Section 59 Inquiry Interim Report: GEMS & CMS briefing, with DPSA Deputy Minister

Meeting report

The Portfolio Committees on Health, and Public Service and Administration, Performance Monitoring and Evaluation (together “Committee”) held a joint sitting and were briefed by the following identified officials:

● Dr Memela Makiwane (Council Chairperson, CMS)
● Ms Diane Terblanche (Council Deputy Chairperson, CMS)
● Dr Sipho Kabane (CEO and Registrar, CMS)
● Mr Moerane Maimane (Council Member, CMS)
● Mr Lusani Mulaudzi (Council Member, CMS)
● Dr Aquina Thulare (Council Member, CMS)
● Mr Xolani Ngobese (Council Member, CMS)
● Dr Sebayitseng Hlatshwayo (Board of Trustees Chairperson, GEMS)
● Mr Mpfariseni  Phophi (Board of Trustees Deputy Chairperson, GEMS)
● Dr Stan Moloabi (Principal Officer, GEMS)
● Ms Jeannie Combrink (Chief Compliance Officer, GEMS)
● Ms Sindy Chikunga (Deputy Minister, DPSA)

The Chairperson welcomed everyone present in the meeting and noted apologies.

He told members that the present session concerned the Section 59 Interim Report (“the Report”) and its findings. The Committee was to be briefed by officials from the Government Employees Medical Scheme (GEMS) and the Council for Medical Schemes (CMS) regarding findings the Report made in regard to these organisations.

Deputy Minister’s Remarks:
Ms Chikunga said the purpose of the meeting was to receive a “briefing from GEMS on the Report into allegations of unfair racial discrimination and procedural unfairness by medical schemes.”

She reminded members that GEMS was registered as a medical scheme in 2005, in terms of the Medical Schemes Act, 131 of 1998 (“the Act”). In terms of the Act, GEMS is a juristic person, but not a company. GEMS rules were then amended and registered on 13 November 2017 according to which rules, specifically 19.1, the business of GEMS is managed by its Board of Trustees (“the Board”). The Board consist of 50 percent of Trustees directly elected by members, and 50 percent are “appointed by the employer” [i.e. the government], and they are referred to as ‘employer trustees’. 

GEMS’s rules define the “Minister” as “Minister of Public Service and Administration of the Government of the Republic of South Africa” Further, the rules define “employer” as “the Government of the Republic of South Africa, duly represented by the Minister of Public Service and Administration.” It is on this basis, that the Ministry was “concerned about GEMS’s cause of action with regards to Section 95 Interim Report.” Following the release of the Report, they Ministry “engaged the Trustees of GEMS to provide progress in various matters that had been in discussion and requested them to include a detailed briefing on the Section 59 Interim Report.”

She said Section 59 of the Act provides: (1) that a “Supplier” is a supplier of a service who has rendered any service to a beneficiary in terms of which “an account has been rendered” shall, not withstanding the provisions of any other law, furnish to the member concerned an account or statement reflecting such particulars as may be prescribed; (2) a medical scheme shall, in the case where an account has been rendered, subject to the provisions of the Act and the rules of the medical scheme concerned, pay to a member or a supplier of service any benefit owing to that member of supplier of service within 30 days after the day on which the claim in respect of such benefit was received by the medical scheme; (3) 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 bone fide in accordance with the provisions of the Act to which a member or a supplier of health services 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—I underline and emphasise—deduct such amount from any benefit payable to such a member or supplier of health services. And we emphasise that.”

“Essentially,” she told the Chairperson, “section 59 authorises medical schemes to recoup monies paid to healthcare practitioners by such schemes where those amounts were claimed unlawfully. The process to determine whether such amounts are to be recovered—and the recovery thereof—is what the complaint hinges on. Healthcare practitioners assert that the medical scheme deploy a process that is racially biased therefore resulting in more recoveries being made against black healthcare practitioners. It must be noted that section 59 is key to ensure the financial sustainability of medical schemes as it offers medical schemes an opportunity to eliminate and recover unlawful payments.”

She said “the outcomes of the briefing meetings that were held between ourselves and GEMS detailed the following: The CMS instituted the investigation into allegations of unfair racial discrimination and procedural unfairness by medical schemes. The CMS conducted an investigations in terms of its regulatory mandate. The inquiry therefore became known as the ‘Section 59 Inquiry’ and was mandated to investigate just two matters, briefly: unfair discrimination and secondly fair procedures.”

She said “GEMS indicated to us that they have supported and participated in the Section 59 public investigation, which we appreciated and we continue to appreciate going forward.”

She added that “GEMS also explained that the urgent application that they instituted—they submitted—to the Gauteng High Court was not in any way to interdict the ultimate release of the Section 59 Interim Report Inquiry compiled by [Advocate T Ngcukaitobi, SC] as the Chairperson of the [investigative] panel (“the panel”). But their request was to be afforded an opportunity to consider the contents of the Report and comment before it was released for public consumption. They wanted the findings of the Report to be presented to them first because they were affected by the Report. We regarded that as a fair request.”

She said “GEMS believed it was only a fair practice for [the] section 59 investigation panel to firstly present the Report to them—as the affected medical [scheme]—before it is made public. They also believe that the was a possibility that their comments could affect the preliminary outcome and findings, does have impact on the final report (sic).”

“We agreed it was necessary for GEMS to put things into perspective, we still believe that,” she said. “In this meeting, they present the outcomes of the interim report, the latest developments on the matter, and the proposed strategy and approach for the submission to the panel of the section 59 interim report, which has a due date […] around March.”

She said “GEMS remain[s] a progressive medical scheme for […] public servant[s] and, as the Ministry, we have confidence in GEMS.”

Opening Remarks by Chairperson of GEMS
Dr Hlatshwayo said “our Deputy Minister, Ms Chikunga, has done quite an extensive preamble towards our presentation today. So, I won’t be saying much.” She handed over to the Principal Officer of GEMS.

Dr Moloabi asked the Chairperson to confirm whether the presentation by GEMS would precede that of the CMS based on the agenda that had been circulated to members.

Ms R Komane (EFF) said that it would only be fair if the Committee followed the agenda.

The Chairperson said it was a “fair request,” and asked the Committee secretary to put the agenda up on the screen.

Ms Komane said that according to the agenda, the CMS should present first.

Presentation by the CMS
Dr Kabane said that he would hand over to Dr Makiwane to make a few opening remarks before he commenced with the presentation.

Dr Makiwane reiterated that the purpose of GEMS presence was to brief the Committee on “the investigative report into allegations of racial profiling and medical unfairness against African, coloured and Indian healthcare practitioners by certain medical aid schemes.”

He confirmed that the CMS “commissioned an independent panel chaired by Adv Ngcukaitobi.” He added “we tried to secure the presence of the chairperson of the [investigative] panel be at this meeting […] however, he assured me that in his absence—as he has other prior commitments—he would send us his secretariat to come and do that presentation (sic).”

After introductions, he handed over to the CMS Registrar and CEO for the presentation.

Dr Kabane repeated the purpose of the presentation, which Dr Makiwane had just outlined.

