Ruan Jooste’s Rants and Cents: Council of Medical Schemes taken to task in dragging their feet in offering low-cost options

The CMS has been working on developing a legal framework, since 2016, to enable medical schemes to offer LCBOs, which would not have to provide all the benefits set out in the Medical Schemes Act – in particular, the prescribed minimum benefits. The industry eventually ran out of patience.

CMS’s reluctance to amend the regulations governing low-cost benefit options considered “inherently unjust” PHOTO:

Published Jul 16, 2023


The Board of Healthcare Funders (BHF) was successful in its application to the High Court in Pretoria this week, to overturn the moratorium that prohibits medical schemes from providing low-cost benefit options (LCBOs) to South Africans who cannot afford full medical scheme membership.

The BHF represents most of the country’s medical schemes and health-care funders, representing schemes and administrators with nearly 4.5 million beneficiaries. The Council for Medical Schemes (CMS), the Registrar of Medical Schemes and the minister of health were cited as the first, second and third respondents, respectively.

The initial application was lodged on August 8 last year. The BHF had asked the High Court to lift the moratorium preventing medical schemes from providing LCBOs in circumstances where the CMS is refusing to grant applications, pending the finalisation of LCBO guidelines; and declare that the failure by the respondents to develop and implement the guidelines is irrational, unreasonable and unlawful under section 6 of the Promotion of Administrative Justice Act and section 1(c) of the Constitution.

The CMS has been working on developing a legal framework, since 2016, to enable medical schemes to offer LCBOs, which would not have to provide all the benefits set out in the Medical Schemes Act – in particular, the prescribed minimum benefits. The industry eventually ran out of patience.

At the Momentum Health Solutions Thought Leadership Engagement 2023 on Wednesday, Zola Mtshiya, the head of stakeholder relations and business development at the BHF, told Personal Finance, that the judgment was handed down on Monday, and that the BHF had a pure forum with its legal team, a day after, to try to understand what the judgement meant for all parties.

“Our appeal was to compel the CMS to give us the documentation that helped them arrive at the decision to prevent medical schemes from providing the low-cost options,” she said. “So it appeared that they didn’t have the documentation or they didn’t want to give it to us.

“This gave us a stronger case for the main application, so the advice we gave our members yesterday was to apply for immediate relief from the CMS.”

What seems clear, is that a) private medical schemes won the court case, and b) it is immediate. But applications will probably be considered by the CMS on a case-by-case base. The CMS has 10 days to respond to the judgement.

Mtshiya said the BHF wanted an immediate exemption for all its members and other medical schemes who wished to play in the space, and they expected the relief to be accommodated this year.

Pending the finalisation of the regulatory framework, the CMS has granted exemptions to certain insurers to provide health insurance products that are similar to LCBOs, which the medical scheme industry, which is a non-profit business, thought created an unlevel playing field.

At the time of the initial application, Dr Katlego Mothudi, the BHF managing director, said the CMS’s reluctance to amend the regulations governing LCBOs was “inherently unjust” and “tantamount to the denial of access to quality health-care services”, as many people who might afford some form of medical cover by defraying certain expenses were being deprived of the opportunity to do so.

In addition, the BHF’s papers filed in the High Court suggested that the CMS’s reluctance was motivated by a political agenda.

“The overwhelming inference is the reason LCBOs have not been developed and implemented is either because of a lack of political will or another political agenda… It does not suit the (Department of Health), tasked with implementing NHI (National Health Insurance), to have increased membership of medical schemes or for the private sector to deliver a viable low-cost product at the same time as it tries to sell NHI,” the BHF head of research, Charlton Murove, said in his founding affidavit.

In his affidavit, Christoff Raath, the joint-chief executive of Insight Actuaries & Consultants, said the most plausible explanation for the lack of progress was that the CMS was intentionally delaying the guidelines to facilitate the implementation of the NHI.

“The delays first started to manifest approximately two months prior to the release of the NHI white paper in late 2015. The LCBO framework was approved by the CMS in September 2015, but then suddenly and inexplicably withdrawn in October 2015. It is widely believed this was done on the instruction of the National Department of Health,” he said.

The LCBO process was re-established in 2020, but it “proceeded at a lacklustre pace”, and there was no sign of the process reaching a meaningful conclusion, he added.

“Currently, the state is overburdened, and premiums for medical schemes are becoming unaffordable to many members and prohibitive to prospective members.The proposed solution seeks to pull towards the principles of Universal Healthcare, to make sure that the healthcare system affords everyone access to quality and affordable health care,” Dr Mothudi said.

“This application… (sought)to push forward a progressive agenda for the public and private health-care sectors to work collaboratively to alleviate the current challenges in our health-care system.

“The CMS and the minister have an important role to play in implementing policies that enable greater access to health care. However, it has been difficult to move forward with the LCBOs, given that the CMS has not taken the necessary steps to implement reform following the publication of demarcation regulations in 2016 in this regard,” Dr Mothudi added.

At the time of publication, the CMS and the Department of Health did not respond to Personal Finance questions.