Point of view: Regulator to investigate excessive costs of medical scheme AGMs

Point of view: Regulator to investigate excessive costs of medical scheme AGMs

THE Council for Medical Schemes (CMS) said medical schemes paying exorbitant fees for hosting annual general meetings (AGMs) should be investigated.

This came after the regulator released the 2022 Medical Schemes Industry Report and Annexure which provided evidence that some medical schemes were spending excessively high amounts on hosting AGMs.

“This spending pattern, deemed worrisome by the CMS, necessitates an in-depth investigation into the potential factors contributing to these extravagant costs associated with hosting AGMs in the evolving landscape of medical schemes,” it said.

The regulator said AGMs were an essential governance component in the medical schemes environment, presenting a chance for schemes principal officers, boards of trustees, and administrators to account for the management of the scheme to beneficiaries.

The council said on closer inspection of the annexures, it noticed significant expenditure traits on AGMs hosted by medical schemes.

“In the regulatory environment, medical schemes must therefore hold AGMs consistent with scheme rules on or before a particular date. This is an opportunity for medical scheme members to voice opinions, ask questions and present motions,” it said.

According to the report published by the CMS, of the 71 registered medical schemes, 33 incurred AGM-related expenses totalling R29.2 million collectively covering 8.1 million medical schemes beneficiaries.

“Five medical schemes exhibited significantly higher spending than other schemes bearing a substantially higher proportion of the total AGM expenditure. These schemes included the Sizwe Hosmed Medical Fund, Medipos Medical Scheme, Engen Medical Benefit Fund, Motohealth Care, and Foodmed Medical Scheme.

“Other schemes with possible high AGM-related spending include the University of KwaZulu-Natal Medical Scheme, TFG Medical Aid Scheme, Cape Medical Plan, SamwuMed, and Discovery Health Medical Scheme,” it said.

The council said remarkably, medical schemes allocated considerably higher expenditures towards hosting AGMs, particularly when juxtaposed with schemes possessing a significantly larger membership profile.

The report said the non-healthcare expenditure for all medical schemes at the end of 2022 was R18.88 billion, an increase of 6.51% from R17.72 billion in 2021.

According to the report, non-healthcare expenditure consisted of commercial reinsurance agreements, administration expenditures, broker costs, and impaired receivables.

It said that no discernible changes were noted in the composition of non-healthcare expenditure over the past five years.

* Maleke is the Personal Finance content editor.

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