He said he was not going to present the Report because, as had been indicated by the Chairperson, “this is still under the custody of the investigation panel and it is only them that can do that here.” Rather, he would “talk to the events leading to this investigation, and talk to the processes, and also where we are in terms of that.” He hoped it would help members with context.

He detailed the background to the investigation:

In April 2019, the Registrar of the CMS was summoned to a meeting by the then-Minister of Health, Dr A Motsoaledi. A group of black, coloured and Indian medical practitioners (represented by Solutionist Thinkers, NHCPA, SAMDP, et cetera) were alleging that medical schemes were not paying them on the basis of their race. Their practices were being shut down and some were committing suicide as a result. The conclusion was that the CMS, as regulator, needed to “put together an investigation.” On or about 13 May 2019, the medical practitioners shared their grievances on Morning Live. On 15 May 2019, the Registrar of the CMS appeared on Morning Live, affirming CMS’ position and announcing an engagement with schemes and the aggrieved medical practitioners, scheduled for the following day, Thursday 16 May 2019.

On the same day, Dr Motsoaledi met with then-Chairperson of the CMS, Dr C Mini and the Registrar, and instructed the CMS to investigate these allegations following the interview on Morning Live.

On 16 May, the Chairperson of the Council, Dr Clarence Mini addressed a stakeholder engagement session, and emphasised that the CMS did not support racial profiling, ill treatment, harassment, and bullying amongst others.

The CMS established a Steering Committee through nominations consisting of all the affected parties (that is, the Schemes, Administrators, Service Providers and other Regulators).

The CMS would launch an investigation into the allegations in terms of its regulatory mandate, under section 7(a)(b)(c)(d), 8(a) and (k) and 9(2) of the Act. This regulatory intervention would go as far as the Medical Schemes Act allowed.

He said the CMS has the obligation to respect, protect, fulfill and promote the rights in the Constitution, and implement the Promotion of Equality and Prevention of Unfair Discrimination Act, 2000.

It is also mandated to protect the interests of members at all times; make recommendations to the Minister of Health on the quality of healthcare services provided for by medical schemes; investigate complaints and settle disputes in relation to the affairs of medical schemes as provided for in the Act; and advise the Minister on any matter concerning medical schemes.

The Steering Committee agreed that the investigation should be led by an independent panel of experts.

The CMS appointed an independent investigation panel, chaired by Adv Ngcukaitobi together with advocates A Hassim and K Williams on 4 June 2019.

The inquiry was called the Section 59 Investigation, after section 59 of the Medical Schemes Act, 131 of 1998, that schemes and administrators were using “against” medical practitioners.
The investigation panel was tasked with the following services and functions:

● Investigate complaints and allegations received by the CMS relating to section 59 of the Act and regulation 5 and 6;

● Make recommendations to the CMS in relation to addressing the complaints and allegations;

● Identify any trends emerging from the Complaints and allegations which may require further legal or policy interventions;

● Make recommendations to the CMS in relation to appropriate further administrative, legal or policy interventions that may be required; and

● Make recommendations to the CMS in relation to appropriate amendments to legislation and regulations that may be required

The investigation panel acted in accordance with the Constitution, the Equality Act, and inter alia, sections 7(d) and (g), 43 and 47 of the Act. It observed the principles of natural and open justice. It functioned as an inquisitorial body and not as an adjudicative body, and conducted its investigation through a combination of public hearings and private interviews. Parties were questioned by members of the panel only, and all hearings were public.

There were also calls for submissions. All interested persons including juristic persons, entities, institutions and organs of state were invited to make written submissions to the Investigation Panel by no later than 19 July 2019. Calls for submissions were placed in all newspapers and on CMS websites. Submissions could be posted, delivered or emailed to the CMS with a closing date of 19 July 2019. A total of 75 submissions were received within the open period for submissions and 163 submissions were received after the closing date. All submissions were handed over to the panel for further deliberations and scrutiny.

The public hearings began in July 2019 and were live streamed on Facebook and YouTube (https://www.youtube.com/user/CMSCares4u/videos). In November 2019, there was a request for additional submissions. The investigation was extended to end January 2020. Approximately 30 respondents appeared over 17 days of hearings. The public hearings saw over a 1000 members of the public attending.

The COVID-19 pandemic delayed the completion of the investigation and release of the interim report. The interim report was then scheduled for release on 16 December 2020. During the morning of 16 December 2020, the panel was informed that concerns were raised by the Minister of Health, Dr Z Mkhize, about the publication of the report without him having been appraised of its contents. The release of the interim report was postponed until further notice. The Minister was briefed by the Panel on 22 December 2020. On 16 January 2021, the panel invited the media and the public to a virtual press conference the next day at midday, to release the interim report. The Section 59 Investigation Panel had to postpone the release of its interim report again following an interdict application by GEMS and the Board of Healthcare Funders (BHF). Judgment on the application was reserved until 19 January 2021.

Following the successful opposition of the interdict application from GEMS and BHF, the panel released the Section 59 Interim Report to the public on 19 January 2021. Comments on the interim report are to be submitted to the Panel’s secretariat, Lawtons Africa, by close of business on Friday, 5 March 2021. Once the panel has received all inputs, it would then consider them before preparing and releasing its final report.

Presentation by GEM
Dr Moloabi stated that inequality is a worldwide problem. It is a certainty that we as South Africans are not proud that we are often referred to as one of the most unequal countries in the world. However, this leaves no room for defensiveness and GEMS is fully cognizant of this. It was once said that we fail more often because we solve the wrong problem than because we get the wrong solution to the right problem. It is with this in mind that we undertook the analysis of the Section 59 Interim Report and present an overview of the GEMS response thus far. The response is still being finalised. With a view to acting with urgency, the Section 59 Interim Report was analysed to determine which findings and learnings will need to be addressed to preserve value and continue creating value, where to undo the effects of the injustices of the past (that all if not most of us) have experienced and also to differentiate between factually incorrect interim findings and interim findings that are not associated with GEMS in the report in question.

He said GEMS is loyal to the South African Constitution. It is a custodian of the Constitution. It is committed to non-discrimination. The scheme may not unfairly discriminate directly or indirectly against anyone on one or more grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.

In accordance with the Act as amended: the “business of a medical scheme” means the business of undertaking liability in return for a premium or contribution:

(a) to make provision for the obtaining of any relevant health service;
(b) to grant assistance in defraying expenditure incurred in connection with the rendering of any relevant health service; and
(c) where applicable, to render a relevant health service, either by the medical scheme itself, or by any supplier or group of suppliers of a relevant health service or by any person, in association with or in terms of an agreement with a medical scheme.

Chapter 1. Definitions: “board of trustees” means the board of trustees charged with the managing of the affairs of a medical scheme, and which has been elected or appointed under its rules. Decisions that relate to how GEMS responds to and has responded to these matters are duly in accordance with resolutions emanating from the Board executing its duties in terms of the MSA.

GEMS is owned by and represents members who have fought discrimination of all sorts. It is unthinkable and impossible that GEMS can be said to be discriminating against its own.

He took the Committee through GEMS’s history, from 2005 when the scheme was registered to 2021 where GEMS was the “blueprint” for the NHI. He drew the Committee’s attention to 2016, where “irregular activities were identified within GEMS.” This is when the scheme had the highest claims on record. He said the impact of internal and external (provider and member) fraud “nearly collapsed” the scheme.

