Blame it on healthcare fraud, abuse and waste
By Kotie Geldenhuys
We all complain about the high costs of private healthcare and the monthly contributions we have to pay. But the main culprit for these ever-increasing costs, is healthcare fraud, one of the fastest growing crimes in South Africa. Classified as a white-collar crime, healthcare fraud consumes millions of rand from the South African economy each year.
The Council for Medical Schemes (CMS) informs us that compared to other types of insurance, claims in the healthcare sector are much higher and far more frequent, with 90% of policy-holders submitting claims in any given year, compared to 25% in other sectors. With more than 67 000 diagnosis codes and 87 000 procedure codes, healthcare insurance is more complicated. This frequency and complexity open up the system to abuse and waste, whether intentionally or not (Business Tech, 2019).
Healthcare fraud occurs in many different and creative ways. An example is a farmer who also owns an independent pharmacy, selling sheep and claiming the cost from his customers' medical aid schemes. In another case a woman used her medical aid to have her brother admitted to hospital, claiming that he was her husband (Pedersen, 2018). There is no doubt that these are two fraud cases. Healthcare fraud is defined as: “Knowingly submitting, or causing to be submitted, false claims or an intentional misrepresentation of the facts in order to access payment of a benefit to which you would otherwise not have been entitled.” Intentionally submitting a false claim to receive a benefit, is considered a criminal act in terms of the Medical Schemes Act 131 of 1998 and punishable with incarceration on conviction. In instances where a funder can prove fraud in excess of R100 000 beyond reasonable doubt, they have a legal obligation to report it to the SAPS (CMS, 2019).
Abuse and waste of benefits
Apart from fraud, there are also so-called grey areas: waste and abuse, which are not crimes per se, but which cost medical schemes millions of rand every year. A common remark that is often made by medical aid scheme members is that they contribute a lot of money to the healthcare insurer every month, so they can use their available benefits as they want to. There are also those who believe that, when the end of the year comes, they should quickly “stock up” to use the last of their medical scheme benefits for the year. These are examples of waste and abuse of benefits. The CMS explains that the elements of waste and abuse are as harmful as the effect of fraud and that both have a direct impact on other medical scheme members, including the viability of the private healthcare sector and the economy.
According to the CMS, abuse refers to practices that are inconsistent with sound fiscal, business or medical practices and result in an unnecessary cost to a medical scheme, or in reimbursement for services that are not medically necessary. Waste refers to the extra costs incurred when healthcare services are overused, or when bills for services are prepared incorrectly. Unlike fraud, waste is usually caused by mistakes rather than illegal or intentionally wrongful actions (CMS, 2018). In short, waste and abuse refer to “the claiming for healthcare treatment and services that are not absolutely medically necessary, including any form of over-servicing or overcharging of a patient, and that may objectively be considered unethical or unconscionable or contrary to best practice principles” (CMS, 2019).
Paul Midlane, the General Manager of Healthcare Forensics at Medscheme, which administrates 13 medical schemes, including Polmed, told Servamus that over-servicing and overcharging is a big problem. Although the Health Professions Council of South Africa (HPCSA) prohibits over-servicing or overcharging in their ethical rules, a recent Health Market Inquiry (HMI) found that Supplier Induced Demand (SID) and over-servicing significant contributors to escalating healthcare costs (CMS, 2019).
Types of fraud, abuse and waste in the healthcare environment
Medical schemes are easy targets for fraudsters, because unlike other forms of insurance, medical aids often pay up front and in good faith when a claim is submitted. This is done to ensure that members have immediate access to healthcare treatment when they need it most (Pedersen, 2019). Lerato Mosiah, the CEO of the Health Funders Association said that some of the most common incidences of fraud, waste and abuse encountered by medical schemes include:
Member non-disclosure, where members do not disclose pre-existing conditions to the scheme;
- obtaining sunglasses where prescription spectacles have been claimed for;
- claiming for fillings when cosmetic dental work has been performed;
- ordering unnecessary blood tests and scans;
- pharmacies claiming for medicine but dispensing groceries and other non-medicine items; and
- kickbacks on referrals (Mosiah, 2018).
The Counsel for Medical Schemes added the following to the fraud list:
- Members allowing their healthcare provider to charge for services not provided;
- members lending their medical scheme card to unregistered dependants, such as friends and family members;
- members providing their medical scheme or policy details to a healthcare provider for the purpose of submitting false claims in order to obtain a percentage of cash for the healthcare provider upon payment of the false claims from the medical scheme or insurer; and
- members being admitted to hospital 2 for a non-existent ailment in order to benefit from the cash payment from the insurer (CMS, 2018).]