Business Maverick


Medical practitioners lambast Discovery Health for ‘unethical, irregular’ clawbacks

Medical practitioners lambast Discovery Health for ‘unethical, irregular’ clawbacks
Discovery Health office in Sandton, Johannesburg. (Photo: Gallo Images / Luba Lesolle)

Medical practitioners are up in arms, saying the scheme is forcing them to hand over clinical notes and intimidating them into paying debt that has long prescribed.

Discovery Health has come under fire from medical practitioners for unethically “clawing back” claims it had approved and paid, well past even the three-year common law prescription period. 

A medical aid fund must, in accordance with the Medical Schemes Act (MSA), query or dispute a claim within 30 days from the date of lodging, by providing written notice to both the fund member and the healthcare provider. The latter then has 60 days within which to respond and rectify the claim. If the scheme does not notify either party within 30 days that a claim is erroneous, or fails to allow correction and resubmission, the onus is on the scheme to prove the error.

This is a statutory time limit that extinguishes the right to, at a later stage, revisit the issue afresh, contest and claim back payment. 

Discovery has exceeded these time limits, by far. Some treatments were pre-authorised, accepted and paid after the procedure, while others were authorised and paid once the procedure was performed.

The scheme is now, in order to enforce their clawbacks, withholding payment due to practitioners for the accounts of new patients until practitioners accept liability and settle the “old” (disputed) debt. 

Discovery does not deny that it enforces clawbacks, claiming it is legally entitled to do so to protect the scheme’s income.

However, practitioners allege it is threatening them with disbarment and/or criminal prosecution, and that they are coerced into signing acknowledgments of debt for which no evidence exists. 

In terms of Section 66(2) of the MSA, a practitioner registered with the Health Professions Council of SA (HPCSA) may only be punished under the Health Professions Act. Section 16 of the MSA further obliges the Council for Medical Schemes (CMS) to report unprofessional conduct by practitioners to the HPCSA as the statutory body which has jurisdiction over its registered practitioners.

Medical schemes cannot discipline, fine or prosecute health practitioners – they may only report practitioners to the HPCSA or the police.

Clawbacks are an unethical practice of retrieving money already paid out to practitioners without allowing them access to patient records for which the amounts that were paid out, are being reclaimed.

Practitioners are also denied the right to have disputed cases heard by way of a peer-review process of each patient file to determine whether improper or overtreatment was performed.

In a guidance to members in February 2018, the Professional Board for Physiotherapy, Podiatry and Biokinetics expressed concern that “certain” schemes were behaving unethically towards registered practitioners.

It said schemes may only deduct such amounts if there has been proven theft, fraud, negligence or misconduct, and “an accused person should be found guilty of such offences by a court of law”.

Section 34 of the Prevention and Combating of Corrupt Activities Act provides that anyone who holds a position of authority and who knows or ought reasonably to have known or suspected an offence involving R100,000 or more, must report it to the police. 

Failure to do so is an offence. 

The board said practitioners should be afforded a right to be “presumed innocent until proven guilty”. 

But that is not happening: Practitioners say they are accused of fraud and theft, based on an algorithm’s flagging, given days within which to respond, and forced to sign admissions of guilt and pay for what appears to be “billing errors” after using incorrect codes. 

These codes are used to protect patient confidentiality. 

Practitioners may also not disclose all clinical notes without the patient’s informed consent. Yet the fund insists this information must be sent to it. It is relying on Section 15 of the National Health Act, which permits a healthcare provider to disclose patients’ personal information to others, as is necessary “for any legitimate purpose” – but this is a breach of the Protection of Personal Information Act.

Physiotherapists, in particular, appear to be targeted but GPs, specialists and other technical professionals have also complained. None of them were prepared to go on record, for fear of reprisal.

One specialist explained it is a sensitive issue for the sector as healthcare professionals, who have taken the Hippocratic Oath, are accused of fraud and instructed to part with clinical notes. 

She has been “audited” twice: In the latest exercise, Discovery requested raw data and confidential notes from 300 patients stemming from 2016.

“I’ve tried to be compliant because I was audited before, burnt my fingers, and paid that debt. I am very cautious – other colleagues were also audited last year, and forced to pay between R2- and R3-million.”

The risk of paying fraudulent or irregular claims… must be balanced by the right of a scheme to subsequently check for such irregularities and to allow a scheme to set off any such payments against future claims, to recover these monies for the scheme and its members. The full benefit of all recoveries vests with the medical scheme members since if these irregular payments were not recovered the medical scheme contributions would need to be higher to cover these additional costs.

She says she cannot afford this – last year, her practice was closed and she is recovering from the loss. 

“I have all the authorisation numbers, provided by Discovery. Why don’t they stop the issue at the source – their own staff?”

The specialist, during her first audit, had to access her bond to pay Discovery. “It was the most revolting experience. If this happened again, I would be broke because 80% of my practice serves Discovery members.”

Worse still, is that the forensic panel members the practitioners sit before are in most instances fund administrators, not from the medical field.  

