Health Squared clients must scramble to find alternative medical cover as CMS efforts fail to secure a deal

In what it terms an “unfortunate situation”, the Council for Medical Schemes has failed to convince enough solvent, sizeable medical schemes to take over the almost 24,000 members of Health Squared Medical Scheme without waiting periods.

The regulator announced this in a media statement late on Wednesday night, having in the past week advised members not to make “panic-inspired” decisions to join other schemes, which may leave them worse off, but rather to wait for its (the CMS') announcement of a managed migration of Health Squared members to alternate schemes.

But now Health Squared members are left to negotiate alternative medical cover on their own.

Health Squared took the industry by surprise two weeks ago by applying to the high court for voluntary liquidation, advising its 23,785 members their “health events” would only be covered until the end of August.

The scheme blamed the coronavirus pandemic and the resultant rise in claims for its financial woes, given it has a much higher proportion of older members than other schemes, on average. More than 27% of its members are pensioners, compared with the industry average of 11%.

The CMS has been negotiating with seven medical schemes, all with more than 100,000 members and a solvency ratio of above 25%, and with an age profile able to “shoulder the risk of the Health Squared population”. The regulator also invited the Government Employees Medical Scheme (Gems) to the engagements to accommodate members who are state employees.

But in the end, only a few medical schemes committed to the migration concession without underwriting or waiting periods, the CMS said last night, without naming them.

“This would still not be enough to ensure cover for all Health Squared members.”

The regulator stressed that medical schemes cannot exclude any person or their dependants from joining an open medical scheme, hence no Health Squared member can be turned away. But the Medical Schemes Act does allow schemes to apply waiting periods for new members.

“Members who have been with Health Squared for a continuous period of up to 24 months, ending less than 90 days before applying for new membership, might be subjected to condition-specific waiting periods,” the CMS said. “However, such a waiting period shall not affect the payment of prescribed minimum benefits (PMBs).

PMBs are a set of 271 medical conditions and 26 chronic conditions, including the likes of chronic renal disease, asthma, cardiac failure, diabetes, hypertension, Parkinsons disease and multiple sclerosis. So those currently undergoing dialysis, for example, should not be left to self-fund it during a waiting period.

Members who have had continuous cover of more than 24 months, terminating less than 90 days immediately before the date of application, may be subjected to a general waiting period of up to three months, except in respect of PMBs.

With regard to condition-specific waiting periods, Health Squared members and their dependants will not be entitled to claim benefits for healthcare services in terms of any pre-existing condition “for which medical advice, diagnosis, care, or treatment was recommended or provided during the 12 months preceding the date of application to a scheme for membership”.

What next?

Meanwhile, the CMS confirmed it will oppose Health Squared’s high court liquidation application on Thursday.

The regulator had intended to put the scheme under curatorship, but as it was identifying a suitable curator, Health Squared applied for a voluntary liquidation order.

The Nephrology Society — a non-profit organisation which looks after the interests of patients with kidney disease — has also filed an affidavit to postpone the liquidation for two months.

Health Squared’s administrator Agility Health has said it will respect the authority of the court “to decide the course of action that will put members first”.

The regulator has advised Health Squared members that the medical scheme still exists until the high court orders otherwise.

“As such, members that are applying for membership with other schemes are required to first terminate their membership with Health Squared as belonging to two or more medical schemes is prohibited in terms of the law”.

“Despite the unfortunate situation in which the engagements ended, the CMS hopes that individual schemes will consider enrolling Health Squared members without waiting periods where doing so will not jeopardise the interest of their members,” the CMS said.

• GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.

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