> Navigate

Unwholesome practices

Medical schemes continue to battle against fraudulent claims. In March, The Times reported that corrupt doctors, pharmacists, physiotherapists, radiologists and pathologists were ripping off medical schemes to the extent of about R22bn/year. The industry disputes the figure, saying correct estimates point to half that amount.

There are no official statistics on medical aid fraud. Agility Global Health Solutions, a risk management company and medical scheme administrator, estimates between seven percent and 15 percent of total medical expenditure can be attributed to fraudulent claims. That is between R7bn and R14bn of the R93bn that medical schemes paid to healthcare providers (doctors, pharmacists and hospitals) in 2011. The Council for Medical Schemes has yet to release the total amount paid to service providers in 2012.

Internationally, it is estimated that losses due to healthcare fraud and abuse may account for between three percent and 15 percent of total expenditure, and Discovery Health CEO Jonathan Broomberg said applying these estimates to SA was likely to give a more realistic picture. In his view, the costs of fraud in SA's private healthcare system are probably closer to the lower end of this range. Medscheme, which administers schemes such as Bonitas Medical Fund, said local and international surveys should put the figure at around R12bn. That would mean each of the 8,5m members of medical aid schemes loses about R1 400/year to fraud. Agility Africa CEO George Roper said medical aid fraud had become more complex in recent years. He said that in the past, instances of fraud were committed by providers and, to a lesser extent, members, but now there was also collusion between members and providers, which was difficult to pick up.

He said the biggest instance of fraud was when providers claimed for services that were not provided, though the provider might have seen the patient. Making this difficult to track was that patients were not aware of consumables such as bandages or syringes that might or might not have been utilised during surgery and were later billed for. Roper said the volume of items that health providers bill for has been rising.

Instances where providers inflated the claim by charging separately for individual items instead of a category have become common. Also common is the practice of charging at initial consultation rates instead of lower follow-up rates. Some providers submit multiple claims dated days or weeks apart with minor changes, for example, to amounts payable and tariff codes, in an attempt to bypass the duplicate checks of the medical scheme's administration system.

Medical schemes have been working together with risk management firms and law enforcement agencies to track down and prosecute perpetrators. They attribute some of their non-healthcare expenditure to the sophisticated technology they use and the administrators with top-notch IT systems they have to hire to curb the abuse of funds. Last year two doctors were arrested in Durban for medical aid fraud amounting to R3,5m. They reportedly faced charges of claiming for services that were never rendered.

Schemes say they have made progress on some fronts, but concede the challenge persists. Lynette Swanepoel, manager of the Healthcare Forensic Management Unit, a division of the Board of Healthcare Funders, said that as medical schemes and administrators became more sophisticated in preventing and investigating fraud, so did fraudsters. But she disagreed that medical aid fraud was on the rise. She said that perhaps people had been paying more attention to the extent of the problem of late, adding that the only "new" experience was that syndicate fraud in healthcare appeared to be more prevalent now than ever before. Healthcare syndicates are reported to have acted in various ways. These include the collusion between medical scheme members and providers to make claims for services that were never rendered.

In some instances, criminals have used complex technology to steal or duplicate members' identities to make exorbitant claims. Schemes and administrators often pick this up only after paying the claim. As a result, they spend a lot of time reviewing, instead of investigating, suspicious claims. Roper said part of the problem was that in the past schemes and their administrators did not invest enough in their IT systems to detect fraud. Another problem was that it was often easier for them to just pay a claim than to frustrate members with a lot of queries.

Swanepoel said schemes and administrators were improving their fraud detection systems in that many were starting to use predictive analytics and stricter rules within their business and operating platforms. She said that challenge was that they would never completely eradicate fraud and wastage and many frauds went undetected. Some administrators have developed systems that have clinical knowledge embedded in the system through thousands of codes. These make it possible for administrators to pick up suspicious line items, for instance for a procedure that is appropriate for an adult but was submitted in a claim relating to a child.

Andile Makholwa: The Financial Mail, 10 May 2013