As a medical scheme, GEMS is required to hold 25 percent of its annual contributions in reserve to protect the scheme against claims that may spike due to any reasons and “Covid-19 is a typical example of what can happen.” In 2016, the reserve bottomed out at 6.99 per cent. GEMS “hit rock bottom.” Instances of fraud, waste and abuse played a role and the resultant media attention created panic amongst GEMS members.

He proceeded to share with the Committee ten case studies of the type of fraud that GEMS had experienced (see slides 20 to 23).

Of the cases he cited, one particular noteworthy instance was what he called a “psychology syndicate” in which fraudulent claims of R72 million were submitted.

The presentation explains:

“The syndicate consists of a group of psychologists that have registered numerous partnership practices and is spearheaded a known service provider who was later found to be the kingpin. This service provider submitted claims to medical schemes including GEMS for services not rendered or partially rendered (over servicing) and colluded with GEMS members giving them cash in lieu of false claims submitted to GEMS.

The service provider and his accomplices had collaborating members admitted to hospitals where benefits were fully covered by the schemes. In addition, the service provider registered new practice numbers in order to continue claiming from GEMS as soon as GEMS became suspicious of  the claiming activity and placed one of his practice numbers on indirect payment.

The service provider enticed less experienced psychologists who he had met at the Durban University of Technology and either convinced them to go into partnership with him or he employs the less experienced psychologists and registers practices without their knowledge.

All the practices’ registrations were done by the service provider and his bank details were provided for the payment of claims by GEMS. All the patient claims are processed by a team of the service provider’s employees, and none of the partners are involved in this process. In total, 17 providers were identified and 30 practices were implicated, although claims were only submitted on 18 practice numbers.”

On the status of this case, the presentation indicates that “The provider and his accomplices were arrested in a sting operation, and both appeared in court, and were granted bail of R10 000 each.

Affidavits obtained from psychologists/colleagues of the service provider confirmed that he registered partnership practices without their knowledge, and that no funds were received by them, as all the funds for claims submitted were deposited into the bank account of the service provider. In addition, none of the partners received a profit share.

Member affidavits confirmed that cash was paid to the GEMS member in lieu of services claimed and that these payments related predominantly to over-claimed services not rendered. Criminal case and Civil recovery in process.”

He said that the previous day GEMS saw a report published by News24 which referred to corruption at GEMS being “in the region of about R300 million.” He said “this is not a new thing. This has been widely reported previously around 2016.” As a result of this seven employees were suspended. Five resigned (before disciplinary processes could be instituted). Two were dismissed. Charges were filed with the SAPS. Seven service provider contracts were terminated.

He said GEMS had proactively taken these steps to deal with allegations of corruption within the scheme.

“The schemes annual integrated reports of 2016 and 2017,” he said, “were used to provide members and stakeholders with details about these reports.” As required by statute, GEMS provided reports to the CMS. GEMS has been transparent with regard to corruption, but wondered why the matter was only resuscitated now.

The broadest beneficiary definition has provided access for more than 1.18 million previously uncovered lives. Five generations can be covered under a single membership. GEMS provides affordable access to both public and private healthcare services for R3 per member per month post subsidy. GEMS was a proudly a successful fully South Africa “public-private partnership and an NHI pilot at scale.”

Sixty-five percent of GEMS members were previously uncovered. Without GEMS, these lives would not be able to find affordable cover in the open scheme market. R15.7 billion in benefits were paid to these families in 2018.

Between January 2020 and December 2020, GEMS grew by 3.9 percent (73 971 additional beneficiaries) from 1.89 million beneficiaries to 1.96 million beneficiaries. This growth occurred despite the adverse economic consequences of the pandemic and the general decline in membership in the industry.

He said “GEMS is a transformative organisation.” He then gave a breakdown of the demographics of the schemes membership: As regards beneficiaries, 91 percent are black, over one million previous uncovered. As regards employees: 96.7 percent are black, 69.6 percent are female, 1.7 percent are disabled (see slides 12 and 14).

In response to allegations of fraud, waste and abuse, the scheme had various engagements with the provider associations who initiated the complaint. It established a constructive working relationship with the Solutionist Thinkers Group that provided support to healthcare providers during investigation and in many instances, presented their case to the scheme. An open door policy was successfully followed by the scheme and many issues were resolved between the scheme and the complainants.

He said that a list was published on the GEMS website at the request of members and was one of the measures implemented by the Scheme to proactively notify members who the healthcare providers on indirect payment are, this we must stress was at the request of members.

The list was removed from the GEMS website by mid-2019 as part of the scheme’s immediate response to concerns raised about the list.

He then outlined to the Committee the providers that were contracted for fraud, waste and abuse risk management (see slides 24 and 25).

All of the field investigators who conduct field investigations for GEMS are Certified Fraud Examiners and are registered with the Association of Certified Fraud Examiners. The ACFE has its own rules and protocols to which its members should adhere. It also has a disciplinary process which it follows in instances where there are allegations of bullying, harassment or improper conduct. Investigators are to have a minimum of 5 years practical experience in investigations in the health care industry or similar, have a quick turn-around time in terms of project completion as per the Project Plan approved by GEMS, and is able to respond to GEMS’ requests at short notice. There are no incentives for work conducted by the field investigators. Work is remunerated at an agreed remuneration level in line with the scope of Work stipulated in contracts.

He then outlined the financial implications for the scheme, per slides 26 and 27.

He then touched on the technical flaws at GEMS, identified in the Report.

“The conclusions drawn by the panel are based on a technical exercise which compares the proportion of black practitioners investigated for [fraud, waste and abuse] and the proportion of non-black practitioners investigated for fraud, waste and abuse. The technical work is subject to several fundamental flaws in law, which result in bias being shown”.

● Practices are assigned a race based on surname, audits reveal a high error rate.
● State practices such as public hospitals are included and arbitrarily assigned a race based on their practice name.
● Corporates such as private hospitals are included and arbitrarily assigned a race based on their name. ● No consideration is given to ownership and employment.
● GEMS members more regularly engage with black practitioners than with non-black practitioners and this difference is not accounted and adjusted for.
● No consideration is given to extenuating factors which may explain the difference, for example, economic hardships may inhibit accurate billing.
● After accounting for oversights and inaccuracies, the risk ratio that black healthcare practitioners are more likely to be flagged as possibly guilty of fraud, waste and abuse, than non-black healthcare practitioners in the GEMS context reduces to 1.28. This is significant less than the 79% presented by the panel and its expert.

The methodology employed by the Section 59 panel’s expert excluded impact of State practices when determining exposure. Corporate practices cannot reasonably be assigned a race based on their name. The analysis therefore shows that the panel failed to account for “exposure” (the prominence of black member interactions) when drawing its results and conclusions.

He then touched upon certain “interpretative flaws” in the Report (see slide 31).

He said the panel elected not to draw a distinction between the position of GEMS and the position of other schemes or administrators, in circumstances where they clearly operate in different ways. The panel refers to or quotes contentions and submissions of certain complainants, without indicating to which scheme or administrator the specific complaint related, thereby creating the impression that such complaints, contentions and submissions apply across the board to all the schemes and administrators involved, including GEMS. And it elected to shift the focus away from the individual complaints and to rather resort to a statistical analysis of selected data, instead of focusing on the individual complaints made against GEMS, which were all responded to in full.

