Dr Debbie Pearmain

Shortly before the Council for Medical Schemes (CMS) CEO and Registrar, Dr Sipho Kabane, issued a media release midday Friday announcing that two stakeholder-based advisory committees had been established to deal with the issues associated with its controversial decision to scrap low-cost benefit options (LCBOs) and demarcation products (Circulars 80 and 82)  – see Med Brief Africa report repeated earlier today – noted health sector legal authority, Dr Debbie Pearmain, had told delegates to a Friday morning Institute for Health Risk Managers (IHRM) seminar in Johannesburg that aspects of some of the decisions reflected in the respective CMS circulars were in fact unlawful.

She reminded her audience that it was stated categorically in the circulars that there would be no exemptions granted for LCBO products within the medical scheme and healthcare insurance environments and that “all products which do not comply with the Medical Schemes Act (MSA) must be wound down by March 2021”.

More specifically, aside from being deemed illegal after March 2021, it was noted that entities that currently have exemption through Section 8(h) of the MSA “are requested to identify the best way forward to wind down these tranches of business”.

General consensus was that this could effectively impact on up to three million lives.

“The council,” said Pearmain, “has not apparently considered the unique circumstances of current exemption holders and their beneficiaries in making the policy decisions referred to in both circulars. It is also apparently not prepared to consider possible exceptional circumstances of potential future applicants and their beneficiaries for exemption in relation to LCBOs.

“This amounts to unlawful fettering of its powers,” Pearmain added, explaining that with fettering the decision-maker is imposing limits on its own discretion by adhering rigidly to policies or promising that it will act in a certain way.

In his statement later on Friday, CMS Registrar Kabane emphasised that in terms of the Demarcation Regulations, demarcation products were outlawed as early as 2017 and only exist through the exemption framework that was jointly developed by Treasury, NDoH, FSCA and CMS for this purpose. This framework applied between April 2017 and March 2019 but was subsequently extended to 31 March 2021.

He added that this extension was not intended to apply in perpetuity “but was meant to provide a transitional arrangement for the migration of demarcation products to the medical schemes regulatory environment”.

Taking the matter further, Pearmain was of the belief – “although there is no proof” – that the decision to scrap LCBO and Demarcation products was not a Council decision but that of its Registrar. If so, she said, the Registrar does not have the power under the MSA to make policy decisions such as that reflected in Circular 80 or grant or refuse exemption applications made in terms of Section 8(h) of the MSA.

At this point she reminded her audience that in terms of Section 7 of the MSA, the Council (“not the Registrar”) must protect the interests of beneficiaries at all times and control and co-ordinate (“not Regulate”) the function of medical schemes in a manner that is complementary with national health policy.

The constitutional rights of beneficiaries, Pearmain concluded, comprise right of access to healthcare services, to administrative justice and to freedom of association: “The fact that the Council is required by law to control and co-ordinate the functioning of medical schemes does not give it licence to act contrary to the Act or administrative law, or the Constitution.”