Skip to content

Posts from the ‘Healthcare’ Category


You’ll pay the price for medical non-disclosure

Article in PDF format: You’ll pay the price for medical non disclosure

Some medical schemes strictly apply the law and terminate the membership of people who failed to provide important information about their healthcare history.

Failing to disclose your medical history accurately on a medical scheme membership application form can have severe financial consequences or even become a matter of life and death, more and more medical scheme members are finding.

Medical schemes are entitled, in terms of the Medical Schemes Act, to terminate your membership and that of any of your dependants if you fail to disclose on your medical scheme application form “material information” about your medical history or that of your dependants.

The aim of allowing schemes to terminate your membership if you fail to disclose important information is to prevent people from joining schemes only when they need to claim – for example, when they know that they need an operation. This practice is known as anti-selection. Anti-selection by some members prejudices other members who are contributing to the scheme on an ongoing basis, because they have to bear the medical expenses of those who anti-select without benefiting from their contributions.

As a result, some schemes are aggressively applying the law, with dire consequence for the members whose benefits are terminated. These members may in some cases have brought the hardship on themselves by being dishonest, while in other cases they may have been misled or uninformed. Three recent cases are outlined in “Families face massive bills after schemes end benefits” on this page.

These cases illustrate the dire financial and other risks you take if you fail to fully disclose your medical history, fail to ensure your application form has been completed correctly or fail to check with your adult dependants that their medical history is fully disclosed.

Stephen Harrison, the head of strategy at the Council for Medical Schemes, says the termination of membership when a scheme uncovers material non-disclosure is quite widespread.

Harrison says he is not sure of the reason for the increase in the number of such cases. But he says there is a perception among some members that schemes are using the fact that they can terminate membership for nondisclosure to target high-risk members and remove them from a scheme.

Open schemes stricter
Mostly, it is open medical schemes that take action against members who fail to disclose their medical history because restricted schemes generally accept members who join by virtue of their employment, without imposing waiting periods.

Some schemes, however, report higher incidents of non-disclosure than others.

Spectramed is a large, growing medical scheme with about 174 000 beneficiaries. Every month it receives about 1 250 applications for membership, Quincy Beukes, the principal officer of the scheme, says.

Beukes says in June this year the scheme received 1 231 applications for membership.

Among such new applications, the scheme found 228 cases of non-disclosure following an application within 90 days for hospitalisation or other medical treatment.

The scheme considers all such cases on the basis of the materiality of the non-disclosure and referred only 24 of the 228 cases to a committee with legal, clinical and member representation. The committee is expected to consider whether an ordinary person could reasonably have been expected to declare what the member did not declare.

Beukes says the 24 cases the committee considered in June resulted in the termination of 22 members’ and their families’ membership of the scheme for the protection of existing members.

These members had joined the scheme and immediately sought authorisation for operations such as
hysterectomies, tonsillectomies or even hip replacements, Beukes says.

Jacky Mathekga, the principal officer of Discovery Health Medical Scheme, which receives 800 to 1 000 applications for membership a day, says Discovery does have cases of members anti-selecting but not a lot.

Mathekga says these cases are usually detected by the claims department, which sees big claims from members who have been with the scheme for only a few days or weeks or months.

For example, he says, there was the case of a woman who informed the scheme two weeks after joining that she had just discovered that she was pregnant and did not know this when she joined. Her doctor said she was then two to three months pregnant, but within four months she gave birth to a normal healthy baby who appeared to have been carried to term.

James van Vught, the principal officer of Oxygen Medical Scheme, says for the first six months of this year, the total number of cases in which membership was cancelled as a result of non-disclosure amounted to about 0.5 percent of applications for membership.

The Council for Medical Schemes appeal committee has heard a number of cases concerning terminated
memberships in recent months.

You’ll pay the price for medical non-disclosure  

Case 1: Secrets and collusion
Spectramed terminated the membership of a woman, her family and her dependent father because she failed to disclose (allegedly unwittingly) her father’s heart condition. The woman was left with about R60 000 in medical bills and her father without adequate medical treatment that could possibly have prolonged his life.

The woman’s father had a heart attack a few months after she joined the scheme in 2006. At that stage
Spectramed found out about his earlier diagnosis and refused to pay claims for his hospitalisation.
The woman, who says her father was secretive and did not inform her of his condition, complained to the Council for Medical Schemes.

In March last year, the council found that the disclosure was not material because the woman’s father had not been treated for his heart condition within the 12 months immediately prior to joining the scheme.

The Registrar of Medical Schemes ordered Spectramed to reinstate the woman, her family and her father as members of the scheme. However, Spectramed refused and appealed to the council’s appeal committee, saying it had new evidence.