The Report makes the scheme guilty by association.

In accordance with Section 1 of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000, and its definition of unfair discrimination, the structure of GEMS’s legal response is threefold in relation to the question whether there was discrimination and/or procedural unfairness:

1. There is no discriminatory act or omission on the part of GEMS
2. There is a clear absence of causation
3. There is no unfair discrimination on the part of GEMS

GEMS maintains that there was no unfair discrimination.

On the communication strategy to redeem the scheme’s reputation, the strategy would be based on GEMS member value proposition (see slide 36).

Through effective communication, there is a need to highlight that GEMS is an appropriate mechanism to realise the NHI as it has options which are suitable for all member’s needs in the public service especially those belonging to levels 1 to 5.

He said the Scheme humbly acknowledges areas that require improvement and has been active through extensive stakeholder and media engagements to ensure all stakeholders receive factual information about the Section 59 Inquiry and the integral role that GEMS has played in reducing inequality in the healthcare industry.

On the operational implications, the scheme commenced with a fraud, waste and abuse operational review two years ago.

Process enhancements have been made over the past two years, including the revision of the schemes fraud, waste and abuse standard operating procedures. The scheme also revised its interpretation and implementation of Section 59 with due regard to blocking of payment and termination of direct payment and the circumstances of providers. As part of the execution of the scheme’s strategy, the GEMS has accordingly embarked on the insourcing of capabilities and work study. The insourcing of the fraud, waste and abuse capability is underway and in line with the work study to be fully insourced within the next three years.

On the lessons GEMS has learned from the Section 59, he outlined the following:

● Identification of fraud, waste and abuse must be factual and supported by evidence
● Sensitivity around identified providers – it is important not to give the impression they are being “accused” or targeted
● Word choices to be considered e.g. irregular versus fraudulent / investigation versus review or audit / outlier versus suspect
● Healthcare providers require training on billing and utilisation of codes
● Distinguish the categories of fraud, waste and abuse better
● Tone of communication to be reviewed
● Re-evaluate time periods given to comply with requests for information
● Assess quantity and quality of information required to validate claims
● Greater transparency in findings and clear methodology set out in quantifying potential recoveries. Estimates to be substantiated
● Consider inputs from professional societies or engage societies on best practice. Ensure clinical merits are not over-looked.
● Drive collaboration with HPCSA and other regulatory bodies to improve process and reduce delays
● Explore contribution of a mediator with scheme, in assisting decision process
● Fraud, waste and abuse risk management process to be clear for both healthcare providers and members
● Complaints of abuse, bias, bullying to be urgently addressed.

He presented that GEMS has a zero-tolerance to all forms of discrimination.

He said the panel has afforded impacted schemes a period of six weeks to study the report and thereafter provide formal comments based on the interim findings.

GEMS has a zero-tolerance to all forms of discrimination and pledges to implement corrective action where such remedial interventions are required and as recommended by the panel for the benefit of its members and healthcare providers. The scheme will continue to engage widely with healthcare providers to strengthen relationships and make sure that if any loopholes exist, it will work together to fix them for the benefit of all. GEMS will also continue in all efforts to ensure that medical professionals receive their claims payment, as the scheme has been doing, in line with scheme rules and provisions of the Act.

GEMS remains committed to eradicating fraud, waste, abuse and corruption to ensure GEMS sustains
the scheme’s financially for the benefit of its members. “Fraud has no colour,” he presented.

The Chairperson opened the Committee for discussion.

Discussion
Mr T Munyai (ANC) said the presentation was prematurely presented. He “advised” that the presentation be received by the Committee not from the secretariat, but from officials who conducted the investigation. He wanted Adv T Ngcukaitobi [who co-authored the Interim Report on the Section 59 Investigation”] to present the “complete report, not the preliminary” report before the Committee. He said to received an “inconclusive preliminary report will not be able to help” the Committee. He presumed that the report that was presented before the Committee in the current session was to provide context and preceded the final report. He welcomed and noted what had been done.

On GEMS, he said he was “very excited” that corruption was exposed wherever it exists within the public scheme. It was important. He welcomed that this misconduct was reported to the relevant authorities. He was “very excited” to see the slide which indicated that there was no segregation which, he said, means that “segregation with GEMS will not apply.” That the new board is taking practical and urgent action in addressing corruption is something that ought to restore public confidence, so that government employees should continue to join “this credible institution.” The chairperson of the board and the CEO “would have clarified that they are dealing with this corruption” and said that improvement can already be seen. He recommended that the report be supported and be noted by the Committee. He said other private medical schemes do not want “the existence of public government schemes.” It was contested terrain. He said that officials who were involved in the corruption related to the medical scheme should be “arrested” and should “rot in jail.”

Ms S Gwarube (DA) said she was confused because the CMS presented a report in which it said it “commissioned an investigation” which was then termed the “Section 59 Investigation”. The report was released in January [2021] and she assumed all members had already read it. It made “damning findings against three main medical schemes.” But, she added, the very investigators who conducted the investigation are not before the Committee to represent their findings. Thus the Committee could not “interrogate” the investigation and ask questions of clarity. She said there were very interesting questions which come up after reading the report which is “lengthy” and “detailed.” For instance, she wanted to know how the investigations were conducted; what the terms of reference were; and if the medical schemes were all in agreement with the terms of reference. She said the Committee was “putting the horse before the cart” because the investigators were not before the Committee.

She asked why GEMS was the only party present, since the report had made findings against three medical schemes. She repeated this was quite confusing.

She noted the CMS commissioned the report, and that was good since it is the regulator. But she wanted to understand what the relationship was between the findings of the investigation committee and the role of the CMS. She asked this because it was emphasised that the investigation was merely inquisitorial. However, the CMS would presumably use the findings to make structural changes. She therefore wanted to know what the CMS’s “take on” the findings were, and what it was going to be doing about the findings made.

She said GEMS had been “really keen” to be part of the investigation. They agreed to the terms of reference of the investigation. She wanted to know, though, why GEMS attempted to interdict the tabling of the investigation’s report if they were on board with the investigation. It was not made clear to her during GEM’s presentation why this was the case.

She wanted to understand what remedial action had been taken by GEMS following the findings of the report. She said the excuse that “old corruption allegations are being reheated is simply not good enough. I think it’s important that the medical scheme tells us exactly what remedial actions have been taken because R300 million and allegations around corruption for them is no child’s play. And so it would have been more useful to hear how the medical scheme has now investigated and rectified the situation.”

Ms M Ntuli (ANC) said that the “eradication and fighting of corruption” amounted to “rooting out corruption” and was important for creating an ethical environment in any work place.

She wanted to know from CMS what its view was on a presentation being made by GEMS for the release of the “interim report that led to their interdict.” She wanted to know whether CMS saw this as a “fair request”.

She asked why practitioners had to raise the issue of discrimination. She wanted to know why the internal systems did not pick it up.

She questioned what the regulator’s role was in dealing with fraudulent claims by practitioners.

She queried why there was such a long delay in holding a “summit to raise awareness,” given that irregular activities occurred “way back.”