“Why do they ask for clinical notes? What would they understand about my notes? What about my doctor-patient confidentiality? They issued codes for every single case – and I ended up paying it.”

The SA Society of Physiotherapy, in a February 2021 guidance, noted practitioners have an ethical obligation to protect patient confidentiality. “Any failure of this duty may result in the HPCSA taking disciplinary steps against such a practitioner. However, even where a contract exists between a practitioner and a funder, the practitioner must still comply with the law and ethical obligations regarding patients’ privacy, which includes the protection of their information.” 

Informed consent must be either in writing or orally and while patients sign contracts with their medical schemes, those do not override a medical practitioner’s statutory and ethical duties towards patients.

An association of practitioners plans to bring a giant charge with the CMS and institute court action against Discovery, if it does not stop the clawbacks.

Professor Birgit Kuschke, a contract and insurance law specialist, says on the facts Discovery is “threatening and terrorising” practitioners to sign acknowledgments for unsubstantiated and prescribed debt.

“In many cases, these were pre-authorisations – surgeons do the work, get paid and are then told by the fund they shouldn’t have so the fund is withholding other payments due,” Kuschke says.

Some practices now force Discovery patients to pay cash to avoid the clawback. 

“Upon presenting the receipt to the medical aid, the scheme rejects the patient’s claim and alleges it has already paid the practice directly, which it has not, and that the practice is double billing or misappropriating the patient’s payment. They deduct from patients’ benefits but don’t pay practitioners. It is unconscionable conduct.”

Kuschke says practitioners need to come forward: “So many individual practitioners are feeling guilty – they don’t realise that it’s a nationwide problem of accusing them of theft and fraud. People are taking on extra debt to repay Discovery – divorcing, closing practices – ‘for all the money you ever owed us’.” 

Responding, Discovery Health says, “Clawbacks aim to recover payments made from medical scheme funds [that belong to members] that have been paid inappropriately and therefore constitute unjust enrichment on the part of the practitioner.”

Kuschke says Discovery must first prove unjustified enrichment. If a treatment is pre-authorised, there is an agreement regarding the payment and thus cannot lead to an enrichment claim in law. 

“The enrichment and the impoverishment have to be calculated and proven. The moment they pay the claim, they have engaged consciously with the practice. They are not paying by mistake – they can’t subsequently plead unjustified enrichment.”

Citing a lack of administrative capacity, Discovery said it processes about 275,000 claims daily: “The vast majority of claims are made appropriately with the requisite information to facilitate payment within a few days. Due to operational capacity limitations of schemes and administrators to verify the enormous volumes of claims and in particular to check these for fraud the schemes are forced to accept the vast majority of claims at face value.

“It would not be fair to the majority of members and practitioners who claim in an ethical way, to delay claim payments until each claim has gone through extensive checks…

“The risk of paying fraudulent or irregular claims… must be balanced by the right of a scheme to subsequently check for such irregularities and to allow a scheme to set off any such payments against future claims, to recover these monies for the scheme and its members. The full benefit of all recoveries vests with the medical scheme members since if these irregular payments were not recovered the medical scheme contributions would need to be higher to cover these additional costs.”

And yet, the scheme is bound by the statutory 30/60-day limit to bring claims – not three years. 

Discovery said it approves and pays for pre-authorised claims in “good faith”, however, it will take action through its Fraud Waste and Abuse (FWA) process to recover funds – “regardless of whether there was pre-authorisation or not”.  

This raises the question of what a pre-authorisation means if a scheme can, without investigation, claw back funds. 

Asked whether individual patients, many of whom pay for treatments from their medical savings accounts, are reimbursed, Discovery said “FWA recoveries are paid directly to the medical scheme; this is a direct saving for members.”  

But the funds should be refunded to the member, not to benefit the scheme’s bottom line. 

Discovery said as a not-for-profit entity, which holds members’ funds, it needs to be able to reimburse its members or practitioners when they have incurred medical costs or performed medical services.

And yet settlements of debt are reflected as credits on the bottom line of the company, benefiting its shareholders.

Discovery claimed the processes it uses in identification, investigation and recovery of funds are fair and compliant with the applicable legislation. “The interim report of the Section 59 Investigation has also upheld Discovery Health’s interpretation of Section 59 and the legality of all the processes followed.”

That investigation, instituted by the CMS, examined black practitioners’ allegations of unfair treatment, including clawbacks. In January 2021, the interim report was released. The panel is working on a final report.

A CMS spokesperson said, “In the interim, providers who have complaints against medical schemes may lodge a complaint through our complaints process and these will be dealt with in terms of the current legislation while the report is being finalised.”

But in terms of the investigation, negligence and fraud must be proven before setting off any amounts. 

The same should apply to all clawbacks: A fund must prove improper billing, and only then withhold funds. BM/DM


Comments - Please in order to comment.

  • Gina Schroeder Schroeder says:

    I know 2 physios this has happened to. I stopped being a Discovery member due to behaviour like this.

