The Government Employees Medical Scheme (Gems) has released its annual report for 2017, reflecting a significant increase in its reserve ratio and surplus.    

“Following a number of challenges that came to the fore in 2016, impacting the wider healthcare funding industry, including Gems, we embarked on a number of strategic interventions to mitigate identified risks and strengthen the scheme's financial position,” says Dr Guni Goolab, the principal officer of Gems.

According to the scheme's financial results for 2017, Gems settled 91 million claim lines, representing a total value of R29.1 billion in claims. The scheme ended the year with a net surplus of almost R3.3 billion and a doubled its reserve ratio to 15.2% from 6.9% in 2016. The scheme’s non-healthcare costs were 5.6% of contributions, which remains below the industry average of 8.6%. 

“A number of innovations and efficiencies have been introduced since 2016 and these are already bearing fruit. A tangible result of this was the fact that we were able to contain contribution increases for 2018 to a highly competitive weighted average of 8.5% across benefit options,” Dr Goolab says.     

A major factor influencing Gems’s improved financial performance was the introduction of selective underwriting in the fourth quarter of 2016. 

Individuals would join and leave the scheme in a relatively short time frame while incurring high hospital admission rates, which were on average four times higher than that of other members. This is known as anti-selective behaviour.

“To protect the interests of the majority of our members, decisive action was required to contain costs arising from anti-selection through the introduction of limited underwriting, including condition-specific waiting periods. During the 2017 financial year, the introduction of underwriting saved R1.1 billion for members.”

A comprehensive strategy for the identification of fraudulent claims and the prevention and recovery of funds in these instances has helped the scheme to protect resources for the payment of valid claims. 

“Potential irregular claims were identified during 2017, and through engagements with healthcare providers and interventions to prevent fraud, waste and abuse we estimate that approximately R175 million has been saved,” says Dr Goolab.

Fast facts

  • Gems is South Africa’s largest restricted medical scheme, and second-largest medical scheme overall. 
  • It has 690 000 principal members and 1.8 million beneficiaries. 
  • 56% of eligible public service employees are on the scheme.