She wanted to know from GEMS whether they provided “members’ capacity building” as a term of reference. She wanted to know whether the scheme provided guidance to its members so that they would know in advance whether they were about to engage in fraud and corruption.

She wanted clarity as to what happened to a member when they are being investigated for corruption but then shortly after resigns their post. She wanted to know whether such members still get their benefits and “just escape.”

She wanted to know which “levels,” from one to 16, were implicated in the fraud.

She asked what GEMS wanted “the panel” to look at concerning other medical schemes which had gone “unconsidered.”

Ms H Ismail (DA) said “according to Adv [Ngcukaitobi], the schemes that violated the Constitution by making findings against professionals without affording those accused the opportunity to answer to the charges against them. It further stated that CMS ought to provide individual relief to affected doctors. Please can you advise how many doctors were really affected? How many complaints did you receive from doctors? And how many doctors had to close down?”

Addressing GEMS, she said: “There are allegations in the media that this scheme had appointed and paid more than R300 million to companies in which some of its executives had direct financial interests. Please advise what processes and procedures were followed to ensure that this was not a conflict of financial interest. Secondly, please provide a list of the companies appointed by the scheme, and how much each company was paid that amounted to more than R300 million.”

She said that “according to Adv [Ngcukaitobi], where medical schemes deducted money unfairly from health professions, they should pay it back. [Have] monies been paid back where applicable?”

She asked: “What checks and balance will you put in place to ensure that there will be no looting and corruption during the National Health Insurance (NHI) implementation process and beyond?”

“So GEMS will be responsible to fund clinical care and related costs. It’s going to be more like a national funding scheme. Now in the public healthcare environment currently, it faces chronic issues of late payments, not paying overtime, system errors, and other issues. How will GEMS overcome these chronic issues.”

Lastly, she said: “Opportunity for fraud and corruption with management at this fund is very high. Will the allocation of funds be on an automated system or programme to ensure that detailed monitoring and prevention of influence is high on manual payments?”

Dr M Gondwe (DA) said that GEMS “indicate[d] that medical schemes are legally required to hold 25 per cent of their annual contributions received in a reserve so as to ensure that they are always in a position to cover the claims that they receive. In 2016 I noted from the presentation that their reserves dropped to an all time low, and they attributed this to fraud, waste and abuse. And I recall there being extensive media coverage around the drop in their reserves and the possibility of them being declared insolvent. Are they sure that a drop in the reserves can be attributed solely to fraud, waste and abuse? Because I also picked up that in 2015 the reserves were also quite low. I think they were at 9 percent. And I would like [GEMS] to confirm whether this was also attributable to fraud, waste and abuse.”

She said: “in 2018, there was a presidential healthcare summit that was held and GEMS indicates that the purpose of this summit was to discuss the threats posed by fraud, waste and abuse to the stability of the healthcare industry. Were healthcare providers part of this summit? If yes, did black healthcare providers voice their concerns around being unfairly treated by medical aid schemes on the basis of their race or ethnicity? And what were the outcomes of this particular summit?”

“Towards the end of February toward the beginning of March, there was a fraud, waste [and] abuse summit also held. I want to find out what the outcomes of that particular summit were and were discrimination concerns raised by black healthcare providers attending the summit? Or were these allegations only raised for the first time on the 13 May 2019 during the Morning Live interview?”

She said: “They also indicate in their presentation that they took a decision to publish a list of healthcare providers that were being indirectly paid by the scheme on their website following a request by members to do so. I want to find out, did they consult or inform the affected healthcare providers in this regard? Is there a legal obligation that mandates them to actually inform healthcare providers that are now put under an indirect payment system from being directly paid in terms of section 59(2) of the Medical Schemes Act?” She added: “They also indicate in their presentation that the list was later removed from their website in mid-2019. I want to get an idea of how long was the list up on their website?”

“They also indicate in their presentation that there were a number of technical flaws that are contained in the [Report]. And one of them is that it overlooks that public hospitals and private hospitals are arbitrarily assigned a race based on their practice number by the GEMS FWA system. I want to find out why does their assign a race to private or public hospitals? Why assign a race at all to a service provider when you are trying to determine whether there is fraud, waste and abuse?”

She wanted to know why GEMS interdicted the release of the Report if it feels that its practices are not discriminatory in nature and have adopted a zero tolerance approach towards all forms of discrimination.

She said that GEMs indicated that the fraud, waste and abuse review was done two years ago. She wanted to know whether there was another review in the pipeline in light of the findings of the investigation.

Ms N Chirwa (EFF) expressed her concern that CMS can “out rule (sic) a candidate over a medical aid scheme—a young black woman who’s 30—from contesting the board of Med Shield because she received a bouquet of flowers.”

Addressing CMS, she asked: Which recommendations from the [Report] has the CMS facilitated and implemented  to date, following the release of the [Report]? Which recommendations has the CMS rejected? What is the reason for the rejection of those particular recommendations?”

She asked what efforts have been transformative in medical aid schemes?

She queried how the CMS could be capacitated to carry out its duty of regulating the private sector “efficiently and sufficiently?” 

She said it was “quite disappointing that we are subjected to such justifications of such horrible outcomes in regard to the investigation, that we are now being told—and given poetics—of the position of GEMS, where in actual fact, the report states otherwise.”

On the R300 million scandal “which GEMS is involved in itself,” she said, “we find that GEMS itself is corrupt.” She wanted to know “which of those companies which […] have been paid over [R]300 million to which some of their executives have direct financial interests? And who are these alleged executives? Can we please have names? Especially because you appearing before the Portfolio Committee on Health.” She wanted clear answers regarding conflicts of interest.

She said that there had been a long delay before corruption was responded to. She wanted to know when the corruption began. She asked what took the scheme so long to uncover the corruption. Beyond opening criminal cases, she wanted to know what the scheme had undertaken to systemically prevent and root out corruption and racism at GEMS.

Addressing both CMS and GEMS on contracting-out, she said “I think, now, the country is moving very fast in ensuring that there is capacity in entities, especially if they have affiliation to the state. What are the efforts that are being done to ensure that outsourcing is something that is being cut at the very least, and that insourcing is facilitated or being implemented in both GEMS and CMS?”

She said to CMS that “in 2019 it reported a very high backlog of grievances, and you cited that obviously the issue of staffing and human resource[s] was an issue. Can we have an update on what the backlog is in relation to the grievances that are raised to you by members of Med Scheme and by general practitioners to date? And what has been done to resolve the previous backlog?”

Ms R Komane (EFF) thought it was premature for the Committee to be receiving a preliminary report, especially since the chairperson of the investigating committee was invited late. She wanted the Chairperson to re-invite the investigators.

She said it was very frustrating and unfair that only GEMS appeared before the Committee when there were three schemes implicated in the report.

She wanted to know how far GEMS had gone in terms of recovering looted funds.

She said it was concerning that when officials are discovered to have committed corruption, they simply resign to avoid further consequences whilst still “pocketing the money.” She wanted to know how far along the recovery process was and what mechanisms was GEMS using to recover such funds.

On insourcing, she said the matter was proceeding too slowly, especially since it was stated that it was to occur over three years.

