Discovery Health will pay for its system error itself, not members

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RYK VAN NIEKERK: Discovery Health is one of the biggest players in the medical fund industry in South Africa. It manages various medical funds and administers various other third-party funds as well.

Last week it found itself in the firing line after a letter was sent to some 16 500 Discovery Health Medical Scheme members in which it was said that members would have to repay the fund significant amounts.

This followed an apparent fault in the administrative system – that last year the fund had paid out medical expenses on behalf of members which should not have happened.

According to media reports there were some instances where members had been asked to repay more than R70 000. However, last week Discovery Health announced that it would itself bear the costs of the system fault and that members no longer had to pay the amounts back.

Discovery Health chief executive Dr Ron Whelan is on the line. Ron, thank you so much for your time. What happened here?

RON WHELAN: Thank you so much, Ryk. I apologise that I’m not going to be able to speak Afrikaans in this interview. My Afrikaans is not as good as yours.

I wanted to start out by firstly apologising to those members of the Discovery Health Medical Scheme who were affected by this error. We recognise that we’ve let you down and we apologise unreservedly for that.

Secondly, I want to assure Discovery Health Medical Scheme members and indeed Discovery clients that Discovery will always act in accordance with its principles and values and do what’s right.

The situation is no different for us.

In this instance we’ve carefully listened to members through the first few days of this recovery related to the system error that you’ve mentioned, and through that process we’ve better understood their individual experiences and circumstances in relation to the error.

Listen/read: MediCheck calls for full probe after Discovery medical aid error

Based on that, we’ve taken a clear and principled decision to cover the costs of the overpaid amounts on behalf of members. Ultimately these decisions can’t simply be made on data, statistics and various other technicalities.

They must be made on the basis of member experience, principles and doing what’s right, and I hope your listeners recognise that.

RYK VAN NIEKERK: You say Discovery will absorb the losses. I would assume they are significant. Would it be the actual medical scheme that will absorb the loss – meaning members or all members who may be affected next year when increases are announced, to cover the extent of the losses?

RON WHELAN: It’s a very, very important question, Ryk. I want to state it categorically that these costs will be covered by the Discovery Group and Discovery Health as the administrators of the Discovery Health Medical Scheme.

This will have no impact on either the impacted members or other members of the medical scheme.

Effectively what is happening here is Discovery Health is paying the monies that were overpaid to these particular members by the Discovery Health Medical Scheme back to the Discovery Health Medical Scheme. That means no impact on contribution increases going forward. It comes directly out of the Discovery Health financials.

RYK VAN NIEKERK: In the statement Discovery put out last week it stated that 16 500 members are affected. How much money is involved?

RON WHELAN: The total overpaid amount as a result of this error is approximately R125 million.

That’s equivalent – and it’s important, Ryk, to recognise this – to 0.1% of annual claims paid out by the Discovery Health Medical Scheme.

It’s a very big number. R125 million is a lot of money, but in the context of your overall scheme payments on an annual basis, relatively small.

That is the amount that your Discovery Health and Discovery Group will be paying into the medical scheme to settle the overpaid amounts for this particular error.

RYK VAN NIEKERK: Where did this error come from? Was it internal systems development, and why wasn’t it picked up earlier?

RON WHELAN: The errors manifested in a claim system update back in the early parts of 2025.

Ironically, it was a claim system update to introduce a new benefit into the system.

It then had a knock-on effect on the above-threshold benefits for members on the Executive, Comprehensive and Priority plans. That’s a very important point in that it affected a small subset of Discovery Health Medical Scheme members on Executive, Comprehensive and Priority plans, representing about 0.6% of members across these plans. That’s where it started. It was a second-order effect.

Read: Discovery to hike top, low-end medical aid plans by 7.9% in 2026

Why it took so long to manifest through the system is that it related to the accumulation rules – and I know this is complicated stuff. It related to accumulation of amounts towards the above-threshold benefit.

And yet the nature of that is that that accumulation happens through the course of the year.

It gradually accumulates – January to February, February to March, March to April and so on and so forth. So you could start to see some of the impact of this error only much, much later in the year.

It was then that our drug risk team that monitors for aberrant medicine expenditure started to identify some changes in medicine expenditure.

Of course those changes in medicine expenditure could just be through consumption patterns. So it’s often hard to discern what’s driving changes in any of the numbers.

