The Council for Medical Schemes (CMS) has summoned the Genesis Medical Scheme board of trustees and principal officer to a meeting, saying it is concerned about the governance of the scheme, reports Business Day.
According to the head of the council’s benefits unit, Paresh Prema, the council wants Genesis to explain why it is spending so much on litigation, why it has failed to comply with a Supreme Court of Appeal ruling on the provision of prescribed minimum benefits (PMBs), and why its solvency ratio is almost six times higher than the statutory requirement of 25%. The council had "a lot" of governance concerns about Genesis, he said.
Genesis had 20,473 beneficiaries and a solvency ratio of 145.1% in 2014, according to the council’s most recent annual report. Prema is quoted in the report as saying that Genesis’ high solvency ratio – which measures members’ accumulated funds against their annual contributions – might indicate the scheme was building reserves at the expense of member benefits.
The report says the scheme has been involved in several high-profile legal matters, including a Western Cape High Court application to scrap regulation 8 of the Medical Schemes Act, which deals with payment for prescribed medical schemes benefits. Genesis withdrew its application on the premise that each party covered its own legal costs. The company was in discussions with the various parties, said its lawyer, Arthur James.
Genesis also lost against a member in a dispute over payment for prescribed medical benefits that went all the way to the Supreme Court of Appeal. The court ruled last November that Genesis had to pay in full for the member’s private sector treatment, and could not avoid this obligation simply by stating in its scheme rules that members had to use state facilities for these benefits. The court said Genesis could have used the public sector as its designated service provider provided it could satisfy the regulator that there was a clear agreement between it and the relevant public health authorities. However, it had failed to do so.
According to the report, Prema said the council was concerned that Genesis’ spending on litigation was at the expense of benefits. The CMS said Genesis had spent R2.145m on legal fees in 2014 and R1.967m in 2013. Prema said the council was also concerned about a circular Genesis had sent its members in March, saying it had selected "every hospital in the public sector as its designated service provider for the payment of the PMB" without setting up agreements with provincial health departments.
Genesis said members’ bills would be paid in full in the private sector if their providers charged 100% or 200% of the scheme rate, depending on which option the members belonged to. "There needs to be an agreement between (the scheme) and the state that it is the designated service provider," Prema said in the report.
The Western Cape Health Department’s head of communications, Marika Champion, said Genesis did not have any agreements with it for the provision of prescribed benefits. "They would need to approach … the head of department with a request for such an agreement to be established," she said in the report.
Genesis principal officer Dennis van der Merwe is quoted in the report as saying that the Act only required schemes to select a designated service provider and did not stipulate that they had to enter into contracts. He said he was unaware that the council had written to Genesis through its lawyers, summoning him and the board of trustees and principal officer to a meeting.Business Day report