She said the Deputy Minister had said it was “fair” for GEMS to interdict the publishing of the report. She asked if GEMS had not been informed of the investigations. She asked why the scheme wanted to be treated partially. “Or does the Deputy Minister insinuate that she also shares the sentiments with GEMS that she supports their interdict [of] the report? I think that is a bit unfair.”

She said that according to the fraud, waste and abuse policy, she wanted to know how long those implicated were granted to pay back the money they had stolen. She wanted to know what happens to “defaulters” when they have admitted “the debt”.

Mr P Van Staden (FF+), addressing GEMS said: “Regarding the [R]300 million which surfaced in the media yesterday […] what steps has GEMS taken to ensure that the persons responsible for this fraud and corruption has been prosecuted?” He did not want to hear about reporting it to the police, but specifically wanted to know what steps GEMS itself had taken.

He then asked whether those implicated were still in the service of GEMS, or whether they were placed on special leave, pending the final outcome of the investigation.

He said: “As a possible future administrator of the NHI fund, what guarantees or assurances can you give us today that this sort of fraud and corruption will not surface in GEMS again while you [are going to] bet he administrator—possibly in the future—of the NHI.”

Ms C Motsepe (EFF) asked if the the medical scheme was started without establishing a steering committee, with the knowledge that money was involved and that this is where most corruption can be found. She asked how all schemes were monitored and evaluated. She said corruption was not preempted and it occurred before any action was taken.

She said the scheme was effectively victimising predominantly black females, since they constituted the majority of memberships according to the presentation.

She wanted to know who recruited the investigators, and what the criteria was used to recruit.

She said she wanted GEM to recruit permanent workers, and not temporary workers or outsourcing employees.

Mr M Sokatsha (ANC), addressing GEMS, wanted to know how the corruption impacted their financial situation.

He also asked how corruption has impacted the services that were supposed to be rendered to their members.

He wanted to know how ready GEMS was regarding the implementation of the NHI.

Dr L Schreiber (DA) said it was strange that the investigators were not present, since both the report and GEMS’s presentation required response from the investigators. He would support a proposal calling on the investigators to come before the Committee.

He questioned whether the discussion of the interim report was premature. He wanted to place a few things from the report on record. He said: “I’m quite astounded by the reference to the fact that the investigators classified people into race groups on the basis of their surname. I don’t understand where the legal basis for that could possible come from. So, if you’re going to make findings related to someone’s race, the question of how you classified them is critical. And yet there seems to be no basis in law for the way in which people were classified, and I think it was recorded in the GEMS presentation that practitioners were classified on the basis of their surname and then […] there was a reference to if (sic) someone works at the Polokwane hospital that they are classified as black. It seems highly unscientific and without any foundation in law. I also have to reference the fact that there seems to be quite a heavy reliance on something called ‘critical race theory’ in this report. My question would be ‘where on earth in our law does the concept of critical race theory exist? What is the basis for relying upon this?’ Especially when it appears that the report concedes that there is correlation, but very little causation in their findings. Potentially a failure to account for other variables. I think this is something that multiple medical schemes actually raised in their comments, that the approach to this study seems to be highly unscientific and not controlling for potentially confounding or intervening variables, or even entertaining alternative hypotheses. Relying on identifying cases on the basis of people’s surnames and classifying them into race groups based on that, and then using something called critical race theory which doesn’t exist in our law to reach a certain conclusion. My question is a very simple one, Chair. Based on this, and based on what the GEMS presentation contained, essentially refuting a lot of the so-called findings in this interim report, is that: Will GEMS be reviewing this report in court, so that we as committees can be aware where this process is? And that we can only really engaged with it once it has been finalised and potentially reviewed. Is there a plan to review this report in its entirety in court, if the final report continues along the same lines as the interim report?”

Ms A Gela (ANC) supported the call for a meeting with the investigators so that, as the Portfolio Committee, they could have a “full report.”

She welcomed GEMS’s presentation and thanked them for it. She “liked” that there was “no room for corruption in GEMS.” She said “we” see the progress that GEMS has made in fighting corruption.

She also “liked” their open “door policy” to “accommodate their members” and also that GEMS was “transparent to make sure that they raise all these issues and also showing that they are ready and also making sure that they are not hiding any corruption.” She said that GEMS was “ready for NHI” in her opinion. She did, however, support the call for inviting the investigators to the Committee “as a matter of urgency.”

The Chairperson told Ms Gela not to answer for GEMS regarding the NHI. She had juts said that they were ready to implement the NHI in her view, when a prior member asked GEMS directly whether they themselves thought they were ready to do so.

Ms R Lesoma (ANC) said that she expected the Chairperson not to “blur the lines” between the two Committees (and their respective scope of oversight) in the joint sitting.

She said she was not questioning the capacity of GEMS board members, but that the risk systems should be tightened so that corruption could be proactively prevented.

She asked whether the government medical aid schemes were audited by the Auditor-General or private auditors and, if the latter, who the private auditors were.

Dr S Thembekwayo (EFF) said she did not understand the reason for the urgency of the current Committee meeting. The reason was that the investigators were not given the opportunity to be present at the Committee. This allowed for subjectivism in interpreting the report.

She asked why GEMS was the only entity permitted to come before the Committee to tell their side of the story when two others were implicated. She asked why could GEMS not wait for the other entities.

Addressing GEMS, she said “there is no smoke without fire.” The R300 million scandal could not be resolved by GEMS merely giving a “quick reaction.” She asked them if they thought the Committee “was convinced enough to accept your explanation? No, it’s not acceptable.” She said they needed to allow themselves time to report “correctly” on the matter of the R300 million.

On the issue of a vacant post of COO, she said the position was “very important” because “the person would have been able to oversee the functions of […] the person who’s doing the administration and transactions.” She asked how soon the post would be filled.

She expressed concerned about the gender representation of 25 percent on the board. She wanted to know why it was so low. It was not fair. This was not acceptable in “this era.” It should be 50/50 representation, even in a board of trustees.

She noted GEMS had stated that it was an “integral part of NHI,” and that it also claimed to be “excellent and efficient, but at the same time GEMS is plagued by fraud. How can we trust you in connection with the handling of finances in the NHI initiative?”

Dr K Jacobs (ANC) said that the Report is wide ranging and makes serious findings. He said it was concerning that the Committee should be interacting with the Report in “this way.” He requested another meeting concerning the Report itself. It was important that the interim report was deliberated on because when the final report is released the Committee would have had the opportunity to “give some input.”

He addressed the “serious” issue of “unfair processes” saying the Committee needed to look into the fact that schemes pay money directly to its members and not to service providers and the latter “never see that money again.”

He said the Committee also needed to look into whether medical schemes were really profiling black practitioners.

He said that the medical aid schemes in question were more likely to identify black service providers as having committed fraud, waste and abuse. This required thorough investigation and discussion.

He said: “It is also true that black practitioners see virtually only black members of the public, and so they are already at a disadvantage in that sense they hardly see members of the public from, for example, the white race. Already that is really a challenge to our practitioners. And then on top of that, the inquiry having found that 47 percent of black providers are found guilty of fraud, waste and abuse by the medical schemes—I’m really talking here on behalf of what is correct and fair and proportionate in terms of providing services and being paid for the services and providing a service to the communities and the public (sic).”

