The Council for Medical Schemes (CMS) believes the Road Accident Fund’s (RAF) directive that no payments must be made to claimants if their medical aid scheme has already paid for their medical expenses arising from a road accident is not in line with the Medical Schemes Act.

In a legal review of the issue, CMS senior manager for legal services John Letsoalo and CMS benefits management senior analyst Mpho Sehloho also concluded that the non-payment by the RAF of these medical costs is not in the interest of the beneficiaries of medical schemes.

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Discovery Health has been embroiled in court battles with the RAF over the directive, which it issued on 12 August 2022.

The High Court in Pretoria declared the directive unlawful on 27 October 2022 following an urgent application launched by Discovery Health.

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This high court ruling was upheld on review for leave to appeal at both the high court and the Supreme Court, with the RAF subsequently appealing this ruling at the Constitutional Court.

Discovery unsuccessfully attempted via the courts to obtain an order forcing the RAF to immediately resume the payment of past medical expenses for injured medical scheme members.

Leave to appeal this ruling was heard by the High Court in Pretoria on 4 August 2023, with judgment reserved and not yet handed down.

‘Unfair discrimination’

Discovery Health CEO Dr Ryan Noach on Thursday welcomed the CMS statement on the RAF directive, adding: “We agree with the CMS interpretation and support their position”.

“The CMS correctly notes the negative effect on medical scheme reserves in the event medical scheme members are excluded from RAF payments.

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“This constitutes an unfair discrimination against medical scheme members as road users who also pay the fuel levies,” he said.

Roach said Discovery awaits the outcome of the Constitutional Court review following the RAF appeal and expressed confidence it will be in favour of medical scheme members “considering the strong judgements against the RAF on the matter to date by the high court and Supreme Court of Appeal”.

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Comment was requested from the RAF but has not yet been received.

Clarity sought

Letsoalo and Sehloho said medical scheme members have sought clarity or a position from the CMS on the court battle between Discovery Health and the RAF.

“In normative terms, the CMS is not obliged to release commentary on matters remote to its mandate.

“However, as a responsible regulator, it became a necessary act to clear [up] any anomalies,” they said.

Letsoalo and Sehloho said that in terms of the Medical Schemes Act 131 of 1998 (MSA), medical schemes undertake liability in return for a contribution by, among other things, granting assistance in defraying expenditure incurred in connection with the rendering of any relevant health services.

The MSA further obliges medical schemes to pay for prescribed minimum benefits in full, which include any emergency medical conditions, under which motor vehicle claims could fall, they said.

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Letsoalo and Sehloho stressed that unless a claim is specifically excluded in terms of the schemes’ rules and/or does not meet the criteria in terms of the definition of relevant healthcare, “the medical scheme must still pay”.

They said most medical schemes provide for handling motor vehicle claims in their rules, wherein members of medical aids can claim compensation from the RAF for such claims and any future healthcare services that may arise due to that motor vehicle accident.

It is also common cause that where the RAF is responsible for claims, which a medical scheme has paid in terms of its rules and the MSA, the RAF should refund such amounts paid to the medical scheme.

Letsoalo and Sehloho added that members of medical schemes who would have claimed directly from the RAF and received compensation for such claims must also pay such amounts back to the medical scheme, which is commonly known as subrogation.

“Should a member not receive any compensation from the RAF even after claiming, the scheme remains liable for the costs of the treatment subject to the registered scheme rules and [the member] must not be required to repay/refund such funds to the scheme.

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“The scheme may, however, attempt to recover such amounts paid from the RAF for the benefit of its members,” they said.

Letsoalo and Sehloho said subrogation allows medical schemes to minimise losses due to these claims and keep members’ contributions reasonable by holding responsible parties accountable.

It also prevents members from being “overcompensated” or unjustifiably enriched for the loss since they should not receive double compensation from the medical scheme claim payout and the recovery from the RAF.

Risk pool funds

Letsoalo and Sehloho emphasised that the financial risk associated with health interventions for which the need is uncertain, is equitably shared within the covered population through a risk pool, managed by medical schemes under the MSA.

“Therefore, the CMS cannot condone a situation where members of medical schemes are forced to be out of pocket due to the non-payment of medical costs by the RAF, where these have since been paid out by medical schemes.

“In line with the CMS’s mandate under Section 7 of the Medical Schemes Act, it is not in the members’ interest if medical schemes are required to claw back payment made on behalf of members due to non-payment of these costs by RAF.

“The non-recovery of these costs by medical schemes negatively and unfairly withdraws from the entire risk pool that is aimed at benefiting the whole membership,” they said.

Letsoalo and Sehloho said by implication, the RAF’s refusal to refund medical schemes leads to the unfair deterioration of the entire risk pool funds.

“Within this background, CMS believes that the refusal to refund medical schemes by RAF is not in line with the provisions of the Medical Schemes Act, and it is not in the interest of beneficiaries of medical schemes,” they said.

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