According to the CMS, fraud, abuse and waste in private healthcare is costing the sector between R22 billion and R28 billion annually, with up to 25% of the all premiums paid by medical aid members funding these false claims. The group said that compared to other types of insurance, claims in the healthcare sector are much higher and far more frequent – with 90% of policy holders making claims in any given year, compared to 25% in other sectors. Healthcare insurance is also more complicated, it said, with over 67,000 diagnosis codes and 87,000 procedure codes that need to be navigated.
Claims are that Polmed, which covers 680000 members and beneficiaries, has “unlawfully” awarded roughly R15.7million to its board of trustees (BOT) over three years in alleged contravention of its own rules.
According to the CMS, not all cases of wasted spend in the private health industry are necessarily illegal or tied to fraud. A lot of the time, it comes down to misrepresentation. “Misrepresentation is however not always intentional. It can often be attributed to an honest mistake due to the dense, complex billing and reimbursement system that healthcare providers need to understand,” the group said.
This can result from billing errors, inefficient diagnostic testing, negligent coding, improper training, administrative confusion, unintentional duplication of claims and a whole range of other causes.
The difference between fraud and abuse is therefore the intent behind the misrepresentation that lead to overpayment, the CMS said. However, no matter how the the bad claims are defined, their impact remains the same. “Significant losses are incurred by paying claims to which, on a balance of probabilities, a healthcare service provider, pharmacy or healthcare facility was not entitled,” it said.
Because waste and abuse is not criminal (and thus lacks any appropriate procedures) and is difficult to define, the CMS wants the private healthcare industry to adopt standardised definitions:
- Fraud: 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.
- Waste and Abuse: The claiming for healthcare treatment and services that are not absolutely medically necessary, including any form of over-servicing or over-charging of a patient, and that may objectively be considered unethical or unconscionable or contrary to best practice principles.
The CMS said that there are numerous factors that play a role in determining whether the misrepresentation is intentional or not – such as the nature of the billing irregularities; the frequency of the irregularities; the evidence available; the claiming history and the degree of deviation from peer norms. “However, these factors do not impact the funder’s right to receive repayment of overpaid claims to which a healthcare service provider was not entitled,” it said.
11 to 17 November is Fraud Awareness Week and one of the most pervasive types of fraud in South Africa is medical fraud.
Last year, medical aids lost at least R15 – R20 billion of total private healthcare industry spend to fraud, with the Board of Healthcare Funders of Southern Africa (BHF) reporting about 10 to 15% of all claims as fraudulent, abusive or wasteful. Approximately 3 to 4% of the R160-billion medical industry is pure fraud. The instances of medical fraud can be reduced, but it will take fundamental shifts in a number of areas, including the way medical schemes are structured and the efficiency of state health care.
While the majority of South African healthcare practitioners are excellent and upstanding, it is a system that does lend itself to fraud. Unfortunately, the cost of fraud is passed on to clients as medical aids put contributions up by 9 to 11 percent each year to withstand escalating private healthcare costs (these increased by around 9% in 2018), with fraud contributing to this increase in expenses.
You certainly don’t have to look far to find examples of medical fraud. From dietitians charging for ‘consultations’ on the quality of hospital food and a doctor claiming to see over 80 patients (several of whom were dead) in a day, to nurse-administered dialysis treatments out of dodgy garages and pharmacies colluding with clients to submit false claims.
One of the reasons for this pervasiveness is that people are not sufficiently informed to query recommended treatments – and no one wants to take a risk with their health. A good example is the c-section. South Africa’s caesarean rate is 72% vs the 15% global rate. In private healthcare, cost isn’t usually taken as a factor when clinical decisions are made, and the worry is that the ethical responsibility may be blurred by financial incentives, such as the additional income a c-section brings to a gynae as opposed to a natural birth.
So how do we reduce this problem? Most critically, we need to change from a fee-for-service to a fee-for-value model, the latter meaning the healthcare provider will be remunerated based on the outcome of the treatment, regardless how many times the patient had to consult. The current fee-for-service model is quite contentious. As with all things, there are multiple nuances and discussions around it. Coming from a medical scheme perspective, we’ve seen how it can open the system to abuse, fraud and waste. At the moment, there are few regulations guiding what private practitioners charge. That’s one of the reasons why private healthcare has become so expensive.
Global fee arrangements are being investigated by medical schemes worldwide in an effort to constrain costs. This is effectively a ‘bundle’ fees model, where a healthcare provider receives a set sum to coordinate and distribute between all parties involved. The worry here is that an issue of underservicing may arise, with providers pocketing the profits. As with the fee-for-service model, a big issue is that a member may not be able to spot corruption, which is extremely disempowering. That’s where there’s a big education job to be done so the public becomes active watchdogs against corruption of any kind.
Additionally, to reduce medical fraud, state healthcare would need to reach global standards, in the process forcing competition in the private sector, which would bring costs down. Advancing tech – like wearables that monitor heartbeat, temperature, glucose and more – will also inevitably help streamline industry efficiencies and lower costs.
While structural changes will be necessary to significantly drop fraud rates, all members can play a role in reducing medical fraud by:
– Getting second opinions before procedures
– Questioning anything that seems suspicious
– Not resorting to anything unlawful when you feel the ‘contribution pinch’
– Seeing a GP before a specialist to ensure you get the right referral
– Making sure you invest in preventative care and explore non-invasive options if appropriate
– Trying not to view medical aid and severe illness cover as grudge purchases. Rather see them for the care they give you access to
Some more examples to help spread awareness of the kinds of fraud that happen:
1. We’re currently dealing with a specialist who operated on someone who was in a car accident. To claim, you need to submit a code. This practitioner submitted a code for the surgery and another code for stitching the patient up. Even though, one would assume the stitching would be part of the operation!
