South Africa’s biggest medical aids under fire

South Africa’s biggest medical aid schemes are under fire after a damning report found evidence of racial discrimination and unfair treatment of black healthcare professionals.

However, the Board of Healthcare Funders (BHF), representing the most prominent players in the industry, argues that the findings are demonstrably and fundamentally flawed.

On Monday, 7 July, Minister of Health Dr Aaron Motsoaledi expressed shock at the findings of the long-awaited Section 59 panel report.

The independent Section 59 panel was set up to investigate allegations of racial profiling against black healthcare professionals, brought to the state’s attention in 2019.

The findings confirmed allegations that black doctors have been subjected to unjust audits and disciplinary processes by some of the country’s most prominent medical schemes and administrators.

Motsoaledi said the complaints brought to the Council for Medical Schemes in 2019 opened his eyes to deep injustices within the healthcare funding system. 

“We didn’t know that black doctors were being cheated. As I told you, it’s a relationship between a doctor and the scheme, we only knew when they came to lodge a claim with the Council of Medical Schemes,” he said. 

The report found that some black, coloured, and Indian medical professionals had their right to procedural fairness violated. 

It highlighted the existence of racial profiling and a clear power imbalance that has disproportionately affected black practitioners. 

According to Motsoaledi, three of the country’s largest medical aid schemes, accounting for 80% of South Africa’s medical scheme membership, were the focus of the investigation. 

“If you are able to make findings on 80%, statistically, it means the other 20% will fall in place,” he said.

Motsoaledi has not yet taken formal action but confirmed that he will proceed with the report’s recommendations in due course.

However, the Board of Healthcare Funders (BHF), representing the country’s major medical schemes, strongly opposed the report’s findings. 

In a statement, the BHF said it was disappointed that the Section 59 Inquiry Panel had upheld the conclusions of its interim report released in 2021. 

The organisation argued that the findings are demonstrably and fundamentally flawed and warned that accepting them could encourage runaway fraud and corruption in the healthcare sector.

Dr Katlego Mothudi, Managing Director of the BHF, said South Africa’s medical schemes lose around R30 billion annually to fraudulent claims, benefit abuse, and improper billing.

“These losses directly impact the contributions and benefits of 9.7 million scheme members, the majority of whom come from historically disadvantaged communities,” he said. 

“Fraud, waste and abuse inflate healthcare costs, reduce member benefits, and drive up premiums, placing disproportionate financial strain on working-class families.”

Not racially motivated

Dr Mothudi also dismissed the allegation that fraud investigations are racially motivated.

“The BHF and its member schemes have a legal and moral imperative to tackle unethical and exploitative practices in the interest of all South Africans,” he said. 

“Unfounded claims of racial bias will not deter us; corruption is corruption and must be rooted out.”

The BHF criticised the methodology of the Section 59 investigation, saying it relied on flawed race classification methods, such as assigning race based on surnames or practice names. 

The BHF claimed that including entities like state hospitals and corporate groups, which do not undergo the same fraud audits as individual practitioners, further skewed the data.

The organisation also argued that the investigation failed to account for exposure bias. In one example, a large medical scheme that is a BHF member reportedly serves a population that is 91% black. 

According to the BHF, this naturally leads to a greater number of interactions with black healthcare providers and, therefore, a higher likelihood of them being audited, not due to racial profiling but due to simple demographics.

“The investigation appeared to confuse correlation with causation,” the BHF said. As an example, it pointed out that black physiotherapists were reportedly nearly twice as likely to be flagged for fraud.

However, the report did not consider alternative explanations such as higher patient volumes or practice locations in high-claim areas. 

When adjusting for these factors, the BHF said, the relative likelihood of being flagged dropped to just 1.28 times, significantly weakening the claim of systemic bias.

Mothudi acknowledged that some providers had raised valid concerns. “The BHF reaffirms that discrimination, whether overt or systemic, has no place in the healthcare system,” he said. 

In response to the outcry, the BHF and its members have launched several reforms to promote fairness, transparency, and mutual trust. 

These include a comprehensive review of fraud investigation protocols, new platforms for engagement with healthcare providers, and updated communication standards designed to reduce the perceived hostility of audit processes.

Other initiatives include educational efforts to help practitioners better understand billing codes, scheme rules, and audit procedures. 

Audit notices now stress respectful language and non-punitive dialogue, aiming to shift perceptions of the process from adversarial to collaborative.

“These measures are part of a broader strategy to build trust while protecting schemes from financial exploitation, ensuring that member funds are spent responsibly and equitably,” said Mothudi.

Despite its rejection of the report’s findings, the BHF said it remains committed to working with regulators and the healthcare community to strengthen South Africa’s healthcare funding system. 

“While we reject the findings of the Section 59 Investigation as flawed, we remain steadfast in our pursuit of a healthcare system grounded in integrity, justice, and sustainability,” Mothudi said.