NHI fraud and corruption – how the law says looters will be punished

With the National Health Insurance being signed into law, legal experts are combing through the new regulations to lay out and explain its provisions.

One of the key provisions that will be of interest to South Africans at large is how the law will deal with those who seek to defraud or abuse the NHI Fund.

A big criticism of the NHI Act is that it establishes a multi-billion rand fund that will become the sole purchaser of healthcare services in South Africa and leaves it in the hands of the government, with centralised power sitting with the Minister of Health.

The actual value of the fund is still to be determined, but estimates have placed the required funding at R200 billion at minimum, scaling up massively to R1 trillion in some scenarios.

Critics of the scheme have pointed out that it is irrational to put these huge amounts of funds in the hands of a government that has proven to be susceptible to corruption and looting.

The health ministry has been at pains to assure the public that the funds will be handled appropriately, saying things like it is ‘too soon’ to call the NHI corrupt before it has even had a chance to operate.

However, the memory of rampant corruption and looting of the R500 billion Covid-19 fund during the pandemic, as well as the more than a decade of state capture that bled state-owned companies dry still sits fresh in many minds.

Almost every single major national company run by the state – Eskom, Transnet, SAA, SA Post Office, Denel, and the SABC, among others – have collapsed or succumbed to corruption and financial mismanagement in some way.

NHI Fraud

According to legal experts and senior associates at law firm Adam & Adams, Cohen Grootboom and Mtho Maphumulo, the NHI Act tries to make some provision for combatting fraud and misuse of funds by laying out harsh penalties if violators are convicted.

Any person who does the following is guilty of an offence:

• Knowingly submits false information
• Makes false representations
• Misuses funds
• Obtains money under false pretences
• Discloses Fund information without consent

Upon conviction, they may face a fine not exceeding R100,000, imprisonment up to five years, or both.

Failure to provide required information to the Fund within a specified period incurs a prescribed fine for each day of non-compliance, unless waived for good cause.

Any penalties imposed constitute a debt owed to the Fund, the experts said.

How the Fund will work

To make use of the NHI Fund, individuals eligible for healthcare services must register as users with the Fund at accredited healthcare providers or establishments.

Parents must register their children. Children born to users are automatically registered. Those between 12 and 18 years old may apply for registration.

Registered users will have a host of entitlements, including:

• Receiving necessary quality healthcare services for free from accredited providers upon presenting proof of registration.
• Accessing information about the Fund and available healthcare benefits.
• Accessing personal health information kept by the Fund, as per the Promotion of Access to Information Act.
• Not being denied healthcare services on unreasonable grounds or unfairly discriminated against.
• Accessing healthcare services within a reasonable time period and being treated with a professional standard of care.
• Making reasonable decisions about their healthcare and lodging complaints regarding access, quality, or fraud.
• Requesting written reasons for Fund decisions and lodging appeals against them.
• Instituting proceedings for judicial review of Appeal Tribunal decisions.
• Protection of their privacy and confidentiality of personal information as per the Protection of Personal Information Act, with some exceptions.
• Accessing information on healthcare funding in the country.
• Purchasing healthcare services not covered by the Fund through private insurance schemes or out-of-pocket payments.

Users of the Fund are also entitled to receive healthcare services purchased on their behalf for free from accredited providers, except in the following circumstances:

• Where they are not entitled to Fund-purchased services.
• Where they fail to comply with referral pathways.
• Where they seek services deemed medically unnecessary by the Benefits Advisory Committee.
• Where they seek treatment not included in the Formulary.

Accredited providers must deliver appropriate healthcare services to entitled users.

To be accredited, providers must meet certification and registration standards, comply with performance criteria, provide required services, allocate appropriate staff, adhere to treatment protocols and referral pathways, submit necessary information, and follow pricing regulations.

At any point along this service chain, any affected parties—users, healthcare providers, establishments, or suppliers—can submit complaints to the Fund following its determined procedures.

The Investigating Unit, established by the Chief Executive Officer, will investigate reported incidents and make recommendations within 30 days. Decisions can then be appealed.

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