2. We commonly see fraud with time-based practitioners like psychologists, dietitians and physiotherapists. There have been cases where physios have wandered around hospitals offering people (who are not their patients) massages post-surgery and then claimed for these. Of course, as a sick person who has just been operated on, you’re not going to question it if an official-looking physio wants to work on your joints.
3. Pathology is another common one. If your doctor has asked you to get a specific blood test and the pathologist wants to perform a full set of blood tests, question this.
4. Prescribed Minimum Benefits (PMBs) are conditions/ treatments that medical schemes are required to cover by law. If you look at how many people prescribed PMBs 10 years ago, compared to now, it does indicate there may be fraud at work. For example, a stubbed toe might be classified as a broken foot.
5. Ophthalmology is another one. Hospital laser equipment has a set fee. But a specialist can charge up to 300% (for a PMB) or 100% (not a PMB) for the use of their own equipment.
6. Back problems are often prescribed surgery, even when preventative and non-invasive care can make big strides in alleviating the pain. There needs to be more of an emphasis on preventative care in general.
7. With diabetes growing in prevalence, dialysis is becoming common. Currently, you don’t need a licence to run a dialysis centre. So, we’ve seen people running them out of garages, using a tap, with a nurse administering treatment rather than clinical technologist. But the claim is still for the rate a clinical technologist would charge.
8. Sometimes members are in on it. For example, if a person is out of benefits and a doctor advises him or her to check into hospital to access treatment, even though he or she doesn’t need to be hospitalised or urgent care, then there’s an ethical decision to make.
9. Pharmacies can also collude with members. For example, we’ve seen pharmacies and clients both agree to tell the story that a humidifier (for example) was purchased. But the client never purchased any such thing, and then splits the claims pay-out with the pharmacist.
Medscheme is the medical aid administrator for Sanlam partnered schemes, Bonitas and Fedhealth. Martin Neethling, Head: Sanlam Healthcare Consultants, says, “Medical fraud, waste and abuse is a critical issue to be aware of. This kind of crime is becoming increasingly pervasive, with consequences for the private health sector and all medical scheme members. We all need to play a role in calling out corruption. This starts with being honest when divulging all details of one’s own medical – and family – history to an insurer when applying for cover and during the claims process.”
Sidebar three: History of medical aids
The way medical aids are structured also contributes to fraud. Historically, there was a ‘you claim, we’ll pay’ kind of system, where medical schemes paid out most health-care claims in 30 days, with limited (or no) due diligence. Then 18 to 20 years ago, managed healthcare was introduced, with controls to determine whether medical procedures were clinically necessary. That’s when pre-authorisation came into effect. It’s also when schemes started specifying specific service providers and medicines to contain costs.
Just imagine for a moment, a world without medical aid. Imagine you had to pay for your appendectomy upfront, out your own pocket. Or the cost of a three-week stint in ICU, at approximately R15, 000 per day. Generally, people simply wouldn’t be able to afford it, so inevitably the cost of care would have to drop, and the model would need to change. Most of us would start getting multiple quotes and second opinions before agreeing to procedures.
On the first day of the conference, medical aid investigators detailed some of the brazen tactics employed by medical professionals. In one instance, the Polmed scheme caught out a physiotherapist who billed for 93 appointments in one day. She billed another scheme for more than 100 appointments on the same day.
A doctor billed a scheme for 107 appointments in a day, each taking two hours, which would have meant he worked 214 hours in one day. In some cases doctors supposedly treated patients in Durban, Bloemfontein and Pretoria on the same day.
The international head of information analysis com-pany SAS, Chris McAuley, said the company had analysed almost two-and-a-half years of medical aid data. It estimated that each member of a medical scheme in South Africa was effectively paying between R2500 and R2800 a year to cover fraudulent and irregular expenditure.
The figure of R22-billion in fraud was “not a thumb-suck” but based on the analysis of medical aid data, he said. Polmed medical scheme investigator Jaco Makkink said some doctors billed three times for one procedure, hiding behind complicated billing codes, or colluding with patients to bill for appointments that did not take place. There were even cases of men claiming for hysterectomies or women for a circumcision.
“Incorrect gender claims are made, it happens, and some claims are even paid,” said Makkink. He complained that anti-competitive legislation prevented medical schemes from sharing information that might stop collusion. This made it easier for healthcare providers to claim for an excessive number of appointments and to multiple medical schemes.
There was general agreement that “the vast majority of clinical practitioners are ethical. It is only a minority killing the system”.
Common methods used to defraud medical aid schemes include:
- Instead of using one billing code for a procedure, such as surgery on a shoulder, doctors bill for multiple procedures, using one code for cutting into the shoulder and another for operating on the shoulder muscles – the latter billed as an additional procedure though covered by the first code;
- A radiology practice in Gauteng billed medical schemes for disposable gowns for every patient, irrespective of whether the patients needed a gown. They bought them for R16 and sold them for more than R100 a patient. One small scheme paid out R10000 a month for disposable gowns;
- Patients are sent for unnecessary blood tests, scans and other diagnostic procedures. However, this can be done to protect a doctor from being sued for negligence; and
- Short-term insurance schemes that pay cash for every day spent in hospital are abused by doctors, hospitals and patients who work in cahoots to admit patients who do not need hospital in-patient treatment.
But schemes use sophisticated analysis and technology to catch fraudsters.
Fiona van Zyl, managing director of Ingelozi Aurora Data Services, said analysis would pick up doctors who administered a high ratio of similar tests to many patients.
She said a new trend was for blacklisted doctors to collude in finding other healthcare providers to continue colluding with in their name.