He wanted the Chairperson to note that the purpose of the briefing was not to discuss the question of the NHI. He said that GEMS would be provided an opportunity to discuss the NHI in the future, and they should not preempt that meeting.

The Chairperson asked Dr Moloabi whether the cases he outlined in his presentation related to communities of colour.

CMS Response:
Dr Kabane addressed the question of the presence of the investigation panel. He fully supported that in their absence the present conversation was incomplete. He also supported the view that the investigators needed to be present to present their report to the Committee.

On the relationship between the investigating panel and the role of the medical schemes, he said it is true that the CMS commissioned the investigation panel in terms of the Act. There had always been an understanding the investigation panel was independent. It was expected, and it was proven true, that some of the panel’s findings were directed at the CMS as well. Speaking on the Reports findings as they related to CMS, he pointed out that there was a “regulator gap” where CMS “needs to start working very close with the Health Professional Council of South Africa to make sure that there is no gap in terms of regulation of the health professionals and their conduct.”

On the the question concerning the views of CMS on the GEMS interdict of the publishing of the Report, he said: “When the interdict came, it was directed at the panel itself, and not CMS. And I’ve already said that the panel is actually independent of the CMS even though it is ourselves that commissioned it. And the panel was actually left to defend (sic) that interdict. And we believe that our role was to just observe, especially because we are an affected party. And in a sense we could not have joined the panel in fighting this interdict by GEMS. But as for the view of the outcome, I don’t think CMS has said things [inaudible] deliberate on this but we take our cue from the court ruling and we have accepted that.”

He said: “in terms of the context, Chairperson, these issues of fraud, waste and abuse, they’ve got a long history that has been there since […] CMS was established. And this centred around the interpretation of the Act and how the different parties conduct themselves around this. So when there was [the] presidential world summit in October 2018, CMS, together with the a large number of schemes, were part of that. And as a result, as early as March 2019, a few months before the eruption of the allegations, CMS had coordinated the entire medical schemes industry and other key regulators in what we called the fraud, waste and abuse summit. And basically we included service providers (that is your doctors, physiotherapists, and all the people that provided services) we also invited medical schemes, administrators, and all other key stakeholders (sic). And the idea was: How do we ensure that there was a standard interpretation of the definitions around fraud, waste and abuse? Which we believe contributed to specific conduct by different stakeholders. And then we also thought we needed to have some kind of an agreement that would bind all the stakeholders together in matters of fraud, waste and abuse. So the outcomes of those fraud, waste and abuse summit, that was coordinated by the CMS, were basically a set of definitions around fraud, waste and abuse that were adopted. And then, secondly, there was also a fraud, waste and abuse industry charter that was adopted. We were planning to have a second fraud, waste and abuse charter, Chair, where we would have adopted [a] code of good practice as well as dispute resolution mechanisms as approved. So CMS has been working with the industry, even at the time when the allegations erupted. So as CMS, what we are going to be doing as part of our input, is to make sure that all the efforts that we have been coordinating with the industry to find their way to the panel so that they can also have an understanding of the broader context. Because when you look at some of the issues that are being raised, are also related to work that has already been covered.”

On whether the CMS had been keeping statistics of complaints related to section 59, he said that those were compiled and would be provided to the Committee. However, that the CMS did not have data on the number of practices which were closed down, but he would find a way to provide the Committee with that data by talking to the members of the industry.

On whether the CMS provided any financial relief to the affected service providers, there was no provision in the law which provides for such relief to any party through the CMS. The budget was very low as compared to the “skills administrators”.

On which recommendations the CMS accepted and rejected, he said at this stage the CMS was still compiling itself response. He could not therefore say at this stage.

On Ms Chirwa’s question of the candidate who had been precluded from contesting a board position, he said that the CMS had noted this, namely that the candidate in question was disqualified for receiving flowers for a baby shower. The CMS would prepare and present a report on this. The CMS does intervene when the standards or recommendations for board appointments have been “transgressed”.

He noted the points raised on in- and outsourcing. This came back to the CMS’s ability to regulate efficiently and effectively. He said certain functions which were being outsourced could be insourced. Certain functions require outsourcing for reasons concerning objectivity and independence, such as investigations. But as soon as it is possible to in-source functions such as these, the CMS would do so.

On the question of whether the complaints backlog had been dealt with, he said that the CMS had indeed been able to as early as “a year or two ago.” He said they are back to their turnaround time of 120 days. There had been some “re-engineering” of the management of the complaints process which have yielded results. This would be demonstrated in the 2020/2021 Annual Report of the CMS.

On whether the CMS gets audited but the AG or private auditors, he said it was the view of the CMS that all schemes needed to be audited and that they themselves oversaw the appointment of “fit and proper” and duly registered auditors. Their conduct is also monitored by the CMS, and where conduct was not appropriate termination of service has followed “in the interests of protecting member interests,” he said.

He said the rest of the comments have been noted by the CMS.

Dr Makiwane said he supported the call for the investigators to appear before the Committee to provide their own presentation. He also welcomed the call to “re-invite the Council to talk to various issues pertaining to it.” He said he was happy with what the Registrar had said, and would not be adding anything more.

GEMS Response:
Dr Moloabi said he noted the comments of members.

On why GEMS interdicted the Report, he said the basis was that, according to GEMS, the terms of reference provided that the affected parties could comment before the Report’s release. The other factor from “legal” was that in an inquisitorial investigation, when a report is interim it is usually shared with the affected parties and only after their comments are considered is it made final. He added that that matter was now “moot” and that GEMS was attending to the interim report.

On whether capacity building and misconduct guidance was provided to members and healthcare providers, he said it was an area that GEMS would focus on more. It was one of the lessons derived from the investigation.

On whether implicated members who resign still receive benefits, he said so long as a membership remains valid, a member remains entitled to benefits they have paid for. This was according to the Act. Benefits cease only at the point at which a medical scheme is terminated.

On the requests for a list of service providers, he said this was part of the Report and part of the public record. He said that GEMS would answer this question in writing.

On whether any money has been recovered, he said there were two processes underway, one criminal the other civil.

On issues of administration which needed to be addressed within the scheme, he said that everything learnt from the investigation in 2016 the scheme reviewed and improvements were made accordingly. Many internal processes have been reviewed, and that the board had given much attention to these findings.

On the systems in place to ensure fraud does not occur, he said that reviews of processes were held from time to time and that GEMS had audits of internal processes. He said that for several years GEMS has continually had unqualified audits of its financials which reflects its control measures.

On the question of 25 percent contribution reserves of medical schemes and whether not meeting this threshold was solely attributable to fraud, waste and abuse, he said that the answer was “no” and that “fraud, waste and abuse was only part of the problem.” After a scheme is established, the regulator allows the scheme five years to reach 25 percent reserve. This may be revised or extended. Because GEMS was growing at rapid rate, it made it difficult for GEMS to meet its reserve requirement. This is because the reserve was based on the projected annual contributions, which was growing “very fast.” Moreover, GEMS did not have any underwriting, which made meeting this reserve more difficult still.

On whether there were black practitioners at the healthcare presidential summit “held in October,” he said yes there were. He said they had raised their concerns via a CityPress article but it was published subsequent to the summit.