Read: Discovery Health Medical Scheme member loss continues

But on further analysis in the latter parts of the year we were able to identify the root cause of this and then move very quickly to fix the other system error. That implementation went live in December, and we aimed to communicate directly to members as soon as we are able to validate the error, together with the quantum.

RYK VAN NIEKERK: Something that stood out for me was, as you’ve said, only 16 500 members were affected. That’s a small number.

But the outcry from the public was huge. It seems as if many, many more members have been affected.

On Moneyweb, for example, we’ve received hundreds of comments on this story, and I saw in other media publications and websites that public comments were harsh – and it seems like there were many more people affected than just 16 500 people.

Were you surprised at the reaction from the public?

RON WHELAN: Not at all surprised. Once we had started engaging with members and understood the unique circumstances and experiences of each member on an individual basis, we could understand the anger and the frustration. It was quickly evident.

It took us two to three days to definitively reach a conclusion, despite the legal and the legislative frameworks and the technical analysis. We needed to act on a principled basis here, taking into account our member experience.

It was on that basis that we quickly took a principled decision to cover the costs on behalf of members for the overpaid amounts.

But I do want to highlight, Ryk, that the error is circumscribed to just over 16 500 members. It does seem like a big amount, Ryk, but in the context of the Discovery Health Medical Scheme, which has close on 2.7 million members, it is a relatively small number.

But in situations like this, this is not about the numbers. It’s not about the quantum, it’s about the principles and that’s the way in which we are seeking to respond to this error.

RYK VAN NIEKERK: Now, there are several companies in South Africa which elicit the ire of South Africans. Discovery is one of them. The banks – all of them. When there’s a mistake made everybody jumps up and down. DStv is another one.

But I think there are some misconceptions and perceptions regarding the healthcare industry, and because Discovery is such a big player, it becomes basically a default perception about Discovery, which is that companies make money from medical aids, so Discovery Health is now trying to recover this money because it wants to increase its profits.

Read: More than half of Discovery’s medical aid plans saw declines in members last year [2025]

As I understand it, Discovery Health only makes money by administering the medical aids – Discovery’s own medical aids as well as funds or schemes from other third parties. I don’t think that is clear enough or sufficiently understood in the public domain. Is that something that worries you or do you disagree with it?

RON WHELAN: Ryk, it’s a very, very important question. I’m glad you asked it because it is important that we clarify.

Discovery Health is the administrator of medical schemes. In addition to the Discovery Health Medical Scheme, we administer many other medical schemes as well for employers; those are employer-based medical schemes in those arrangements.

I think the system works well in this respect, Ryk, that we get paid a monthly administration fee per member for administering the benefits of your scheme members.

What that means is that if I decline a claim, that has no impact on Discovery’s financials.

If I pay a claim, it has no impact on the Discovery financials, which impacts the Discovery Health Medical Scheme and the other schemes that we administer.

So it puts me in a position as the CEO of Discovery Health, when we’re assessing member claims [to] assess those strictly in accordance with the Medical Scheme rules without fear or favour – and certainly no undue influence on our bottom line. That’s very, very important.

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In relation to this error, what happened was that because of the error the Discovery Health Medical Scheme paid out claims at a higher rate than they should have paid out. Ordinarily those, your moneys, are recouped into the medical scheme. You go through the recoveries to ensure that no members are worse off through this. In this instance we, as the administrator, are funding the costs of this particular error.

And then, Ryk, I do want to come back to your original question on this. We recognise that we have a big responsibility as Discovery Health across the environment in South Africa. We take that responsibility very, very seriously. We recognise that healthcare is a sensitive issue and we must manage the claims very accurately.

Our claim system runs at 99.9% accuracy. Even in this particular area in 2025 we had 99.9% accuracy.

Ryk, we process over 85 million claims on an annual basis. To run at 99.9% accuracy is quite remarkable.

That said, we will take the learnings from this error. We will aim to get better around this error. We are recognising that, as much as we aspire to be perfect, it’s tough to get these systems working at 100% accuracy.

You’ve seen errors in the banking sector. You’ve seen errors in other sectors, as you mentioned here earlier on. They do happen from time to time. And when they happen, we must act quickly. We must act ‘principle’ly and do whatever is required to make things right.

RYK VAN NIEKERK: Ron, thank you very much. That was Dr Ron Whelan. He is the CEO of Discovery Health.