Efforts to curb fraud, waste and abuse of medical aids necessary to keep costs low

Do medical schemes and administrators employ racial profiling, bullying and rogue tactics against Black and Indian doctors? Definitely not.

What is the impact of fraud, waste and abuse on the medical aid sector? At least 10 to 15% of all medical aid claims are fraudulent, abusive or wasteful in nature, about R22-billion last year alone.

So why has the past week been characterised by accusations that medical schemes and administrators were bullying the medical providers and patients. Medical schemes and administrators are obliged by law to safeguard the funds of the members against abuse and any funds recovered in this regard help to keep annual increases of medical aid under control.

Funds recovered help keep members’ fees low and deviant providers are in the minority

Medscheme recovered R147-million from the approximately R45-billion paid in claims. This is roughly 0.3% of total claims paid. The true savings are therefore from the change of claiming behaviour on the part of medical providers post forensic intervention which is over R11-billion. These are claims that would have been paid and would have required a higher contribution increase from members and reduced benefits.

In 2018, Medscheme investigated 1 101 cases, of which 830 had forensic findings. This represents only 3% of the approximately 24 500 healthcare service providers (19 000 medical professionals, 4 950 pharmacies and 550 facilities) we pay monthly. All other providers were paid without audit;


Out of the 830 forensic matters, we lodged 94 complaints with the Health Professions Council of South Africa (HPCSA) for fraudulent or unethical conduct, which we encourage the HPCSA to investigate as a matter of urgency.

In 2018, payment of less than 0.3% practices were held back subject to resolution of suspected fraud, waste and abuse and of these 830 forensic interventions, only 21 complaints (2.5% of all the cases) have been formally logged with the Council of Medical Schemes (CMS).

These stats are an indication that a very tiny minority is impacted by our audits, and that the claims of bullying are without basis. However, the company encourages any organisation or individual to lodge complaints with the industry regulator or pursue legal processes.

Context of fraud waste and abuse

Every minute somewhere someone is involved in the abuse and waste of health care services or is committing fraud against the medical aid sector.

When someone goes to the doctor for a headache, stomach cramps, a sceptic wound, and a doctor performs blood tests, could this be considered medical aid abuse, waste or fraud?

To make matters worse, what if the doctor bills for services not rendered, use incorrect codes for services, usually at a higher tariff, waive deductibles and or co-payments, bill for a non-covered service as a covered one and unnecessarily or falsely prescribe drugs.

How about “phantom billing”, misrepresenting services such as performing a tummy tuck and billing it as a hernia operation or an appendectomy.

There is also “upcoding” — that is billing for a more expensive service than the actual one provided.

Other examples of fraud, abuse and waste include health providers admitting patients to hospitals, when it is not clinically necessary, in order to access in-hospital medical aid benefits; health providers admitting healthy patients to hospitals to enable patients to claim for the Hospital Cash Back Plan insurance policies; claims are submitted on items such as hearing aids and frames for glasses, when the patient does not need the item or even when the patient is not aware of the claim; healthcare providers using multiple practice numbers and then submitting duplicate claims for the same service.

Fraud, abuse and waste of health services and funds is unethical and illegal. It is a waste of the financial resources of the health care sector, costing it more than R22-billion a year according to the Board of Healthcare Funders (BHF) and Council for Medical Schemes.

The BHF has previously indicated that some medical aid members are making money by selling their cards to patients outside doctors’ offices, one of the more common types of fraud.

The organisation has said medical aid contributions amounted to over R100-billion a year, and between 8% and 12% was lost to fraudulent activities.

There is also collusion between medical aid members, patients, pharmacies and doctors who committed the crime in exchange for money or other “gifts”. In some cases, pharmacists allowed card holders to embark on unrestricted shopping.

It is unethical and illegal when a doctor knowingly bills for a procedure that was not provided. The major distinctions between fraud, abuse and waste is being able to prove intent. Whilst one fraud is criminal, waste and abuse is either negligence or opportunistic.

Why are medical schemes easy targets for fraudsters? Because unlike other forms of insurance, medical aids pay up front and in good faith when a claim is submitted. This is to ensure members can have immediate access to healthcare treatment when they need it most.

We then check retrospectively that claims and payments made were correct, in line with the treatment provided and the scheme rules.

Amongst others, we have technology software to do trends on various elements of the claims, including: Treatment regimes, average duration of treatments and average numbers as well as average claims (per area of specialty). Our predictive analysis tool assesses all our claims nationally and we then look where there are significant outliers. Those would be the claims that are investigated to ensure that they are valid.

It is a pity that some doctors have accused us of being insensitive when we investigate mainly wastage and abuse, as fraud requires that intent is proven. However at Medscheme we are only focused on what was the doctor entitled to be paid, irrespective of whether he intended to over-charge the medical scheme or not.

Delays occur when a service provider refuses to allow us to validate the claims and we withhold payment. Instances where we have determined abuse, then we request the doctor to pay back the funds not due to them and where there is clear fraud — we report them to authorities.

Ultimately, the wastage and abuse of medical aid funds comes back to the patient through increased medical aid contributions.

For example, through our predictive tool, we have over the past 18 months saved R200-million which historically would have been incorrectly paid out or not recovered. These savings assist the schemes to improve member benefits and the quality of care that the member can access.

When funds are wasted or abused, there will either be the less benefits or higher annual contributions.

Corruption is a silent killer for the health sector. According to Transparency International, a global civil society organization leading the fight against corruption, common corrupt practices in health care sector include worker absenteeism; theft of medical supplies; bribery in medical service delivery; fraud and embezzlement of medicines, medical devices, and health care funds; improper marketing relations; weak regulatory procedures; opaque and improperly designed procurement procedures; and diversion of supplies in the distribution system for private gains.

It is a pity that despite the staggering costs of fraud the discussion of insurance fraud has always centred on defining the problem rather than on finding solutions. We need viable approaches for uncovering and recovering fraudulent claims.

Indeed, the perpetrators of health care fraud continue to find new ways to siphon money from the health care sector which ultimately impacts the premiums we all pay for cover.

Here are some ways to protect yourself from health care fraud and help keep health care costs down for everyone:

  • Read and understand medical aid agreement so that you know what and who is covered and what is not covered by your benefits.
  • When visiting a doctor, ask questions about the services you receive. Are they necessary? Are they a luxury?
  • Protect your medical aid card. Keep it away from thieves. It represents your benefits.
  • Scrutinise your doctor’s receipts and medical bills. Understand each item listed on your bill to confirm that services were actually performed.
  • If you have co-payments, always ask for a receipt and check it before you leave the provider’s office for accuracy. Save it as your proof of payment should a question arise at a later time. Question any charges that exceed your co-payment.
  • And finally, always notify your healthcare provider if you suspect abuse, waste and fraud or any suspicious activity.
  • Everyone must co-operate both medically and financially at all levels of medical treatment to ensure an honest, reliable and successful medical care.

    Anthony Pedersen is chief executive of Medscheme, a subsidiary of AfroCentric Group of companies, which provide health administration and health risk management solutions to the healthcare funding industry

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    Anthony Pedersen
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