Medical Expenses Mess (Part 1)

Being a member of a medical aid in South Africa is as essential as having accident insurance for your vehicle. But choosing the best medical aid plan is like comparing dogs with cats. Both are pets, but they differ so much that comparing them will only leave you more confused.

Medical aid schemes provide a service to consumers. “Service” is defined in the Consumer Protection Act 68 of 2008 (“CPA”) as (amongst others) “any work or undertaking performed by one person for the direct or indirect benefit of another.” (own emphasis). Medical aid schemes undertake to pay medical expenses on your behalf (to your benefit) to medical service providers.

Different medical aid plans, especially from different medical aid schemes, are, in our opinion, incomparable. The one offers A, while the other offers B. However, without insight into the monetary advantage of either A or B, it is impossible to determine whether the price difference warrants choosing the one over the other.

Another problem in comparing medical aid plans, is that the rates paid by medical aid schemes are not universal. Two schemes can pay 100% of “their” rate, but that does not mean that it is the same rate or that they cover medical expenses in full.

Is there a solution to this problem?

This article is one of a two-part series. In this part, we will focus on medical aid schemes, and in the next part, we will focus on the medical service providers.

Marketing of Services in terms of the CPA

The CPA, particularly Section 29 thereof, provides that a Service provider must not market any service in a manner that is reasonably likely to imply a false or misleading interpretation, or in a manner that is misleading, fraudulent or deceptive in any way.

Section 41 of the CPA goes further and provides: “In relation to the marketing of any goods or services, the supplier must not, by words or conduct, directly or indirectly, express or imply a false, misleading or deceptive representation concerning a material fact to a consumer; or use exaggeration, innuendo or ambiguity as to a material fact, or fail to disclose a material fact if that failure amounts to a deception.”

Marketing in Practice

In practice, medical aid schemes market their plans (services) as covering “100% (or 200%) of the scheme tariff”, but what does this mean? Actually, nothing.

Each medical aid scheme has their own set of rules, which determines the tariffs they pay for each medical service or procedure. This means that 100% of the scheme tariff of Scheme A is not the same as 100% of the scheme tariff of Scheme B. Comparing the two schemes could have been as easy as a simple mathematical exercise, if scheme tariffs were universally applicable to all medical aid schemes, but sadly they are not.

Comparing two plans from two different medical aid schemes, is a complex exercise which, to the average person, is simply too time consuming or needs information not readily available.

To make matters worse, every medical aid scheme covers at least 100% of their tariff, which creates the impression that members are covered for 100% of their medical expenses. However, this is not the case. If a doctor charges R700 for a consultation and the Scheme A’s tariff is R500, the patient will be liable for the R200 shortfall. If Scheme B’s tariff is R400, the patient will be liable for an additional R100 shortfall, despite the fact that both schemes covered 100% of their tariffs.

This means that 100% (or even 200%) of the scheme’s tariff, means nothing if the tariffs are not universally applicable and publicly accessible.

These “secret” tariffs also make it difficult to determine whether a medical aid plan is sufficient for you and your family, because you will not be able to determine whether 100% (or even 200%) of the scheme’s tariff is sufficient.

We are of the opinion that this is a deliberate attempt by medical aid schemes to force you to choose the most expensive plan that you can afford, simply to get the most money out of you and leave you hoping that you will have sufficient cover when you need it. And if the cover is not sufficient, you will be complacent with the fact that you “did what you could”.

Another problem is the ‘micromanagement’ of medical expenses. When vising a doctor, chances are you will pay for substantially more than one item. Health Squared is one of a limited number of medical aid schemes who are transparent about their tariffs and published it on their website HERE. The list of tariffs for a general practitioner is 76 pages long, with 31 items on the first page only. If the doctor doesn’t even know what he/she will have to do before the consultation, how would you know whether you have sufficient cover?

A Healthcare Consultancy Firm, HealthMan published Comparative Tariffs on their website. When opening one of these files, you will soon notice the difference in tariffs paid by medical aid schemes and the overwhelming number of items.

Is there a solution?

A better way of describing the benefits and cover of a medical aid plan, would be to specify a percentage of guideline tariffs, universally applicable to the industry as a whole. For example, if a guideline tariff of R700 per doctor’s consultation is applicable, Scheme A can specify that it covers 80% of that tariff, Scheme B can specify that it covers 75% of the tariff, and the doctor can specify that he charges 90% of the tariff. This way, the patient will at least know there will be a shortfall of between 10 – 15% of the total bill, without being deceived or mislead by a meaningless “100%”.

Even after discovering all these tariffs, codes, and lists (which took a lot of digging), it is still nearly impossible to determine whether you will have sufficient cover for medical expenses when visiting the doctor.

What is “100% of a Red Car”? Is it 100% of a red remote-controlled toy car, 100% of a red sports car or 100% of a red family car? All of them are 100% of a red car, but the first will get you nowhere, the second will get you and one person somewhere, and the last will get your whole family somewhere.

The same goes for medical aid schemes. If you don’t know what is behind the percentage, the percentage means nothing.

Marketing in Practice measured against the CPA

100% commonly means “fully or wholly”. When a medical aid scheme markets a medical aid plan as covering medical expenses at 100%, it is commonly interpreted to mean that it covers the medical expenses in full.

We have shown that 100% cover does not necessarily mean full cover. It only means full cover of the tariff prescribed by the medical aid scheme. If a doctor charges more than the scheme’s prescribed tariff, there will be a shortfall, and 100% cover will not mean full or whole cover.

This marketing practice by medical schemes, in our opinion, contravenes at least Sections 29 and 41 of the CPA, in that it:

  • Implies a false or misleading interpretation of a material fact, in that it implies full cover for medical expenses;
  • Implies a false, misleading or deceptive representation concerning a material fact to the consumer (i.e. extent of cover for medical expenses); or
  • Uses exaggeration, innuendo or ambiguity as to a material fact, in that it emphasises 100% cover, when 100% can mean R400 or R600, when the doctor charges R500.

Recourse for Consumers

When transactions are concluded pursuant to false, misleading or deceptive marketing by service providers, and the consumer suffers losses or incurs expenses as a result thereof, the CPA provides that the Court, when considering the matter, may make any order the Court considers just and reasonable under the circumstances, including an order to restore money to the consumer or compensate the consumer for such losses or expenses.

This means that if you were deceived by a medical aid scheme, in that you were under the false impression that your medical expenses will be covered in full (or 100%), when in fact you are left with a huge bill for medical expenses that are not covered by the medical aid scheme, the Court can order the medical aid scheme to reimburse you for such losses or expenses.

Unfortunately, there is not quick and inexpensive way to enforce your rights as a result of false, misleading or deceptive marketing, since the Court will need to hear evidence, arguments and consider the matter before it makes an order to that effect. Therefore, the remedy for consumers can only be enforced by litigation.

If you have suffered losses or incurred expenses as a result of false, misleading or deceptive marketing by medical aid schemes, you should approach your attorney for assistance.