Fraud, waste and abuse

According to the Association of Certified Fraud Examiners (ACFE) SA, healthcare fraud, waste and abuse syphon huge amounts of money from the South African economy each year. One expert puts the figure at R930 million per annum.

FAnews spoke to Brian Watson, an Independent Healthcare Consultant for Genesis Medical Scheme and Discovery Health CEO, Dr Jonathan Broomberg about fraud, waste and abuse in the medical schemes industry.

Offenders, provinces and offences

In 2018, Discovery Health’s efforts to curb fraud, waste and abuse in the healthcare system resulted in a substantial R555 million recovered on behalf of client schemes. “The volume of cases investigated in the forensic unit continues unabated with the trends of the top offenders, provinces and types of offences remaining relatively unchanged. Of the 5 443 cases that were reported for possible irregularities, concerns were confirmed on approximately 75% of investigations,” said Dr Jonathan Broomberg, CEO of Discovery Health.

The top offences by region with the highest number of fraud, waste and abuse cases investigated in 2018 include the Limpopo province which tops the list (201 cases per 100 000 DHMS lives – down from 226 cases per 100 000 DHMS lives in 2017), followed by Free State (89 – up from 55 cases in 2017) and the North West (89 – up from 70 cases in 2017). Fraud, waste and abuse cases were also investigated in the Eastern Cape (85– up from 70 cases in 2017), Gauteng (83 – up from 73 cases in 2017), Kwa Zulu Natal (79 – up from 72 cases in 2017), Mpumalanga (66 - down from 95 cases in 2017) and the Western Cape (53 – up from 47) The least number of fraud, waste and abuse cases investigated in 2018 emanate from the Northern Cape (33 - down from 52 in 2017).

“Forensic investigations reveal that a minority of healthcare professionals committed fraud against medical schemes, resulting in significant costs to schemes and their members. Medical schemes are not-for-profit entities, solely funded by member contributions. This means that schemes have finite resources from which to pay member claims. The burden of lost funds as a result of fraud, waste and abuse would be significantly more serious in the absence of our rigorous approach to investigating potential fraudulent behaviour and dealing decisively with fraud, waste and abuse when it is identified. Without this rigorous approach, fraud, waste and abuse depletes the available pool of funds needed for healthcare treatment for members, and drives up premiums,” explained Dr Broomberg.

The types of fraud, waste and abuse cases identified in 2018 were claims submitted for services not rendered (40%), capturing errors by a practice (16%), procedural codes applied incorrectly by healthcare providers – e.g. using a code that carries a higher value than the service performed (12%), outlier trends are identified for a practice – an audit is needed to verify claims (11%), duplication of claims (6%), claims by non-members (4%) and claims for more expensive items or items different to those supplied (4%).

Inappropriate tariff use

According to Watson, medical schemes are increasingly receiving invoices from medical specialists where tariffs are considered inappropriate and/or fraudulent. 

“One such open medical scheme in South Africa (“the Scheme”) recently received an invoice from an Orthopaedic Surgeon (“the Surgeon”) who operated on a member’s hand. The member suffered from a fracture due to osteonecrosis of the lunate bone (loss of blood supply to one of the small bones in the wrist). This condition is a PMB and accordingly, practitioners may demand full settlement of all costs,” said Watson.

“The Surgeon’s invoice (including his specialist assistant) for performing the 102-minute procedure amounted to approximately R67 000. This procedure involved ‘a vascularised bone graft based on a microvascular dissection and anatomical pedicle’,” continued Watson. 

The Scheme’s review of the claim, according to Watson, suggested that the main reason for the high cost of the invoice was the Surgeon’s use of the Medical Doctors Coding Manual tariff code 0294, used for a vascularised bone graft with or without soft tissue with one or more sets of micro-vascular anastomoses (openings). 

“The Scheme was of the view that the use of tariff code 0294 is reserved for extremely complex surgery, where the grafting of tissue requires the tissue to be removed from its blood supply and transplanted in the new area with blood vessels being joined by surgery under a microscope, therefore carrying a higher level of remuneration than heart and lung bypass surgery,” said Watson. 

Fraudulent behaviour

“The Scheme on several occasions requested the Surgeon to confirm that he had in fact performed a micro vascular anastomosis. The view of the Scheme was that the billing of the tariff code 0294, in the absence of having done a microvascular anastomosis, may have been extremely inappropriate and possibly and arguably even fraudulent. The Surgeon elected to ignore the reasonable and important request of the Scheme for more information regarding the surgery. Instead, the Surgeon resorted to threats of legal action and a demand that the Scheme discuss the matter telephonically, whereas the Scheme requires written confirmation of the exact nature of the surgery,” said Watson. 

“Currently there is no sense of engagement around equitable remuneration in private healthcare, as medical schemes are required to reimburse all PMB claims in full, i.e. R67 000 for 102 minutes of surgery. In essence, this scenario would cripple the system and place medical scheme cover outside the reach of all but a privileged few; a situation our country cannot afford. Medical schemes are increasingly receiving invoices where the tariffs used are considered inappropriate seemingly with a view to artificially inflating the claim,” added Watson. 

The future of healthcare

“The demand that PMB claims be paid in full irrespective of the reasonableness of the charge is doing the healthcare industry and the public more harm than good. The only winners may be the group of doctors that appear to be gaming the system. Everyone complains about the high cost of medical scheme membership, whilst saying nothing about the high charges that some doctors make against medical schemes. Sadly, the good old-fashioned family practitioner who treats many patients for no charge and who undertakes house calls, is an all too fast disappearing group,” concluded Watson. 

“We believe that this is only part of the story, and fraudulent activity and billing abuse most likely costs medical schemes several billion Rand per year. These precious funds could be used to pay for the critical healthcare needs of our medical scheme members,” explained Dr Broomberg.

“As a criminal offence, healthcare fraud, waste and abuse not only tarnishes the good name of honest health professionals but is a grave injustice against medical scheme members, driving up premiums and depriving them of benefits,” concluded Broomberg.

Editor’s Thoughts:
As Dr Broomberg said, this is only part of the story. Do you believe fraud, waste and abuse is the number one factor in driving up premiums? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts myra@fanews.co.za.