Thoneshan Naidoo, CEO of HFA
The Health Funders Association (HFA) welcomes the High Court ruling in favour of medical schemes in the matter brought by the South African Society of Physiotherapy (SASP).
The judgment upheld the constitutionality of Section 59(3) of the Medical Schemes Act (MSA), which permits medical schemes to recover payments made in error, or losses arising from fraud, negligence or misconduct, as part of their statutory responsibility to protect member funds.
The Court further found that Section 59(3) does not infringe the constitutional rights to just administrative action or access to courts and rejected the applicant’s request to have S59(3) declared unconstitutional. The application was accordingly dismissed.
“This ruling has important implications for the healthcare sector. It reinforces the responsibility of medical schemes to safeguard member contributions and helps ensure that healthcare funding is used appropriately, sustainably and for the benefit of members,” said Thoneshan Naidoo, CEO of HFA.
Medical schemes are not-for-profit entities funded entirely by member contributions. Trustees have a fiduciary duty to act in the best interests of members and schemes are legally prohibited from paying claims that are not valid. As a result, schemes are required to maintain systems and processes to identify, investigate and recover payments that may have been made incorrectly or unlawfully.
Fraud, waste, abuse and error (FWAE) is estimated to account for up to 15% of total claims. Current FWAE management programmes enable schemes to recover approximately R1 billion annually, while also creating a significant deterrent effect that helps reduce inappropriate claiming and supports affordability for members. These measures, combined with the broader deterrent effect of FWAE management activities, contribute to keeping contributions approximately 4% to 8% lower than they would otherwise be.
Importantly, the overwhelming majority of healthcare providers practise ethically and professionally. Only a small minority of providers become the subject of FWAE investigations, of which 8 out of 10 investigations arise from tip-offs. Nevertheless, irregular claiming practices can have a significant impact on healthcare costs and ultimately place upward pressure on member contributions.
Addressing FWAE is in the interest of all stakeholders. Medical schemes and healthcare providers are interdependent partners in delivering quality healthcare, and effective collaboration is essential to maintaining a sustainable, trusted and affordable healthcare system.
The judgment also confirmed that healthcare providers are not without remedies where disputes arise. The Court noted that the MSA already provides mechanisms through which providers can challenge decisions, including referral of disputes to the Council for Medical Schemes (CMS). This reinforces the importance of utilising and strengthening existing statutory processes to ensure disputes are resolved fairly, transparently and in accordance with due process.
The judgment further reinforces that disputes relating to payment recoveries and claims administration should be addressed through the statutory mechanisms established under the MSA.
The findings of the Section 59 Investigation Panel similarly recognised the need for medical schemes to safeguard member funds while ensuring that FWAE management processes are fair, transparent and accountable. The Panel also made no legal finding of unfair discrimination or racial profiling under the Constitution or the Promotion of Equality and Prevention of Unfair Discrimination Act.
HFA remains committed to working with the CMS, healthcare professional associations and other stakeholders to strengthen fair, transparent and consistent processes through standard operating procedures, codes of good practice and a Universal Code of Conduct.
“Fraud, waste, abuse and error ultimately harms everyone. It increases healthcare costs, undermines sustainability and affects affordability for members. Addressing these challenges fairly, transparently and consistently is essential to protecting both members and the integrity of the healthcare system,” said Naidoo.
ENDS