In April, the woman’s father died. She believes that had her father had cover and access to further treatment, his life would have been prolonged.

Quincy Beukes, the principal officer of Spectramed, says the scheme plans to present evidence to the appeal committee that the woman’s father was treated for his heart condition in the year before he joined the scheme, and that this treatment was the result of collusion between the woman’s father and a pharmacist, who supplied him with medication based on a fictitious and invalid script.

Beukes says Spectramed is of the view that the woman knew her father was ill because he was taking scheduled medicines and would have been quite sick.

The woman is concerned that she does not have the money to pay a lawyer to represent her case when it is heard by the appeal committee.

Case 2: R2 million in claims unpaid
The membership of a Richard’s Bay man and his wife was terminated nearly a year after he joined a scheme, on the grounds that he had failed to disclose a pre-existing condition.

The medical scheme reversed certain claims and refused to pay further claims for medical bills amounting to some R2 million, mainly for his now-deceased wife’s treatment in intensive care.
Stephen Harrison, the head of strategy at the Council for Medical Schemes, says the Registrar of Medical Schemes initially ruled in favour of the scheme involved, but mediation talks are now under way.

Harrison says in the meantime the member has appealed to the appeal committee, disputing the allegations of non-disclosure.

Case 3: Alegations against an adviser
Oxygen Medical Scheme terminated the membership of a family for failing to disclose the heart condition of a child, allegedly on the advice of an adviser.

The scheme also reversed claims paid for the child’s treatment in hospital, as well as for an emergency
appendectomy for a second child, leaving the family with medical bills of about R93 436.
Oxygen investigated after the daughter of a man identified in an appeal committee ruling as AA was admitted to hospital for an emergency procedure to correct a heart condition within five months of the family joining the scheme in 2007.

It found the child had been diagnosed with the condition in 2004, had had an electrocardiogram within the 12 months before the family joined the scheme and was still taking medication for the condition.
In an appeal to the appeal committee, OA, AA’s father who was paying his contributions, says the child’s condition was not disclosed on AA’s application form because an adviser employed by Old Mutual informed them it was not necessary to do so.

However, the appeal committee dismissed the appeal. The committee said that since AA had signed the application form and had confirmed that he had read the form and warranted that the information in it was correct, he “must, unfortunately, bear responsibility for his conduct”.

OA also complained to the Ombud for Financial Services Providers, but the ombud’s office said it was unable to help him and suggested OA take the matter to court.

OA says he does not have the money to take the matter to court and his appeals to Old Mutual to reconsider have been unsuccessful.

Don’t be afraid to declare
Whatever you declare about your health on a medical scheme application form cannot be used to increase your contributions, because by law a medical scheme cannot charge you more than it charges other members. Your contributions can be based only on the number of dependants you have and your income.

A late-joiner penalty may be imposed if you join a medical scheme late in life without having been a member before.

The only consequence for disclosing a condition on your medical scheme application form is that the scheme may impose a 12-month, condition-specific waiting period.

Waiting periods are aimed at preventing members from joining a scheme only when they need to.
The 12-month, condition-specific waiting period cannot, however, be applied if you have been a medical scheme member for more than two years, and if you join a new scheme within 90 days of leaving a previous one.

However, if, for example, you have never been a member of a medical scheme, are diagnosed with osteoporosis and days later join a medical scheme, you will probably face a 12-month waiting period, during which time you will not be able to claim for any treatment related to osteoporosis.

But this could be a lot less of a financial burden than not declaring the condition, and your scheme finding out and reversing all claims paid to date for you.



Should mandatory membership of medical schemes be reintroduced?

Article in PDF format: Should mandatory membership of medical schemes be reintroduced

1 August 2012

The medical aid industry in South Africa is losing R13.5 billion each year due to the anti-selection pressures imposed on the industry because healthcare cover is not mandatory.

This is the view of Barry Childs, CEO of Lighthouse Actuarial Consulting and CareGuage. His opinion is based on a detailed comparison between open and restricted schemes over the past 11 years.

Childs was speaking on the second day of the Board of Healthcare Funders’ (BHF) Southern African conference, currently underway at the Champagne Sports Resort in the Drakensberg.

According to Childs, mandatory membership would also mean that medical scheme contributions would be an average of 14% lower across the board, with as much as a 23% saving for open scheme members.

Childs believes that the BHF should be pushing for the legislation change which would make health cover mandatory.

He urged the BHF to continue to engage government on reforms such as mandatory membership and solvency reform.

Dr Humphrey Zokufa, Managing Director of the BHF, disagreed that these were the most important reforms necessary.

“The BHF has visited 43 of its 73 members since January, and all have asked us to deal with Regulation 8 and the PMB issue,” he responded after the presentation. “They all agree that it is the biggest threat to the viability of medical schemes in this country.”

