Why fraud is a multibillion-rand medical emergency
Doctors, patients, brokers and syndicates are taking a healthy cut from medical scheme payments
The architects of National Health Insurance can learn a lot from the numerous ways medical aids are defrauded, say two Unisa researchers.
Tsholofelo Legotlo and Ashley Mutezo interviewed 15 employees involved with fraud management at one of the biggest medical aid administrators and heard how doctors, patients, brokers and syndicates are creaming off an estimated 10% of the more than R150-billion paid out every year.
“As SA plans to implement the National Health Insurance, policymakers should take cognisance of the fraud perpetrated against medical schemes and proactively put mitigating strategies in place,” they wrote in the South African Medical Journal.
Legotlo and Mutezo, from Unisa’s finance department, said medical practitioners had dreamed up the most ways of defrauding medical aids — backing a 2015 study which found that 52% of ethical transgressions punished by the Health Professions Council were for fraud.The most common fraud involved false claims. One of the interviewees told the researchers: “They are claiming for certain procedures not performed.”
Then came irregular billing. “Service providers ... claim for a code of a higher value than the actual service or treatment provided,” said Legotlo and Mutezo.
“Service providers [also] billed for excessive time. [And they] sometimes supply members with cheap products but claim for more expensive ones.”
Other frauds involved service providers claiming from medical aids for treatment which a patient had already paid for, and billing for products covered by the medical aid but supplying products that were excluded from the cover provided by the policy.
“Optometrists are supplying sunglasses and claiming for spectacles,” said an interviewee. “Each provider has a different type of fraud in his field.”Medical aid members committed fraud by failing to declare pre-existing medical conditions to avoid a waiting period before cover commenced.“Card farming” — when members share their benefits with non-members — was particularly prevalent among women, the interviewees said.
“Where a lady has multiple children but cannot afford to put them all on the medical aid, she will cover herself and one of the children but service all of the kids under that one entity,” said one.
Employees of medical scheme administrators added to the fraud burden by changing bank details so that benefits were paid into their own accounts. And brokers falsified medical aid membership applications to earn commission fraudulently.Collusion between members and service providers meant that “the member agrees to access excluded services or non-medical items [eg sunglasses and cash] by billing the medical scheme for covered benefits”.
Legotlo and Mutezo said hospital cash plan insurance benefits were another target. “The healthy member is admitted to hospital and the medical scheme pays for the hospital, doctor and related accounts. The member then shares the cash with the provider after the claim has been paid by the insurance company.”Hospitals also colluded with independent service providers “by routinely providing access to the patient’s details, and allowing these providers to claim from the medical scheme for services not rendered, or which are provided in-house by the hospital. This practice is most prevalent with physiotherapists, nurses and dietitians.”
Syndicates are responsible for the remaining fraud, which centres on identity theft. “Syndicates submit a medical scheme application for an unsuspecting member and then submit fictitious claims,” said the researchers.
“They purport that the provider of the health service has been paid and that the member should therefore be reimbursed. The refund is subsequently channelled to the syndicate’s bank account, details of which were given to the medical scheme. Thereafter, the bank account is closed.”