You\'ll pay the price for medical non-disclosure

Tag : medical material
August 9, 2008

By Laura du Preez

Failing to disclose your medical history accurately on a medicalscheme membership application form can have severe financialconsequences or even become a matter of life and death, more andmore medical scheme members are finding.

Medical schemes are entitled, in terms of the Medical Schemes Act,to terminate your membership and that of any of your dependants ifyou fail to disclose on your medical scheme application form"material information" about your medical history or that of yourdependants.

The aim of allowing schemes to terminate your membership if youfail to disclose important information is to prevent people fromjoining schemes only when they need to claim - for example, whenthey know that they need an operation. This practice is known asanti-selection. Anti-selection by some members prejudices othermembers who are contributing to the scheme on an ongoing basis,because they have to bear the medical expenses of those whoanti-select without benefiting from their contributions.

As a result, some schemes are aggressively applying the law, withdire consequence for the members whose benefits are terminated.These members may in some cases have brought the hardship onthemselves by being dishonest, while in other cases they may havebeen misled or uninformed. Three recent cases are outlined in"Families face massive bills after schemes end benefits" on thispage.

These cases illustrate the dire financial and other risks you takeif you fail to fully disclose your medical history, fail to ensureyour application form has been completed correctly or fail to checkwith your adult dependants that their medical history is fullydisclosed.

Stephen Harrison, the head of strategy at the Council for MedicalSchemes, says the termination of membership when a scheme uncoversmaterial non-disclosure is quite widespread.

Harrison says he is not sure of the reason for the increase in thenumber of such cases. But he says there is a perception among somemembers that schemes are using the fact that they can terminatemembership for non-disclosure to target high-risk members andremove them from a scheme.

Open schemes stricter
Mostly, it is open medical schemes that take action against memberswho fail to disclose their medical history because restrictedschemes generally accept members who join by virtue of theiremployment, without imposing waiting periods.

Some schemes, however, report higher incidents of non-disclosurethan others.

Spectramed is a large, growing medical scheme with about 174 000beneficiaries. Every month it receives about 1 250 applications formembership, Quincy Beukes, the principal officer of the scheme,says.

Beukes says in June this year the scheme received 1 231applications for membership.

Among such new applications, the scheme found 228 cases ofnon-disclosure following an application within 90 days forhospitalisation or other medical treatment.

The scheme considers all such cases on the basis of the materialityof the non-disclosure and referred only 24 of the 228 cases to acommittee with legal, clinical and member representation. Thecommittee is expected to consider whether an ordinary person couldreasonably have been expected to declare what the member did notdeclare.

Beukes says the 24 cases the committee considered in June resultedin the termination of 22 members' and their families' membership ofthe scheme for the protection of existing members.

These members had joined the scheme and immediately soughtauthorisation for operations such as hysterectomies,tonsillectomies or even hip replacements, Beukes says.

Jacky Mathekga, the principal officer of Discovery Health MedicalScheme, which receives 800 to 1 000 applications for membership aday, says Discovery does have cases of members anti-selecting butnot a lot.

Mathekga says these cases are usually detected by the claimsdepartment, which sees big claims from members who have been withthe scheme for only a few days or weeks or months.

For example, he says, there was the case of a woman who informedthe scheme two weeks after joining that she had just discoveredthat she was pregnant and did not know this when she joined. Herdoctor said she was then two to three months pregnant, but withinfour months she gave birth to a normal healthy baby who appeared tohave been carried to term.

James van Vught, the principal officer of Oxygen Medical Scheme,says for the first six months of this year, the total number ofcases in which membership was cancelled as a result ofnon-disclosure amounted to about 0.5 percent of applications formembership.

The Council for Medical Schemes appeal committee has heard a numberof cases concerning terminated memberships in recent months.

Families face massive bills after schemes end benefits
Case 1: Secrets and collusion
Spectramed terminated the membership of a woman, her family and herdependent father because she failed to disclose (allegedlyunwittingly) her father's heart condition. The woman was left withabout R60 000 in medical bills and her father without adequatemedical treatment that could possibly have prolonged his life.

The woman's father had a heart attack a few months after she joinedthe scheme in 2006. At that stage Spectramed found out about hisearlier diagnosis and refused to pay claims for hishospitalisation.