “short” – it might’ve found a very different response from affected members.
News24 article – Discovery to pay up after major medication claims error (Restricted access)
Moneyweb – What on earth did Discovery Health think would happen!
See more from MedicalBrief archives:
Discovery seeks repayment after overpaying members’ claims
Medical aid premium hikes way above inflation
Consumers shoulder burden of medical aid schemes fraud
Discovery digs in its heels over cancer treatment for canoe champ