  • Geoff Krige says:

    What a mess. Looking at the phenomenal growth of Discovery into a mega-corporate now diversifying into all kinds of financial services shows just how much profit the medical aids funds raise. In a compassionate society it would be considered completely unethical to make this much money out of exploiting the natural desire of people for decent health care. If it wasn’t for the dismal ANC record with SOEs and Health Services, I would say roll on NHI!

  • William Stucke says:

    Discovery claims to be a “not-for-profit entity, which holds members’ funds”?

    What absolute rubbish! A non-profit can’t have shareholders. Discovery most certainly does have shareholders, and distributes its considerable profits by way of dividends.

    Their business practices over the years have left a bad taste in my mouth.

  • Robert Morgan says:

    I myself have recently fallen foul of the questionable actions of this crappy company. In an attempt to claim a disability payout which I was assured by my FA and Discovery would meet no hitch, suddenly there were problems of non-disclosure. When asked why Discovery didn’t ask for a microscopically detailed forensic report *before* I started my policy, I was informed that this sort of bothersome process would put prospective customers off applying in the first place! Needless to say they virtually ran out of fine-toothed combs once my claim was admitted. The oldest trick in the book which my Financial Advisor should’ve been fully aware of. I lost hundreds of thousand of hard earned rands to these no-marks. I and my practitioners were even accused of dishonesty – just to add insult to injury. Avoid this company like the plague.

  • Jeremy Collins says:

    I joined Discovery in 1997, back when they were small enough to warrant Adrian Gore doing the presentation to our company. Since then I’ve watched them dominate and reshape private healthcare in SA, with profit incentives overriding every aspect of healthcare, including basic integrity and decency. They have a long track record of ‘errors’ on chronic or elderly patient accounts, little amounts that are corrected if checked, but if missed they add up to a considerable revenue stream. Bullying practitioners, fleecing patients, it’s all in a days work for Adrian Gore and his team of caring investment bankers.

    • Kanu Sukha says:

      There is a saying something about a leopards and its spots : In my ‘youth’ I was one of the first to acquire a ‘Lifetime’ membership in the H & R clubs group when it was launched, also founded by yours truly Adrian ! It took some ‘doing’ to acquire it … and we all know how that turned out ! Once bitten twice shy is my concluding saying. Psychopathy knows no limits to its inventiveness !

  • Rod Gush says:

    The Author of this article and a number of the commentators below, fail to clearly distinguish between Discovery Health Medical Scheme and Discovery Limited the quoted company. The Medical Scheme is a not-for-profit entity which functions in terms of the Medical Schemes Act. Its activities are overseen by the Council for Medical Schemes (CMS). The “clawbacks” by the Medical Scheme are added to the Reserves of the Medical Scheme and are Members’ funds thus benefitting the Fund as a whole. They do not “benefit the shareholders” of Discovery Limited.

    • Chris Green says:

      Thanks Rod for the clarifying comment but a fish stinks whatever the wrapping. Thanks DM for highlighting this. Yet another corporate taking advantage of the “state capture” lapses in our country.

  • Gerrie Pretorius Pretorius says:

    I am a Discovery member and disgusted to see that the scheme does not credit individual members with moneys retrieved, but instead enriches the shareholders. That is nothing else than being immoral. And because they are ‘the biggest’ they tend to get away with it. Sies!

    • John Gosling says:

      Quick Discovery story: When I returned as an ex-pat to SA in 2004, Discovery notified me that since I was not insured in SOUTH AFRICA since the age of 35 (even though I was fully insured in the US by various health insurers for 20 years) they would slap on a 50% penalty LIFETIME to my monthly health care insurance – making it unaffordable! I took this as far as the minister at the time – who shrugged shoulders – and nothing came of it. I fought tooth and nail with Discovery who told me that they had to make a profit, you know, so, sorry…

  • Tim Price says:

    I am aware that other schemes do this as well, not just Discovery.

  • Gavin Ferreiro says:

    They followed the American way, the financial returns are impressive for them but not for all. The question is why have the service providers not opened a lawsuit against them for these practices? Is it the case that “we don’t have the money, but we will die while bleeding out” syndrome? Get the evidence of malfeasance and get a lawyer who will take a percentage. Lay a case at SAPS (sic) about their fraudulent practices and use social media to trumpet their wrong doing. Question companies that subscribe to them, raise the battlements.

  • David Hill says:

    “Practitioners say they are accused of fraud and theft, based on an algorithm’s flagging,…..” I wonder if the people who developed the software are the same ones that did the Post Office software in the UK that ended up in so many Postmasters being jailed over 15 years ago and has recently been found to be the problem? Many have been released and / or their records cleared, but they are still left with 15 years of lost life, respect and earnings. Discovery have always, in my mind, been very dodgy. Now they are demonstrating it clearly.

Please peer review 3 community comments before your comment can be posted


This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.

Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

Daily Maverick Elections Toolbox

Download the Daily Maverick Elections Toolbox.

+ Your election day questions answered
+ What's different this election
+ Test yourself! Take the quiz