Correctional Services spokesman Manelisi Wolela has denied allegations that student leader Mcebo Dla.
The Star newspaper reported that the fraud is by doctors who give a medical scheme member cash, then claim the money and more back from the medical aid, even though they might not have treated the patients.
The newspaper reported that the scheme was widespread amongst civil servants.
Lynette Swanepoel from the Healthcare Forensic Management Unit said if the premiums become unaffordable many people would have to turn to government hospitals and clinics which are already under pressure.
She said that irregular activities and the over-use of funds cost the medical scheme industry R5- to R8 billion a year.
Health Professions Council of SA spokeswoman Bertha Peters-Scheeoers told the Star that it was a real concern.
“A small number of unscrupulous individuals are engaging in this criminal behaviour; bringing the highly regarded profession of medical doctors into disrepute,” she told the newspaper.
Those involved in the bhabhaza said they were entitled to their money whether it was used for medical reasons or not, the Star reported.
The Government Employee Medical Scheme appears to be the worst-hit and confirmed a number of cases were under investigation.