On the “GEMS list that we had kept” and whether the providers on the list were “provided with information that they will be on the list,” he said that engaging them was part of the process of investigation of possible fraud. The listing follows engagement with provers so that they would know there was an investigation underway.

On why GEMS assigns a race to providers, he said the answer was that “we do not.” He said it was explained in GEMS submission that “providers submissions are based on the PCNS. PCNS is a private practice numbering system that is used by the industry. It is generated by the board of healthcare funders and it is the basis of documenting the records of the healthcare providers who claim from the scheme.”

On whether there was another review underway of the GEMS fraud, waste and abuse process, he said that GEMS continues to improve on its systems based on “our learnings.” He said the scheme was already taking its “learnings” from the Interim Report. GEMS would also look at the findings of the final report and determine how they could be incorporated.

On the question of racial profiling, he said that this question was “noted” and that whatever came “out of this forum” would be considered and taken seriously.

On which companies were mentioned in the News24 article, he said these records were in the public domain, as well as the fact that executives were mentioned in GEMS’s report.

On GEMS’s delay in the response to corruption, he said GEMS had not only responded now, but before the Report was released. The board authorised a the commissioning of a forensic report after the findings of 2016. The commissioned report had been shared with the regulator. It was also part of the scheme’s annual report. “We have really been very open in ensuring that information relating to this matter is known.”

On the question of what GEMS was doing to self-correct, he reiterated that the scheme would look into “anything that comes out of the Report.” He said “processes” would be put in place to deal with the Report’s adverse findings.

The Chairperson directed Mr Moloabi not to repeat the questions when answering, saying that this was wasting the Committee’s time and that the Committee would run out of time.

On the minimisation of outsourcing, he said that GEMS started a programme where both the cleaning and security staff, who had previously been contracted-out, where now insourced.

On the NHI, he said that GEMS was doing everything do ensure that the scheme was “readying itself for the environment where NHI will be implemented.”

On the recovery of the R300 million, he said there was a criminal and civil litigation process underway.

On what happens when defaulting healthcare professionals are unable to pay the scheme, he said that the scheme had “entered into arrangements with the healthcare providers,” who had requested payment arrangements due to the impact of the pandemic.

He said GEMS would be “putting systems in place” to ensure corruption is “dealt with adequately.”

Ms Chirwa objected and said that Mr Moloabi was repeating all the questions (thereby wasting time) and that he was giving ambiguous answers. She wanted concrete and tangible responses. She said, for instance, if the question was “What systems have you put in place to prevent corruption?” the answer could not simply be “We’ve put systems in place.” This kind of answer was inadequate and vague.

The Chairperson again directed Mr Moloabi, who had been repeating, questions throughout his reply, not to do so.

Mr Moloabi said that GEMS “is recruiting permanent employees going forward in reducing outsourcing.”

He said: “from the 2016 event in that a lot of work has been put into final recovery and that includes the claims management forum that I’ve alluded to.”

On the implantation of the NHI, he said it was GEMS view that it was a “very huge” undertaking and that the scheme was working “very hard” to ensure that it “gets itself ready for when implementation is done.”

On the matter of racial profiling by surnames, he said GEMS had responded to this already by saying that the Report “can be misleading” in this regard.

He said the scheme had not taken any decision to have the Report reviewed.

He said he noted Ms Gela’s submission.

The remaining questions were dependent on the final report, after which “decisions can be taken at the level of the forum.”

He said GEMS is audited. “The Auditor-General does not audit medical schemes.”

On the Media24 report, he said “It is not a new thing. This report comes from 2016 and GEMS has responded by making available the reports that it undertook after this [Media24] report came about.”

He said “the gender representation is noted.”

He said “we are working hard to ensure the implementation of NHI,” and GEMS would continue “working hard.”

He noted Mr Jacobs comments, some of which, GEMS had already addressed. “The issue of racial discrimination imbalance of power between scheme and administration.”

He said that GEMS would look into the final outcomes of the report and would “respond accordingly in terms of making improvements”.

On the question of why GEMS decided to come before the Committee before the other two schemes had an opportunity to, he said “I think that has been answered.” However, GEMS would return if invited to do so.

Deputy Minister’s Response:
Ms Chikunga said “We agree with the members that corruption is a problem and it should not be allowed anywhere, and it should be presented, and probably, I do believe that maybe Honourable Chirwa is not out of line by actually saying ‘give us the details of what you are doing to fight corruption’ because it is, indeed, something that is keeping us back as a country, if it is allowed to continue. And therefore it has to be prevented and I want to believe that we’ve put quite a number of systems in place, including legislations (sic), the PFMA [Public Finance Management Act] for instance, the advertising of tenders, the rigorous processes that will include your bid adjudication committees, the appointment of audit and risk committees by boards, and discussing all these things. These are systems that are put in place but we can actually add onto very specific systems that they’ve put in place (sic) at GEMS to ensure that they are able to prevent any corruption from happening.”

She added, “However, people being people, particularly those that are corrupt and are hellbent to steal from the state, they will always find a way of circumventing those systems that are put in place. And then it becomes critical that you put again systems that will ensure that if that happens, we are able to detect [corruption] in order to deal with it. If there is corruption that is detected, there are two ways of dealing with it. First, in fact, the internal processes, which would include the disciplinary procedure, which must be followed up ’til the end. But also corruption and fraud is a crime that must be reported to law enforcement agencies, so that if a person decides to leave the institution, but he faces the full might of the law, because the case has been reported (sic). I think the question is to say ‘of that money that was fraudulently used and so on, what has been the progress with regards to cases that have been reported to the police?’ And I think those are fair questions which I think we might have to provide members of Parliament with information, even if the question itself—or the media article—is based on something that happened in the past. The forensic investigation that happened in the past; the interventions that happened in the past—but of course it was published yesterday and it looks like its something that happened now, but it’s something that happened (sic).”

On whether GEMS’s interdict was “fair,” she said it was fair in the sense that they should have been provided an opportunity to respond before the Report was made public. She said the current meeting was evidence of the difficulty of dealing with an interim report, because no-one knows what the final report will contain. The opportunity to respond might have afforded the investigating panel the opportunity to correct possible errors of fact before it chose to publish it.

She supported “getting” the investigation panel to come before the Committees “and probably other schemes as well.” This is so that all these schemes would be provided a “fair opportunity” to respond to the Report.

She said that the Report did not indicate explicit racial bias “in the algorithms and methods,” and that the data fed into the scheme’s system did not contain “details of race.” She said, however, that GEMS ought to look into the human element of the system.

She said “as far as we are concerned, GEMS is a progressive medical scheme for our public servants. It strives to be the best in the country, and it is one of the best, we believe. And welcome its scrutiny (sic) as it prepares itself to administer NHI.”

The Chairperson said questions which could not be accommodated in the meeting should be submitted in writing.

He said perhaps the Committee should invite Adv Ngcukaitobi to address the interim report, but rather for the final report upon its release.

The Chairperson asked the Chair of the Board of Trustees, Dr Hlatshwayo, if she wanted to say anything.

She said she did not have anything to add apart from thanking members for the time.

The Chairperson told her “We hope that your side of the story will still stand, even after the final report.”

She said “I promise you that.”

The Chairperson adjourned the meeting.