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SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Medical aid fraud, waste and abuse

21 October 2016 Dr Bobby Ramasia, Bonitas Medical Fund
Dr Bobby Ramasia, Principal Officer of Bonitas Medical Fund.

Dr Bobby Ramasia, Principal Officer of Bonitas Medical Fund.

The financial burden of fraud, wastage, abuse and irregular practices that are committed in the private healthcare sector are estimated to add as much as R22 billion per year to the overall annual cost of private healthcare in South Africa as a whole. Dr Bobby Ramasia, Principal Officer of Bonitas Medical Fund, talks about fraud, wastage and abuse and explains how sophisticated systems have been introduced by Bonitas to combat this.

Healthcare fraud is defined by the Association of Fraud Management as a ‘deception or misrepresentation that a person or entity makes, knowing that the misrepresentation could result in some unauthorised benefit to the individual or entity or another’. Simply put, it is when a member, administrator or healthcare provider is dishonest in order to get money to which they are not entitled. Medical aid fraud is the most complex form of financial fraud to detect, monitor and prevent.

What kind of fraud, waste and abuse takes place?

We find that waste and abuse is far higher than fraud and is more easily quantifiable in terms of values as it is usually a clear contravention of tariff codes or a rule that exists. Most of the common practices include:

1. Billing for services not rendered (over billing)
2. Using incorrect codes for services (at a higher tariff)
3. Waiving of deductibles and/or co-payments
4. Billing for a non-covered service as a covered one
5. Unnecessary or false prescribing of drugs
6. Corruption due to kick- backs and bribery

Who are the culprits?

The culprits are not just medical practitioners, guilty parties are found all along the healthcare delivery chain – from medical practitioners through to employees, service providers and members. There has also been an increase in collusion between members and healthcare providers in order to attain illicit financial gain from a medical aid scheme. There has also been an increase in cash back claims, this is when member are admitted to hospital for procedures that could have been avoided in order to claim through hospital insurance products All of those involved in corruption are costing medical aid schemes billions of Rands each year.

However, it is not just this collusion that results in fraud, abuse and wastage – it can also occur when there are errors at billing stage (using incorrect tariff and ICD-10 codes).

What is the cost of healthcare fraud?

According to global and national surveys done by various role players in the industry such as KPMG, Ernest & Young, The Association of Certified Fraud Examiners (ACFE) and others, the costs of healthcare fraud may range anywhere between 5% and 15% to 20% of total healthcare expenditure, depending on which survey you refer to. It is Bonitas’s view that the cost of healthcare fraud may be up to 7% of expenditure of which the majority is waste and abuse

Fighting fraud is one of Bonitas’ top priorities; as a result we have put a series of measures in place to ensure that the scheme is fraud resilient.

“We already employ an arsenal of sophisticated strategies to deal with the challenge and significant progress has been made to enhance our prevention and detection capabilities.

However, as fraud, wastage and abuse becomes more prevalent and sophisticated, so must the methods we use to combat it,” he says.

How does this ‘IT forensic investigator’ work?

The system developed analyses a set of data by applying various algorithms over a period to identify ‘outliers’ or abnormal data compared. These outliers are then scored in terms of the probability of the data being fraudulent. For example, the system analyses all GPs claims, compares them and if one set of claims stands out in the data set it is scored according to a level of difference in the claiming pattern. The results are referred to a forensic analyst, by means of a case management system, to review these high scoring outliers.

‘It also contains other reporting functionalities and an analysis tool which links any aberrant anomalies and raises the red flag for the forensic analysts so they identify possible syndicated or continuous fraud waste and abuse,’ explains Dr Ramasia. ‘We investigate and act on every transgression and have increased recoveries in terms of losses. We are also able to provide better information and evidence to prosecuting authorities.’

Do these forensic edits work?

‘The system was only recently implemented, but initial results and indications are that levels of fraud, waste and abuse previously not identified have, and will be, identified for recoveries and or prosecution. Our predictions of a reduction in fraud of 8.% therefore seem to be accurate. The system, like a good red wine, matures and improves over time as more data is collated, effectively predicting, preventing and managing fraud, waste and abuse.

‘We have found that the biggest single deterrent to fraud, waste and abuse is to make it known that we are actively investigating every instance that is detected or we are made aware of. Education in terms of the relationships with medical aids, their members and the healthcare providers goes a very long way in curbing the abuse of medical aid benefits and, as such, our approach in fraud management speaks to this education component in all the matters we deal with.’

Is medical aid fraud on the rise?

‘Medical aid fraud definitely appears to be on the increase. Thanks to intelligent technology and modern methods of fraud detection, we are able to identify more cases of healthcare fraud, waste and abuse. I am sure in the future, as the implementation of new detection methods mature, the curvature of healthcare fraud will plateau out and not reflect dramatic increase or decreases.’

What is the penance for medical aid fraud?

According to Section 66 of the Medical Schemes Act, medical aid fraud, committed either by a member or a healthcare practitioner, is a criminal offence which carries a fine or imprisonment or both.

The core focus of the Healthcare Forensic Management Unit (HFMU) of the Board of Health Funders (BHF) is to facilitate a unified approach with regards to fraud in the medical schemes environment. This is achieved by sharing information regarding fraud, over billing and over servicing in order to minimise fraud across the industry and to protect medical schemes from healthcare providers and medical scheme members who shift their wrongdoings from one medical scheme to another once ‘caught out’.

In the case of healthcare providers, it depends on each and every judgement as well as the findings of the Healthcare Professional Council of South Africa (HPCSA) in terms of what punitive measures are to be imposed and each case is therefore adjudicated on its own merits.

Fraud, waste and abuse are categorised together but, in the event of fraud, it is harder to convict because of the burden of proof that rests with the victim in term of the Criminal Prosecution and Procedure Act. ‘We find that waste and abuse is far higher than fraud and is more easily quantifiable in terms of values as it is usually a clear contravention of tariff codes or a rule that exists.’

What is Bonitas’s success rate in terms of having someone convicted and sent to prison/and or fined for this offence?

As you know the wheels of justice turn very slowly and the healthcare industry is a fast paced one when it comes to the payment and honouring of medical claims. We have a number of matters which are either in ongoing court cases, nearing completion or have been finalised, some with success. It must be mentioned that criminal prosecution is not the only remedy available to medical aids to address healthcare fraud; the Medical Schemes Act does provide various remedies for schemes to address and recover losses sustained due to fraud, waste and abuse.

How does fraud, wastage and abuse affect the scheme’s members?

If one has a low recovery rate in terms of losses suffered, then the impact does impact the average contributions payable by members. Although medical fraud does have an effect on the members’ pockets, it is not the real driver of increased costs. There is a myriad of other factors contributing to increased healthcare costs.

To conclude: Do you think the Medical Aid Schemes and particularly Bonitas are winning the battle against fraud or do the perpetrators, like drug resistant bacteria, just get smarter and smarter and immune to efforts to destroy them?

‘Yes we are definitely sending the right message to those would be fraudsters,’ says Dr Ramasia, ‘and with this new approach, which caters for the early detection of these fraudulent activities, it is becoming evident to the fraudsters that we are just as smart and adaptable to ever changing circumstances and environments to combat fraud, waste and abuse effectively.’

 

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