Fraudulent claims plague medical aids

There are no official statistics on medical aid fraud.

Agility Global Health Solutions, a risk management company and medical scheme administrator, estimates between 7% and 15% of total medical expenditure can be attributed to fraudulent claims. That's between R7bn and R14bn of the R93bn that medical schemes paid to health-care 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 health-care fraud and abuse may account for between 3% and 15% of total expenditure, and Discovery Health's chief executive Jonathan Broomberg says applying these estimates to SA is likely to give a more realistic picture. In his view, the costs of fraud in SA's private health-care system are probably closer to the lower-end of this range.

Medscheme, which administers schemes such as Bonitas Medical Fund, says 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 a year to fraud.

Agility Africa's chief executive George Roper says medical aid fraud has become more complex in recent years.

"In the past, instances of fraud were [committed] by providers and, to a lesser extent, members. Now there's also collusion between members and providers, which is difficult to pick up."

Services not provided

He says the biggest instance of fraud is when providers claim for services that were not provided, though the provider may have seen the patient. Making this difficult to track is that patients are not aware of consumables such as bandages or syringes that may or may not have been used during surgery but were later billed to the medical scheme.

Roper says the volume of items that health providers bill for has been rising. Instances where providers inflate 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 and the administrators use.

Last year two doctors were arrested in Durban for medical aid fraud amounting to R3,5m. The Mercury reported that they faced charges of claiming for services that were never rendered.

Schemes say they have made progress on some fronts but concede the challenges persist.

"As medical schemes and administrators become more sophisticated in preventing and investigating fraud, so do fraudsters," says Lynette Swanepoel, manager of the Healthcare Forensic Management Unit, a division of the Board of Healthcare Funders. But she disagrees that medical aid fraud is on the rise.

"Perhaps people have been paying more attention to the extent of the problem of late," she says. "The only 'new' experience we are having is that syndicate fraud in health-care appears to be more prevalent now than ever before."

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 says part of the problem is that in the past schemes and their administrators didn't invest enough in their IT systems to detect fraud. Another problem is that it's often easier for them to just pay a claim than to frustrate members with a lot of queries.

Swanepoel says schemes and administrators are improving their fraud detection systems using predictive analytics and stricter rules within their business and operating platforms. "The challenge is that you will never completely eradicate fraud and wastage. Many frauds go 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.