It is often stated that the medical aid industry is prone to abuse by members and health practitioners because payments for services rendered are made in good faith. In recent times there has been a concerted effort by administrators of medical aids to limit the losses occasioned by such abuse. In doing so, the administrators have directed their efforts to reduce any losses directly towards health practitioners. The administrators have relied in large part on s 59(3) of the Medical Schemes Act 131 of 1998 (the Act) to deduct their claimed losses from the amounts owed to health practitioners for services rendered to the medical aid’s members.
Section 59(3) of the Act states: ‘Notwithstanding anything to the contrary contained in any other law a medical scheme may, in the case of –
(a) any amount which has been paid bona fide in accordance with the provisions of this Act to which a member or a supplier of health service is not entitled to; or
(b) any loss which has been sustained by the medical scheme through theft, fraud, negligence or any misconduct which comes to the notice of the medical scheme, deduct such amount from any benefit payable to such a member or supplier of health service.’
It is evident from the provisions in s 59(3) that an administrator is granted wide discretionary powers to deduct any amount that qualifies under subss (a) and (b) from a benefit payable to a health supplier. Section 59(2) of the Act provides a medical scheme with an option of paying the member or the supplier, however, payment must be made within 30 days of the account being rendered. As mentioned, s 59(2) provides the medical scheme with a further discretion to pay either the member (indirect payment) or the supplier (direct payment). The normal course of events when a patient sees a health practitioner is for the health practitioner to deliver the service to the member patient and deliver its account to the medical aid. The medical aid should then either pay the supplier or the member within 30 days. Should the member not have benefits available, the claim will be rejected by the medical aid and the health practitioner will have to pursue the patient for the costs of the services rendered. The alternative is for the patient to pay the health practitioner cash upfront at the consultation, then deliver the account to their medical aid for reimbursement.
The far-reaching powers granted to medical schemes in terms of s 59 of the Act are counterbalanced by reg 6(2) – (4) of the Act. Briefly set out, these regulations provide that if a medical scheme is of the opinion that a claim submitted is erroneous or unacceptable for payment, the scheme must notify the supplier within 30 days and state the reasons for such an opinion; thereafter the supplier must be afforded an opportunity to correct and resubmit the claim within 60 days. If this process is not followed, the medical scheme will bear the onus of proving that the claim is erroneous or unacceptable for payment. As mentioned, the purpose of reg 6(2) – (4) is to reign in, or at least temper the medical schemes’ powers in terms of s 59 of the Act. These regulations and the procedure and time-periods set out therein are peremptory and cannot be disregarded by an administrator of a scheme.
In general, the process is initiated with a s 59(3) letter sent by the administrator of the scheme to the supplier stating that it has detected certain anomalies in relation to the claims submitted by the health practitioner. The administrators of the schemes also rely on reg 15J(2)(c) of the Act, which entitles a medical scheme to access any treatment record held by a managed health care organisation or health care provider and other information pertaining to the diagnosis, treatment and health status of the beneficiary. Thus, the administrators rely on this regulation to conduct desktop audits on practices or to threaten these practices with the possibility of a full-scale audit.
The modus operandi of the administrator is to withhold payment of money owed to health practitioners for services rendered; then after the health practitioner has provided verification documents, the scheme nonetheless holds the withheld money owed to the health practitioner as a sword over the health practitioner’s head. A serious concern is that some of the schemes investigate claims stretching back as far as three years. Once the scheme has done their calculations (often using a flawed audit process), they quantify a substantial amount over an extended period, thus suffocating the health practitioner and often forcing them to agree to a settlement with the scheme that is detrimental to their practice.
The above actions are not in line with the Act and specifically reg 6(2) – (4) as set out above. The purpose of these regulations is to obligate a medical scheme to take prompt action within the time-periods stated in the regulations when it deems a claim to be ‘erroneous or unacceptable’ for payment. Instead many of the medical schemes embark on a large-scale retrospective audit, severely disrupting the practices of these health suppliers. Moreover, in many instances the administrators are simply using the provisions of the Act to conduct a
Kafkaesque cost-saving exercise without affording the health practitioner a fair opportunity to clarify any suspected irregularities.
Therefore, health practitioners should hold the administrators and medical schemes accountable and inform them that if they are of the opinion that a claim is erroneous or unacceptable for payment, the administrator or medical scheme must do the following in terms of reg 6(2) – (4) of the Act –
If this process is not followed, the medical scheme will bear the onus of proving that the claim is erroneous or unacceptable for payment. Thus, the medical scheme cannot engage in a large-scale retrospective audit and instead must act proactively and within the stated time-periods. This will prevent severe disruptions to the practices of health practitioners.
Lastly, s 59(3) of the Act authorises an administrator to deduct bona fide payments that a health practitioner is not entitled to or if the medical scheme has suffered a loss. Administrators will rely on minor discrepancies to deduct or withhold payments due to practitioners. Moreover, s 59(3)(b) requires that a loss should have been sustained by the medical scheme. For example, if the allegation by the administrator is that the treatment date and the invoice date differs, it cannot be said that the scheme has suffered a loss and, therefore, the administrator should not be allowed to deduct the claim amount from any payment due to the health practitioner. It is understandable that medical scheme administrators have a duty to protect the interests of the members of the medical scheme to prevent abuse, however, administrators should still act within the parameters of the Act.
The recent s 59 investigation launched by the Council for Medical Schemes is an indication that s 59 of the Act and the way the administrators utilise the provisions of the Act is a cause for concern.
Vince van der Walt LLB (UP) LLM (Unisa) is a legal practitioner at Hahn & Hahn Attorneys in Pretoria.
This article was first published in De Rebus in 2020 (April) DR 6.
