Government coming after big medical aids in South Africa
The Department of Health says the Council for Medical Schemes (CMS) is seeking legal opinion on how to proceed against the big-name medical aids in South Africa named in the Section 59 investigation, including penalties.
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.
In July 2025, the panel published its final report on the investigation, which found that some black, coloured, and Indian medical professionals had their right to procedural fairness violated.
It also flagged the existence of racial profiling and a power imbalance that disproportionately affected black practitioners.
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.
This includes Discovery, the Government Employment Medical Scheme (GEMS) and MedScheme.
The medical aids and the wider industry representative, the Board of Healthcare Funders, have strongly opposed the report’s findings, calling the investigation fundamentally flawed.
Regardless, the DOH and CMS are pushing ahead with action against the medical schemes and the wider industry, including potential penalties.
Responding to a parliamentary Q&A submitted by ActionSA MP Dr Tebogo Letlape, health minister Aaron Motsoaledi said that the government, through the CMS, is considering what actions to take.
He said that the CMS is in the process of procuring a firm of attorneys to develop a “comprehensive legal opinion” to advise on appropriate actions.
“This opinion will assist CMS in systematically considering the associated risks and determining how to act against those identified in the final report, as well as identifying mechanisms to legally protect individuals who have been negatively affected by the discriminatory practices uncovered,” the minister said.
Notably, he said that the opinion will also consider the application of section 67(1)(o) of the Medical Schemes Act, which empowers the minister to make regulations providing for penalties in cases of contravention of section 59 of the Act.
“In this regard, CMS may benchmark proposed penalties against those applied by other regulatory bodies, such as the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA), to strengthen deterrence and prevent future instances of such conduct,” he said.
More regulation chains for medical aids incoming
While the National Department of Health and the minister have yet to step into the process, Motsoaledi said that collaborations are coming.
Specifically, he said that a platform will be set up through which a “multi-disciplinary stakeholder committee” (still to be established) can engage on Fraud, Waste, and Abuse mechanisms used by medical schemes.
He is also keen on more regulations and amendments to hold over medical schemes.
“I do support legislative and/or regulatory amendments to provide stronger oversight and enforcement powers over medical schemes engaging in discriminatory conduct,” he said.
The following measures are currently being explored:
- Establishing a collaborative structure between the CMS and the Health Professions Council of South Africa (HPCSA), with a dedicated focus on addressing Fraud, Waste, and Abuse.
- Requiring CMS to issue more regular guidance on the issues arising from the Fraud, Waste, and Abuse investigation and sanctioning processes.
- CMS should provide procedural certainty for medical schemes in exercising their powers in terms of the MSA, the remedies available to parties who feel aggrieved by the conduct of schemes, and the penalties against schemes in the event of a breach of the MSA.
- Developing and implementing an urgent mechanism to assist providers in engaging the schemes once providers are accused of Fraud, Waste, and Abuse-related conduct.
- Introducing transparency mechanisms to regulate the use of software, algorithms, and artificial intelligence systems employed by medical schemes to monitor claims submitted by healthcare providers and members.
- Developing urgent regulations for the establishment of the Tribunal and mediator services to restore power imbalance between service providers and medical schemes.
- Development and implementation of an urgent mechanism to ensure that Medical Schemes are accountable to a public body for the systems they use, as this, in turn, ensures accountability to the public whilst still maintaining a form of confidentiality which we understand to be necessary to ensure the effectiveness of the algorithms or programmes.
- Proposing urgent amendments to section 59(3) of the MSA to strengthen its regulatory detail.
“It appears that the section that gave rise to the Fraud, Waste, and Abuse systems is light on regulatory detail and could be expanded upon so that it properly regulates the more intrusive aspects of these systems developed by Schemes and their Administrators over the last decade,” the minister said.
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