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Putting the lid on medical aid fraud

Last year, medical aids lost at least R15-R20bn 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 9-11% 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.

Fee-for-value model

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
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About the author

Paul Midlane, general manager of healthcare forensics at Medscheme - medical administrator for Sanlam