How medical aid fraud affects you

An interesting article about how medical aid fraud affects the members of medical schemes in South Africa

Medical aid fraud affects every member

The financial burden of fraud and irregular practices that are committed in the private healthcare sector are estimated to add about R22 billion per annum to the overall annual cost of private healthcare in South Africa.  This bill in turn has to be footed by all the members of medical schemes in South Africa.   Any benefit paid by your scheme to which you (or your service provider) are not entitled, comes at the expense of all the other members.

Healthcare fraud is a type of white-collar crime involving the submission of dishonest healthcare claims.  There are numerous ways in which this type of fraud is perpetrated.  Perpetrators can range from individual members to healthcare professionals, as well as criminal syndicates. 

Case study  -  fraudulent dental claims

A classic and recent example was when the internal clinical auditors of Genesis Medical Scheme detected an unusual trend in claims from a Cape Town dentist.  He claimed approximately R120 000 for treating just 4 families during 2014/15.

A closer review of the claims yielded some suspicious results.  The Scheme then asked each of the affected members to testify by signature that the claims that they submitted were correct.  This they all did without question.

As a next step, Genesis obtained certified copies of the dentist’s records for each member patient.  Armed with this information, the Scheme then obtained panorex x-rays of all of the treated members.

A high level skilled audit revealed that the dentist had defrauded Genesis by filling teeth that had long been extracted, taking unnecessary x-rays, performing root canal treatment on non-existing teeth and a whole host of other irregularities.

When confronted with the evidence, the dentist immediately offered to repay the amount defrauded from the Scheme.

Although it is too early to come to any conclusions, a practical explanation for this fraudulent dental claims scenario could be that the members’ children needed braces, an expensive treatment not covered by most medical schemes.  The dentist may have provided the braces, but knowing that the Scheme would not cover it, he may have submitted claims for “other” dental treatment that were covered in terms of the rich dental benefits available to members; hence recovering his cost and giving the members the benefit they wanted.

The matter is still on-going but neither the dentist nor the members that participated in the fraud can go unpunished as they perpetrated the fraud, knowingly, against the honest members of the Scheme. 

Medical aid fraud can have many different faces

The following are just some examples of how medical aid fraud can present itself:

Fraud committed by members:

•  Submitting false or altered invoices or colluding with a service provider to submit false claims.  Claims paid are then for the benefit of the member or are shared with the service provider. 

•  Allowing non-members to use his/her membership to obtain treatment.  This is usually done by collaborating with a healthcare provider to use their membership details to claim benefits. 

• When a member conspires with his/her treating doctor to perform surgery that is normally excluded, such as cosmetic surgery, to submit a false claim for a different approved procedure. 

• Dual membership, where a member belongs to 2 medical schemes at the same time and where claims are submitted to both schemes. 

Fraud committed by service providers:

• ICD-10 codes can be manipulated so that tariff codes with a higher monetary value are billed or, the scheme can be billed for codes in respect of services not provided. 

• Hospitals can bill additional theatre time (who will ever know, as the patient is “out” and the medical scheme is not present). 

• Hospitals practicing merchandise substitution, i.e. where they charge the scheme for an oxygen tank while only a nebuliser was provided. 

• Service providers can charge the maximum benefit allowed in terms of his patient’s plan option, i.e. charging the scheme R45 000 for the prosthesis used in a knee replacement, while the actual prosthesis used only costed R22 000. 

•  Service providers claiming for non-covered benefits under ICD-10 codes that are covered in terms of the scheme benefits.
  
  
• Service providers can offer their patients money in exchange for submitting a claim to their medical aid.

• Pharmacists can claim for original, more expensive medicine while dispensing a cheaper generic alternative, or claim for more medicine than what was in fact dispensed to the patient.  

• Pharmacists can submit medicine claims, but actually supply household items to members. 

You can go to jail

When medical aid members, or healthcare providers, with or without the knowledge or participation of medical aid members, submit fraudulent claims to a medical scheme, every member of that scheme actually suffers, as claims are paid from a certain pool of reserves and every member is equally liable for contributing to the reserve funds of that scheme.  So while fraud benefits the minority of service providers and / or members, it comes as a cost burden to every other honest member.  The perpetration of a fraud on a medical scheme is a criminal offence (section 66 of the Medical Schemes Act). 

Further to this, in terms of Section 66 of the Medical Schemes Act, healthcare fraud, whether committed by a member or a service provider, is a contravention of the Act any anyone guilty of an offense, will be liable on conviction to a fine or to imprisonment for a period not exceeding five years, or to both a fine and imprisonment. 

How can you prevent fraud? 

Always analise your claims statements carefully and check that you have in fact received the services / products claimed for by your healthcare provider.  Never accept money in exchange for a claim to your medical aid.  Medical aid cards must always be kept in a safe place and lastly, always report suspicious behavior to your medical scheme.