The traditional argument for mandatory membership is that it solves the problem of people only joining medical schemes when they are older, or in the case of women when they plan to fall pregnant and are likely to have higher medical costs.

Childs realised that by looking at the differences between open and restricted schemes he could work out the effect of non-mandatory cover on the industry.

“This provided 11 years’ worth of data,” he said. “The restricted schemes effectively provided a control study, without anti-selection, for a comparison with open schemes.”

Childs found that in the 1990s, open schemes were 12% cheaper than restricted schemes. Over following years, this was reversed, with restricted schemes now 14% more expensive. If the comparison is made for the years between 2000 and 2012, the differences are even more marked, with open schemes showing a cost increase of 30%.

“Open scheme contributions increased 2.6% faster than restricted schemes which in turn increased 2% faster than inflation,” he said.

So what caused this divergence? Childs interrogated the data to see if removing the two largest medical schemes GEMS (restricted) and Discovery (open) would make a difference.

In terms of healthcare and non healthcare costs, the divergence remained. Child’s research did show, however, that the inclusion of GEMS has seen a marked impact on the efficiency of restricted schemes.
What about sustainability? Childs found that restricted schemes are making more surpluses, and have higher reserve levels, despite having had lower contribution inflation.

“Real price inflation is only a part of the cost escalation issue – utilisation is a much bigger force,” he said. “Mandatory membership would not get back the money that has been lost but it would make a difference in the future.”

Dr Zokufa agreed with Childs’ findings but felt that any changes must be contextualised correctly. He believes that mandatory cover should only be introduced as a precursor to NHI.

“The problem with mandatory cover is that the new members become cannon fodder for the high cost members. The people with less benefits effectively subsidise those who have more benefits and claim more. It can only work if the money collected from the new members is ring-fenced for their benefit. Each option level must be self sufficient,” he said.


A broker can help, but check before you sign

Article in PDF format: A broker can help,but check before you sign

The Council for Medical Schemes has made it clear that you, and not your healthcare broker, are responsible for the information about your medical history that is disclosed on your membership application form.

August 9, 2008

By Laura du Preez


Don’t rely on a broker to supply your medical scheme with accurate details of your medical history. Schemes have the right to terminate your membership for non-disclosure even when a broker has misinformed you about what to fill in or has failed to declare something you told him or her.

A qualified and trustworthy healthcare broker can be a big help in guiding you through the process of finding a suitable scheme and option and through the application process, including the completion of the form. But when it comes to the medical questions, make sure you answer these yourself.

The Council for Medical Schemes appeal committee has in at least two recent cases upheld the right of a medical scheme to terminate membership despite the fact that members were assisted by brokers.

Although you may still be able to complain to the Ombud for Financial Services Providers or sue your broker, medical bills can be very high and compensation from the ombud is limited to R800 000. Lodging a civil claim could involve legal costs and delays, and, in the meantime, hospitals and other healthcare providers could be sending debt collectors after you.

In the case of AA and Oxygen Medical Scheme (see “Families face massive bills after schemes end benefits” in related story below), the appeal committee noted that AA and his father, OA, may have a claim against their adviser, an Old Mutual employee, identified as S.

The adviser assisted AA to complete the medical scheme application form and, according to both AA and OA, misinformed them that they did not need to disclose AA’s daughter’s heart condition because she had not been hospitalised for the condition in the 12 months before they applied for membership.

If the allegation is true, the information given was incorrect. This is because you should disclose any condition that has been diagnosed or for which you have received treatment in the past 12 months, as well as any information about significant health events or those for which you need ongoing treatment and that are material to the scheme’s assessment of the risks it faces in signing you up (see below “What you need to declare”).

In the case involving AA, the child was still taking medication for the heart condition.

The appeal committee that heard the father’s appeal said it had in many such cases “had occasion to level criticism at the conduct of brokers” and this case “provides a further example of unacceptable conduct on behalf of such brokers”.

James van Vught, Oxygen’s principal officer, says the matter was referred to Old Mutual’s internal ombudsman, but the ombudsman has advised OA that unless he can provide new evidence, the matter cannot be taken further.

Old Mutual has confirmed that it has investigated OA’s claims, but the adviser maintains he was not informed of the child’s heart condition. The Pretoria-based adviser is still employed by Old Mutual.


Bad advice is no defence

Despite the appeal committee’s comments about the broker who assisted OA and his son, the committee found against OA. It said it had “consistently held that the shortcomings in the conduct of brokers who assist applicants for membership of medical schemes cannot be used as a defence for the non-disclosure of material information in the membership application forms.

“Regardless of who fills the form in, ultimately it is the applicant for membership who signs the form, who confirms that he or she has read the form, and who warrants that the information therein is correct.”

