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CMS ANNUAL REPORT2013-2014
Governance of medical schemes
September 2014
• Background
• Inspection of regulated entities
• Curatorships
• General meetings of members
• Trustee and Principal officer fees
• Trustee Remuneration Guidelines
CONTENTS
• Governance failures persist
• Legislative framework remain unchanged
• Calibre of trustees elected on the BOT remain unchanged
• Third party influence on the affairs of regulated entities
• CMS continues strengthening governance framework for
regulated entities
BACKGROUND
• Medshield and Sizwe placed under curatorship
• Allegations of material irregularities and poor management
of schemes
• Medshield trustees challenged curatorship order
• Original curator of Medshield removed after resignation
• Both schemes have since convened successful elections
for new Board of Trustees
• Governance of the two schemes have also improved and
unlawful payments recovered by curators
CURATORSHIPS
• Poor attendance of annual general meetings
• Lack of participation by those attending the meeting
• Members complain about poor timing of meetings and lack
of accessibility
• Members motions are sometimes not tabled for discussion
• Agenda items are not properly ventilated
• Manipulation of trustee elections
GENERAL MEETINGS OF MEMBERS
TRUSTEE FEES
568 373 309 307 397 308 225 154 167 356
14
10
12 12
8
9
12
16
13
6
0
2
4
6
8
10
12
14
16
18
-
100
200
300
400
500
600GEM
S
Bonitas
Fedhealth
Hosm
ed
DHMS
Liberty
Profm
ed
LA-Health
Bestm
ed
Spectram
ed
Average fee per trustee R'000 No. of trustees
Average fee per trusteeNo. of
trusteees
PRINCIPAL OFFICER FEES
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
-
1 000
2 000
3 000
4 000
5 000
6 000
7 000M
edih
elp
Bes
tmed
DH
MS
PO
LME
D
Libe
rty
GE
MS
Tra
nsm
ed
Bon
itas
Um
vuzo
Ban
kmed
Average beneficiaries 2013 PO remuneration 2012 PO remuneration
TRUSTEE REMUNERATION GUIDELINES
Purpose
• Escalating trustee fees
• Inadequate legislative framework(Regulation 6A)
Method
• Draft discussion document released in 2011
• Comments invited from interested parties
• Divergent views emerged out of comments received
TRUSTEE REMUNERATION GUIDELINES
• CMS engaged Ernst and Young to conduct a
comprehensive study
• Study consisted of surveys and one on one interviews
• Review of prevailing remuneration philosophies
• Proposal with recommendations for the industry
TRUSTEE REMUNERATION GUIDELINES
Findings
• Current legislative framework and previous CMS papers do
not regulate amount paid as trustee fees
• Only annual disclosure is required
• Partial compliance with disclosure provisions in the Act
• No clear understanding of the role and functions of the BOT
TRUSTEE REMUNERATION GUIDELINES
• Not all schemes remunerate their trustees
• Just above 50% of restricted schemes do not remunerate
their trustees
• 45% of schemes that remunerate pay per meeting
• 30% pay a fixed monthly fee
• 8% pay trustees consulting fees
• 18% pay an hourly rate
TRUSTEE REMUNERATION GUIDELINESConclusion / Guidelines
• Develop Trustee Remuneration Policy detailing scheme’s
approach to remuneration.
• Policy must be approved by BOT/ Remuneration committee
and tabled at AGM for approval.
• Trustees provide an oversight role and should not engage in
day to day affairs of the scheme.
• Amend scheme rules to clearly delineate the role and
functions of the BOT vis a vis the Executive.
TRUSTEE REMUNERATION GUIDELINES
• Trusteeship must not be compared with non executive
directorship
• No payment of consulting fees to trustees
• No remuneration for attending conferences or training
• Schemes must conduct an independent benchmarking
exercise amongst other schemes
THANK YOU
Mr. Stephen Mmatli
Head: Compliance & Investigations unit
Tel: 012 431 0578
Fax:012 431 0678
Email: s.mmatli @medicalschemes.com