The Minister of Health intends to introduce the attached Medical Schemes Amendment Bill, 2007 (the bill) in Parliament in 2007. The bill is hereby published for public comment in accordance with rule 241 of the Rules of the National Assembly.
Pretoria, 0001 (for the attention of the Director: Social Health Insurance) by not later than Wednesday the 31 of January 2007.
Words in bold type in square brackets indicate omissions from existing enactments. Words undcrlined with a solid line indicate insertions in existing enactments.
to provide for the establishment of a risk equalisation fund; to extend the functions of the Council for Medical Schemes; to provide for the application of risk equalisation to medical schemes, subject to certain exceptions; to provide for the provision of prescribed data by medical schemes to the Council for Medical Schemes for purposes of risk equalisation; to grant powers to the Minister to make regulations prescribing the methodology and procedures for risk equalisation; to provide for the early termination of office of a trustee or principal officer to be subject to approval by the Registrar; to amend the provieions relating to benefits provided by medical schemes; to amend the provisions relating to the composition of boards of trustees and eligibility of persons to serve as trustees or principal officers; to provide for overnight of the Registrar over election processes; to amend the provisions relating to disclosure of trustee remuneration; to provide for good corporate governance guidelines and associated disclosure requirements; to amend the provisions relating to the powers of the Minister to make regulations; to amend the provisions relating to offences; and to provide for matters in connection therewith.
1of Act 62 of 2002, section 40 of Act 65 of 2002, and section 25 of Act 52 of 2003.
of beneficiaries and may.
'financial transfer' means a financial transfer from the risk eaualisation fund to a medical scheme.
Amendment of section 7 of Act 131 of 1998, as amended by section 2 of Act 55 of 2001.
Insertion of Chapter 3A in Act 131 of 1998 3.
Establishment of Risk Equalization Fund 19A.
The Council must establish a Fund to be known as the Risk Eaualization by the Council.
report on the Fund as part of the reuort contemplated in section 14.
The Fund shall vest in and be administered bv the Council.
the Council for the mmmses mentioned in section 19D.
must utilise the money in the Fund in accordance with section 19D onlx for money received in. and payments macle from.
interest and dividends derived fiom the investment of money standing to the credit of the Fund: and other money lawfully mid into the Fund.
Council in accordance with subsection (2).
Money in the Fund shall.
thereof in termsof this Chapter.
of the Council. not being a liabilitv arising out of or in COMection with any such account. have or obtain recou~se or any right charge or otherwise. against money standing;to the credit of such account.
Investment ofmoney not immediately required money of the Fund which is not muired for immediate allocation.
Finance Management Act. 1999 (Act No.
must be incorporated into the remrt in section 14.
determined bv the Registrar under section 191 to the Fund on being notified the Registrar in Writing of the amount of the financial transfer, within the period and in the manner stated in the notice.
If a medical scheme fails to uav a financial transfer referred to in uaramu or w it within the specified period, the Registrar may.
wav of civil action in a competent court recover the amount owed by the medical scheme.
the Council may.
The Minister shall, in consultation with the Minister of Finance and after following the consultation urocesses in calculation of the financial basis assess the financial transfers uavable bv a medical scheme. if any.
to the risk eaualization fund and the financial transfers to be made to a medical scheme. if am.
to correct an error or to retrosDectively of risk factors or other material changes.
lodged in terms of this subsection does not sus_pen to Day a financial transfer pending the outcome of an aumal. Drovided that if the Registrar is of the minion that the information submitted bv the medical scheme in accordance with Section 19L mav be incorrect, the Registrar may on some other reasonable basis make a determination of a financial transfer to be mid the ad.
The Registrar may. after consultation with the Minister and Minister of Finance, determine a schedule for the uromssive to in section 191, transfers on the financial soundness and viability of medical schemes in general.
must provide for an annual increase in the uercentage of the financial transfers that are pavable and the total financial transfers referred to in section 191 to become uayable witbin a reasonable period.
Review and amendment of formula for calculating financial transfers thereof and may recommend to the Minister anv amendments thereto necessary for ensuring utilization of the Fund.
The Minister may annually.
on the recommendation of the Council and in consultation with the Cabinet member resuonsible for national financial matters.
Everv medical scheme must at such intervals and in the form determined bv the Registrar submit to the Re~strar the information that he or she may of risk equalization.
J2) The Registrar must take reasonable measures to protect unauthorized access to information submitted in accordance with subsection (1).
It is an offence for any person to submit information that to the knowledge of that person is untrue or misleading in any material respect.
Verification of information in relation to information provided in accordance with section 19L, a medical scheme to submit to him or her the information as specified in the notice: or a report by an auditor or by any other person with appropriate the Registrar, on any matter soecified in the notice. J2 The Registrar may at any the business of a medical scheme if the Registrar has reason to believe that information submitted bv a medical scheme in accordance with section 19L is incorrect or false. The provisions of section 44, with the necessm changes, apply under this subsection.
the provisions of anv other law.