The appeal committee made similar comments in a case involving a Spectramed member, identified as EEB, who used the services of a broker and who failed to disclose that she suffered from high blood pressure and that her dependent husband had high cholesterol.

In this case, the committee said EEB had signed the form completed by a broker “without checking its completeness. She cannot shift the responsibility for this omission to the broker, regardless of how careless he may have been.”

In this case, the committee also commented on “a disturbing pattern of brokers completing forms on behalf of members either inaccurately or in an incomplete manner”.

The committee urged schemes to ensure their accredited brokers are more diligent. OA also complained to the office of the Ombud for Financial Services Providers, but the ombud did not rule on the case.

The ombud’s office said testing the shortcomings of the adviser’s advice would be better suited to a court of law because witnesses needed to be called and their evidence interrogated.

It pointed out that OA had informed the ombud’s office that AA had recently been in hospital for a bi-polar mood disorder, but there was no indication of this on the documents lodged with the ombud’s office even though the condition had been disclosed and Oxygen had imposed a waiting period on AA for this condition.

Although this case was dismissed, Charles Pillai, the ombud, outlined in a 2005 ruling what your medical broker should do for you.

In that case Pillai found against another Old Mutual adviser who filled in Oxygen membership application forms on behalf of a man and his premature baby son.

Although the broker admitted the man had told him about the premature birth, he said the man did not tell him about the baby’s medical condition.

The fact that the baby was born prematurely was not conveyed to the scheme, and no heart, respiratory, eye and ear problems were recorded in respect of the baby despite the fact that he had all of these.

Pillai ruled that it is the broker’s duty to recognise which matters are material and to make sure these are disclosed to an insurer.

He said the broker should at the very least have informed the scheme that the baby was premature, enabling the scheme to ask further questions about the baby’s condition.

Pillai ordered the broker to pay the man’s outstanding medical bills of R31 204 plus interest.

Jacky Mathekga, the principal officer of Discovery Health Medical Scheme, says schemes need to do more to ensure that brokers communicate to members the importance of making full disclosure about their medical conditions. He says schemes are not doing enough to educate members on this issue.


What you need to declare

Fill in your membership application form honestly and as comprehensively as you can, Stephen Harrison, the head of strategy at the Council for Medical Schemes, says.

The risks of non-disclosure are greater than any consequences of disclosing your health status, he says.

James van Vught, Oxygen’s principal officer, says you and your dependants are legally obliged to disclose all conditions for which medical advice, diagnosis, care or treatment was recommended or received within the 12 months up to on the date on which you apply for membership. This will enable a scheme to impose a waiting period on you, where applicable (see “Don’t be afraid to declare” in related story below).

He says, however, that you should declare your medical history that predates the 12 months before you apply to join a scheme.

It is in your interest to do this, Van Vught says, because this information could be used to help you by getting you on to a disease management programme, such as one for HIV/Aids.

The application form usually poses questions such as “Have you had any disorders of the heart, blood vessels or circulatory system?” and specifies the time period in which you might have had such a condition – ever, in the past 10 years, in the past 12 months and so on.

It is safest to supply this information, because the law obliges you to disclose “material information” and there are different views on what is and isn’t material to your scheme, as cases before the Council for Medical Schemes appeal committee reveal.


Material information

Patrick Masobe, the Registrar of Medical Schemes, has argued that if a medical scheme would not have been able to impose a waiting period as a result of what you failed to disclose, it was not material. However, the council’s appeal committee has taken another view.

The 12-month, condition-specific waiting period can be imposed on you only if you were diagnosed or treated for the condition within the 12 months immediately preceding your application. And it does not apply to prescribed minimum benefit (PMB) conditions if you leave one scheme and join another within 90 days.

This was the case for a member of Spectramed, identified in an appeal committee ruling as EEB. EEB and her husband failed to disclose that they suffered from high blood pressure and high cholesterol, both of which are PMB conditions.

Waiting periods could therefore not have been applied to EEB and her husband even if they had disclosed their conditions. The registrar therefore ruled that EEB’s non-disclosure was not material.

In an appeal heard in June last year, Spectramed argued that it was material to the scheme’s ability to assess its exposure to risk and to determine the benefits it offers and the contribution rates it charges.

The appeal committee accepted this argument and upheld the scheme’s right to terminate the membership of EEB and her husband.

This issue, however, remains unresolved as a similar appeal committee decision has been taken to the appeal board.



If you read nothing else on your medical scheme application form, make sure you read through the medical questions, Quincy Beukes, the principal officer of Spectramed, says.

Old Mutual Healthcare’s David Bombal says if an adviser fills in your application form, give him or her a written list of your medical conditions and those of your family so that you have a record of what you disclosed to your adviser.