CONCERNS OVER REGULATION OF SWAZIMED

MBABANE – Are they a law unto themselves?

The country’s dominant medical aid scheme, Swaziland Medical Aid Fund, otherwise known as SwaziMed, is allegedly not regulated. This is despite the existence of the Financial Services Regulatory Authority (FSRA), which is mandated with the regulation and supervision of insurers, medical aid schemes, retirement funds, intermediaries and fund administrators, among other non-bank financial services. In the regulation of the stated entities, the FSRA is guided by the Financial Services Regulatory Authority Act of 2010, the Retirement Funds Act 2005 together with the Insurance Act of 2005.
SwaziMed should fall under the class of insurance, retirement funds and medical schemes service providers.

However, the Times SUNDAY has established that SwaziMed, which collects hundreds of millions of Emalangeni annually from its members, is accused by other industry players of not submitting itself to the powers of the FSRA.The industry players alleged that the regulation of SwaziMed is only in theory, but practically it did not exist. They alleged that SwaziMed is only licenced but not regulated by FSRA. This, they pointed out, was even evidenced by the zero mentioning of SwaziMed in the annual reports of the FSRA ever since the latter began supervising and regulating the medical aid schemes industry.

This publication has indeed gone through all the annual reports available on the FSRA website and all of them do not mention SwaziMed yet other medical scheme service providers are cited by name. It is alleged that this has resulted in SwaziMed engaging in anti-competitive behaviour by demanding that employers should engage them exclusively. This has reportedly unfairly disadvantaged other medical aid schemes, which are failing to penetrate the market because of this alleged behaviour by SwaziMed.

Other medical scheme service providers are Lidwala Health, United Health Insurance, Oracle Health (former Medscheme), EmaSwati Care and Mpilwenhle. SwaziMed reportedly has over 40 000 members, with the fund’s 2019 annual report putting the figure at 45 700, as it is the medical aid scheme for a number of private companies, public enterprises, government ministries and the country’s politicians (Cabinet ministers, members of parliament (MPs) and members of advisory councils, boards and committees).

In 2019, the fund announced that its net membership had increased by three per cent mainly due to the addition of members of the current 11th Parliament after the management successfully presented to the Government of Eswatini and became a preferred provider of medical aid services for the MPs.

It also listed Waterford Kamhlaba students and the Hilton Garden Inn employees as other new groups that had joined the scheme during 2019.
Sources within the industry alleged that SwaziMed considered itself to be too powerful such that it undermined the powers of the FSRA.
This, they alleged, was further evidenced by the continued disregard of Circular No. 1 of 2016 that was issued by the FSRA to try and stop the anti-competitive behaviour of some medical aid schemes to demand exclusivity from employers.

“This Circular was solely meant for SwaziMed because despite being dominant it was also demanding exclusivity,” alleged a source.

Undesirable business practice

According to the Circular, which was issued on June 10, 2016, the FSRA had noted undesirable business practice by some medical schemes, whereby they imposed undue and discriminatory restrictions on the provision of medical scheme services to members and employers. “Medical aid schemes are often offered on condition that the employer will undertake to exclusively utilise the services of that particular medical scheme. This has the resultant effect that member employees are deprived of the right to choose a medical aid scheme of choice as the chosen medical scheme may not necessarily meet the needs of the consumer,” said the FSRA.

This practice, the regulator said, also removed the competitiveness between legitimate medical schemes to provide improved medical services and deprived consumers their right to choose a service provider of their choice. The FSRA, therefore, directed all medical aid schemes to remove restrictive provisions relating to medical services. Effective June 30, 2016, the regulator said employers with more than 30 members should no longer be requested to undertake to utilise the services of one particular medical scheme as a condition of enrolment.

