By Paul Midlane, 12 November 2018
Last year, medical aids lost at least R15 to R20 billion of total private healthcare industry spend to fraud, with the Board of Healthcare Funders of Southern Africa (BHF) reporting about 10 to 15% of all claims as fraudulent, abusive or wasteful. Approximately 3 to 4% of the R160 billion medical industry is pure fraud. The instances of medical fraud can be reduced, but it will take fundamental shifts in a number of areas, including the way medical schemes are structured and the efficiency of state health care.
While the majority of South African healthcare practitioners are excellent and upstanding, it is a system that does lend itself to fraud. Unfortunately, the cost of fraud is passed on to clients as medical aids put contributions up by 9 to 11 % each year to withstand escalating private healthcare costs (these increased by around 9% in 2018), with fraud contributing to this increase in expenses.
You certainly don't have to look far to find examples of medical fraud. From dietitians charging for 'consultations' on the quality of hospital food and a doctor claiming to see over 80 patients (several of whom were dead) in a day, to nurse-administered dialysis treatments out of dodgy garages and pharmacies colluding with clients to submit false claims.
One of the reasons for this pervasiveness is that people are not sufficiently informed to query recommended treatments – and no one wants to take a risk with their health. A good example is the c-section. South Africa's caesarean rate is 72% versus the 15% global rate. In private healthcare, cost isn't usually taken as a factor when clinical decisions are made, and the worry is that the ethical responsibility may be blurred by financial incentives, such as the additional income a c-section brings to a gynae as opposed to a natural birth.
So how do we reduce this problem? Most critically, we need to change from a fee-for-service to a fee-for-value model, the latter meaning the healthcare provider will be remunerated based on the outcome of the treatment, regardless how many times the patient had to consult. The current fee-for-service model is quite contentious. As with all things, there are multiple nuances and discussions around it. Coming from a medical scheme perspective, we've seen how it can open the system to abuse, fraud and waste. At the moment, there are few regulations guiding what private practitioners charge. That's one of the reasons why private healthcare has become so expensive.
Global fee arrangements are being investigated by medical schemes worldwide in an effort to constrain costs. This is effectively a 'bundle' fees model, where a healthcare provider receives a set sum to coordinate and distribute between all parties involved. The worry here is that an issue of underservicing may arise, with providers pocketing the profits. As with the fee-for-service model, a big issue is that a member may not be able to spot corruption, which is extremely disempowering. That's where there's a big education job to be done so the public becomes active watchdogs against corruption of any kind.
Additionally, to reduce medical fraud, state healthcare would need to reach global standards, in the process forcing competition in the private sector, which would bring costs down. Advancing tech – like wearables that monitor heartbeat, temperature, glucose and more – will also inevitably help streamline industry efficiencies and lower costs.
While structural changes will be necessary to significantly drop fraud rates, all members can play a role in reducing medical fraud by:
Medscheme is the medical aid administrator for Sanlam partnered schemes, Bonitas and Fedhealth. Martin Neethling, Head: Sanlam Healthcare Consultants, says, "Medical fraud, waste and abuse is a critical issue to be aware of. This kind of crime is becoming increasingly pervasive, with consequences for the private health sector and all medical scheme members. We all need to play a role in calling out corruption. This starts with being honest when divulging all details of one's own medical – and family – history to an insurer when applying for cover and during the claims process."
The way medical aids are structured also contributes to fraud. Historically, there was a 'you claim, we'll pay' kind of system, where medical schemes paid out most health-care claims in 30 days, with limited (or no) due diligence. Then 18 to 20 years ago, managed healthcare was introduced, with controls to determine whether medical procedures were clinically necessary. That's when pre-authorisation came into effect. It's also when schemes started specifying specific service providers and medicines to contain costs.
Just imagine for a moment, a world without medical aid. Imagine you had to pay for your appendectomy upfront, out your own pocket. Or the cost of a three-week stint in ICU, at approximately R15 000 per day. Generally, people simply wouldn't be able to afford it, so inevitably the cost of care would have to drop, and the model would need to change. Most of us would start getting multiple quotes and second opinions before agreeing to procedures.