Category Fraud/Crime

Medical fraud costing scheme members billions every year

24 July 2012 Graham Anderson, Principal Officer at Profmed
Graham Anderson, Principal Officer at Profmed

Graham Anderson, Principal Officer at Profmed

Fraud in the medical scheme industry has become increasingly prevalent in recent years, from medical service providers and the staff working within medical schemes, right through to inflated claims that may be submitted by members.

According to Graham Anderson, Principal Officer at Profmed, the medical scheme that caters exclusively for graduate professionals, while no exact figures exist as to the true extent of fraud within the healthcare industry, estimates suggest that billions of Rands a year are being wasted, negatively impacting on the bottom line of schemes and resulting in higher premiums for members. Estimates by law firm Eversheds last week suggested it could be as high as R15 billion.

“Many people assume that fraud is most common among consumers (i.e. the medical scheme members); however, the reality is that the majority of fraud in the sector is also committed by service providers within the industry.”

Anderson says it is often easiest for those working within the industry to commit such crimes as they have access to all of the relevant information and understand the systems better. “Accounts charged to medical schemes on the members’ behalf can easily be inflated without the member’s knowledge to include procedures that weren’t carried out, a higher price charged for equipment or medication that was used, or even charging for items that were not used.”

“Very often, members don’t check the accounts charged to their medical scheme, firstly as it appears too complex to decipher and, secondly, the payment is being settled by the scheme itself. However, the fact is that if a provider is fraudulently overcharging, this can have a severe impact on the level of benefits that a member has available for the rest of the year, potentially depleting their benefits far sooner than would otherwise occur.”

“While medical costs and the terminology used may seem complex, it is actually no different from checking the statement at a garage after a car has been taken in for a service to ensure that what you are being charged for has actually taken place.”

He says it is crucial that members check what is being claimed for from their scheme by the service provider and determine whether this matches up with the treatment they have received. “Ultimately, it is the members who are most affected by fraud in the industry as it results in an increase in costs with the end result being that all members are charged a higher premium.”

There are systems and processes in place to address this issue, including a monthly meeting held by the Board of Healthcare Funders of the Fraud Management Unit, in which all BHF scheme members meet to discuss the problem and share information.. This ensures that providers or members are not attempting to replicate fraudulent activities at multiple schemes.

“The extent of this problem is huge and it is in the interests of all schemes, members and providers to work together to stamp out fraud in the medical scheme industry to ensure increases in healthcare costs can be kept to a minimum,” concludes Anderson.

Quick Polls


The shocking crime and motor vehicle accident statistics shared during a recent SHA presentation suggests that group personal accident and personal accident cover are a no-brainer. Do you agree?


Not sure
fanews magazine
FAnews April 2024 Get the latest issue of FAnews

This month's headlines

FAIS Ombud lashes broker for multiple compliance blunders
TCF… a regulatory misfit initiative?
The impact of NHI on medical malpractice insurance
Fixed versus variable: can you have your cake and eat it too?
The future world of work
Subscribe now