“To promote fair competition, medical schemes should permit the freedom of choice in so far as the selection of a medical scheme is concerned and permit splitting of the provision of medical schemes to more than one service provider,” said the FSRA. However, this directive was not adhered to, allegedly by SwaziMed, and this resulted in the FSRA issuing a public notice in the media on December 20, 2018, where it reminded that it was an undesirable business practice for a medical scheme to offer medical scheme services on condition that the employer undertook to exclusively utilise the services of that particular medical scheme or medical scheme provider.

Members of the public who had concerns were encouraged to submit their written complaints to the FSRA for necessary remedial action. In that notice, the FSRA listed four registered financial service providers who provided medical schemes services and these were; Momentum Insurance (Swaziland) Limited, Medscheme Health Insurance Limited, Swaziland Medical Aid Fund (SwaziMed) and Swazi HMO – Mpilwenhle.
A questionnaire was sent to SwaziMed Principal Officer Peter ‘Samora’ Simelane giving him an opportunity to respond to the allegations levelled against the fund, but he elected not to give answers. In a phone conversation yesterday, he acknowledged having received the questions and opted not to say anything. “I saw your questionnaire; I think you can publish the information that is at your disposal,” he said.

The following questions had been posed to Simelane: 

Does SwaziMed submit to the regulatory powers of the Financial Services Regulatory Authority (FSRA)?
We have received information that SwaziMed offers medical scheme services to employers on condition that the entity will be the exclusive service provider of such services. What could be your comment to this?
Is it fair and competitive behaviour on the part of SwaziMed, which is already the dominant player, to demand exclusivity from the employer where the entity wants to be the service provider?
Now that SwaziMed has its own hospital, we have been reliably informed by some of your clients that they are compelled by the service provider to use only this hospital whenever they need to access medical services. What would your comment be to this?

FSRA mum on issue

Meanwhile, on Thursday questions were also sent to FSRA Chief Executive Officer Ncamiso Ntshalintshali and a response was provided yesterday by the authority’s Head of Stakeholder and Consumer Affairs, Mbuso Gamedze. “We acknowledge receipt of your questionnaire on the aforesaid subject matter. The FSRA will respond accordingly when the time is right, and we thank you most sincerely for your understanding in this regard,” he said.
In a subsequent telephone engagement, Gamedze said he was not aware how SwaziMed was not mentioned in the annual reports where other regulated schemes were included.

“Those are the things I will seek to establish. But I know that we do regulate SwaziMed as per the provided legislation,” he said. It was put to Gamedze that it was one thing for the law to stipulate that SwaziMed was supposed to be regulated by the FSRA but it was another matter the scheme submitted itself to the regulatory powers of the authority. “We do regulate SwaziMed and we will respond to the questions when the time is right,” Gamedze insisted.

The following questions were posed to the FSRA:

Does the FSRA exercise any regulatory power or oversight over SwaziMed or the latter does as it pleases?
Is the FSRA aware of reports that SwaziMed offers medical scheme services to employers on condition that they will be the exclusive service provider? If such reports have been received, what steps has the FSRA taken to address the concerns?
Is it legal for a medical scheme service provider to include an exclusivity agreement to an agreement entered into with the employer? If this is not legal, what are the penalties that are imposed on those found to have engaged in such conduct?
How prevalent is such conduct within the local medical aid industry?
 Now that SwaziMed has its own hospital, is it legal for clients of this service provider to be compelled to use only this hospital whenever they need to access medical services?

Meanwhile, in 2014 the FSRA, when giving an update on ‘medical schemes issues’, reported that it had developed an action plan aimed at guiding the process of introducing a supervisory and regulatory framework for the medical schemes industry as required by the FSRA Act. As part of the plan, it said medical schemes operating in Eswatini had been identified and an introductory meeting with the medical schemes industry was held on October 24, 2013.

During the meeting, interim registration requirements were reportedly circulated and the market players were required to register by January 31, 2014.
A questionnaire focusing at understanding the nature and size of the market, the legal formation of the entities and the product offering was reportedly also circulated to the industry at the meeting, with the registration process of all market players commencing at the beginning of February 2014.

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