Fraud Waste and Abuse

It is no secret that the cost of quality healthcare in South Africa is very expensive and that medical schemes face an uphill battle every day when it comes to containing their costs. Part of this challenge is the fact that fraud, waste and abuse is rampant in the industry and the current fee-for-service model means that medical schemes continuously face the hamster wheel of making payments while trying to address these challenges.

FAnews  spoke to Paul Midlane, General Manager: Healthcare Forensics at Medscheme, to find out the true extent of these challenges.

What are the current challenges when it comes to fraud, waste and abuse? 

Fraud, waste and abuse refers to a healthcare provider claiming for services that were not rendered or that were not medically necessary. This can include claiming for an hour when a provider only saw the patient for five min. This can also include dispensing the generic of a medicine but claiming for the original. Another example of fraud, waste and abuse is allowing a healthy patient to stay in hospital just so that they can access their hospital cash-back plan insurance policy. 

Healthcare claims are emotive; therefore, a greedy healthcare provider can manipulate the uninformed patient into requiring treatment that is not clinically necessary or appropriate. When it comes to short-term or life insurance claims, it can take months to verify and validate the authenticity of a claim. However, in order to ensure access to healthcare treatment for its members, medical schemes must pay a valid claim within 30 days. 

Another reason for fraud, waste and abuse is volumes. Unlike short term insurance, where a policyholder may have one or two claims annually, one healthcare event can be linked to hundreds of different codes and tariffs and claims. Our administrator processes over six million claims per month. Therefore, all healthcare claims are paid in good faith, based on the trust and integrity of the healthcare service provider. This can be abused by the minority of unscrupulous providers who submit false or inflated claims. 

Combined with prescribed minimum benefits (PMBs) and the fee-for-service nature of billing, medical schemes are ripe for exploitation. 

What are the challenges when it comes to fee-for-service? 

A fee-for-service reimbursement model does not take into account the quality outcomes of the services provided. Therefore, there is no incentive or obligation on the healthcare service provider to manage the cost or the quality of the treatment rendered to a patient. This is because the healthcare provider will get paid by a medical scheme regardless. 

This also leads to a lack-of-coordination of care. Often, the same tests are repeated for no clinical reason other than it is a new healthcare provider entering the treatment cycle. There is no incentive for a GP to try keep the costs of the specialist down because they do not share the information and are paid separately. Very often, scans and blood tests are repeated by a radiology or pathology lab when they were performed by the previous treating provider. Every time a service is rendered, a claim must be paid and that is why healthcare is so expensive.   

Is there a resolution in sight?

There are other alternate reimbursement models (ARM’s) such as paying a global fixed fee per event which includes all associated costs. This will apply if healthcare providers assumed some risk and were paid on a sliding scale based on the quality of the treatment/service that they provide. 

Alternatively, if practitioners could be employed and get paid salaries, there would be no incentive to over service patients for financial gain. 

The Health Professions Council of South Africa (HPCSA) argues that Global Fee Arrangements may lead to a conflict of interest as providers will be incentivised to under-service patients to save money, but how is that conflict of interest any different to the current conflict that arises out of fee-for-service? 

How do medical schemes pick up that they are being abused?

Due to volumes, complexity, and the speed in which healthcare claims must be paid, most detection and analysis can only be done retrospectively using very advanced predictive analytical software. This software will highlight anomalous patterns and trends. 

In other words, medical schemes need to set a specific set of rules that would establish outlines for further investigation. 

Fedhealth have used the Insurance Fraud Manager (IFM) software provided by FICO, a credit scoring provider that regularly scores all healthcare providers, facilities and pharmacies based on their claiming behaviour. From there, the scheme can have a discussion with the provider about the over-payments that were made and request reasons why the amounts should not be repaid to the scheme. 

Medical schemes are also reliant on tip-offs from whistle blowers and member participation to alert them to instances where services were not rendered but claimed for. 

Outside of rate increases, how do medical schemes combat/manage this?

Medical schemes must have a fraud, waste and abuse risk management plan, which includes many elements that must continuously be reviewed and revised. Such a plan would include a communication policy to continuously reinforce to members to be aware of the accounts they receive, and to question claims that don’t look right. 

Schemes should also invest in analytical software and they must contract with an experienced healthcare forensic unit to investigate irregularities. 

Schemes should also participate in industry initiatives such as the Healthcare Fraud Management Unit (HFMU) of the Board of Healthcare Funders and should actively collaborate with the rest of the industry in terms of information sharing to avoid repeat offenders. 

Fraud, waste and abuse and fee-for-service are major contributing factors to the above inflationary increases experienced by members year-on-year. 

Editor’s Thoughts:
This really opens up a can of worms. Will this get any better when the National Health Insurance is implemented? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za