Panel Finds Racial Discrimination in Medical Scheme Investigations

A long-running investigation into South Africa’s leading medical schemes has confirmed systemic racial discrimination against Black healthcare providers in fraud, waste, and abuse (FWA) investigations.

The findings, published in the final report by the Section 59 Investigation Panel, chaired by advocate Tembeka Ngcukaitobi SC, reveal that Black medical practitioners were significantly more likely to be found guilty of FWA than their white counterparts between 2012 and 2019.

The investigation focused on schemes administered by Discovery, Medscheme, and the Government Employees Medical Scheme (GEMS).

“Black providers were disproportionately flagged, investigated and penalised,” the report states, citing statistical evidence that Black physiotherapists, psychologists, and dieticians, among others, faced significantly higher odds of being found guilty of FWA — in some cases up to 12 times more likely than white peers.

While the panel did not find intentional racism, it concluded that the current systems used by medical schemes were deeply flawed, producing discriminatory outcomes.

Key Recommendations

To address the systemic unfairness, the panel made several strong recommendations:

Legislative Reform: Amend the Medical Schemes Act to clearly regulate how schemes investigate and claw back funds in FWA cases.
Early Warning System: Require schemes to promptly notify healthcare providers of potential issues before any investigation or penalty begins.
Clawback Limit Review: Shorten the audit period for recovering funds from providers to avoid undue financial harm.
Independent Legal Support: Establish a tribunal or support structure to assist providers during FWA disputes.
Algorithm Transparency: Mandate that all fraud detection software and AI tools used by schemes be disclosed to the Council for Medical Schemes (CMS) for accountability.
Annual Risk Ratio Audits: Require medical schemes to conduct yearly racial bias audits of their FWA systems.

Mixed Industry Response

While the panel’s work has been widely welcomed by affected healthcare providers, the Board of Healthcare Funders (BHF) — representing the medical schemes — rejected the report’s findings.

“We believe the panel’s findings are fundamentally flawed and could open the door to rampant fraud,” the BHF said in a statement, raising concerns over the statistical methods and definitions used to assign race.

Despite these objections, the panel stood by its analysis, noting that alternative risk ratios provided by schemes still showed Black providers were more likely to face adverse outcomes.

Next Steps

Health Minister Aaron Motsoaledi has received the final report and is expected to consult stakeholders before announcing potential changes to legislation and oversight mechanisms.

The CMS has also been urged to enforce accountability and transparency across all schemes to restore trust in South Africa’s healthcare funding system.

“This is not about blaming individuals,” the panel concluded. “It’s about fixing systems that unfairly harm Black professionals and violate the constitutional promise of equality.”