Board in terms of section 45 of the Auditing Profession Act. 2005 (Act No.
of that Act, if the reuort, amongst others. relate to the medical scheme's participation in the risk equalization fund; and inform the Registrar in writing of any matter relating to the affairs of a medical scheme of which the auditor became aware of in the performance of his or her functions as auditor of that medical scheme, that.in the opinion of the auditor relates to the medical scheme's participation in the risk equalization fund or may nenativelv impact on the medical scheme's abilitv to pay the financial transfers referred to in section 19H.
An auditor must inform the principal officer of a medical scheme of anv information referred to in subsection (l), provided to the Registrar.
may not be held to constitute a contravention of any provision of the law or breach of any provision of a code of professional conduct to which such auditor may be subiect.
Nothing in this subsection may be construed as conferring upon any person anv right of action against an auditor which. but for the Drovisions of that subsection, such person would not have had.
Annual dissemination of informationon risk equalization must annuallv 4 months before the start of the calendar year, inform each medical scheme of its proiections on financial transfers relating to that medical scheme.
Administrative penalties any step he or she mav take under this Act, immse on a medical scheme for anv failure to comply with a provision of this Chapter.
with the relevant provisions of the Promotion of Administrative Justice Act. 2000 (Act No. 3 of 2000) and mav not exceed the amount prescribed by which such failure continues.
to the Council within the period soecified bv the Council.
period. the Registrar bv way of civil action in a comuetent the amount of the administrative penaltv from the medical scheme.
Amendment of section 29 of Act 131 of 1998, as amended by section 9 ofAct 55 of 2001 4.
to such conditions as mav shall provide for the determination of contributions on the basis of income or number of dependants or both income and the number of deuendantq may.
for the determination of contributions on the basis of efliciencv factor: and including age.
sex, or past or present state of health of a beneficiarv.
Insertion of section 29B in Act 131 of 1998 5.
A medical scheme shall om~de in its des which shall be provided to evexv of the medical scheme.
Amendment of section 33 of Act 131 of 1998 6.
will not jeopardise the financial soundness of the medical scheme or of any existing benefit option within the medical scheme.
limitations on the number of benefit o~tions that mav be registered in a medical scheme.
Amendment of section 35 of Act 131 of 1998, as amended by section 12 of Act 55 of 2001 7.
"(12) The Registrar may, when he or she has received the information referred to in subsection (1 l)[, and in concurrence with the Council] -".
Amendment of section 37 of Act 131 of 1998, as amended by section 14 of Act 55 of 2001 8.
Amendment of section57 of Act 131 of 1998, as amended by section 23 of Act 55 of 2001 9.
members of the medical scheme from amongst members of the medical scheme.
or elected in terms of the rules of the medical scheme.
The election of a trustee bv the members of a medical scheme shall not be valid unless all the members of the medical scheme were eligible to vote in the election of that trustee.
The Registrar may.
Court for an order contemDlated that an election held bv a medical scheme was conducted in a manner which did not provide all the members of the medical scheme fixir to participate in the elections; or in a material resuect with the rules of the medical scheme or such conditions as mav be prescribed.
deem fit, and take such stem as may be necessary to ensure continuity of governance in the medical scheme pending the outcome of the new election urocess.
an employee, director, officer, consultant or contractor of [the administrator of the medical scheme concerned] any uerson contracted bv the medical scheme to provide administrative.
a broker or an employee. director. shareholder. officer, consultant or contractor of a uerson which Dmvides broker services:or administrative. marketing. broker.
an employee, director, officer, consultant or contractor of [the administrator of the medical scheme concerned] any uerson contracted bv the medical scheme to provide adminismtive.
director, shareholder. officer. consultant or contractor of a -person which provides broker services: or the medical scheme to urovide administrative. marketing.
the medical scheme concerned: and any uerson contracted by the medical scheme to provide administrative.
Insertion ofsection57A in Act 131of 1998 10.
The board of trustees and urinciud officer of a medical scheme shall establish and maintain an adeauate and effective governance. which shall be consistent with the nature.
complexity and risks inherent in the activities and the business of the medical scheme concerned.
The Council may, from time to time.
A medical scheme shall. at such intervals and in such manner and format as the Council may time to time determine.
Amendment of section 66 of Act 131of 1998, as amended by section 27 of Act 55 of 2001 11.
liable on conviction to a fine or to imprisonment for a period not exceeding five years or to both a fine and imprisonment.
of subsection (1).
or maintains or authorises the urepmtion or maintenance of any falsebooks of account or other records of falsifies or authorises the falsification of any books of account or other records. which causes. may cause or is intended to cause an error in the value of a financial transfer; or in any other way makes use of any fraud, art or contrivance whatsoever. or authorizes the use of any such fraud, art or contrivance which causes.
of an offence and is liable on conviction to a fine or to imurisonment for a period not exceeding 10 years. or to both such fine and imurisonment.
Amendment of section67 of Act 131 of 1998, as amended by section 28 ofAct 55 of 2001 and section 3 of Act 62 of 2002 12.
neceSSary to create of such medical scheme products in the market: and in the best interests of low income consumers.
This Act is called the Medical Schemes Amendment Act, 2007, and comes into operation on a date to be fixed by the President by proclamation in the Gazette.
the quality of data available for purposes ofadministering the risk equalisation fund; and any other matter relevant to such approval.