Corruption trap: Why health-care fraud is costing you money

Four in 10 South Africans say corruption is one of the top three things on their mind when deciding where they’ll put their cross in this year’s elections, a large survey of 30,000 people across 15 countries showed last year.

It’s not unexpected. Over the past 10 years, South Africa has been performing poorly — with a score hovering in the low 40s — on Transparency International’s corruption perceptions index, which gauges people’s views of dishonest expenditure in the public sector. (A score closer to 100 means people think their governments are clean; closer to zero means they think of them as highly corrupt.)

But the scourge of corruption mars not only the public sector; private companies face dodgy deals too. The health-care sector is not exempt, with fraud costing the industry up to R28bn a year, the Council for Medical Schemes says.

Add in a mention of the National Health Insurance (NHI) fund, which will be like a massive, state-funded medical aid to give everyone the same package of quality health services, regardless of their income, and people get worried. Because how will the government be able to stop abuse of a really big pot of money like this if fraud is so rife in the industry — especially with risk and fraud management being the only one of the NHI’s five chief directorates that’s still without a head?

In Bhekisisa’s monthly TV show, Health Beat, Mia Malan spoke to Botho Mhozya, who heads up health-care delivery transformation at Discovery Health, about how they’re tackling fraudulent claims and dishonest practices. 

Could South Africa’s largest private medical scheme have some advice for the NHI? 

Mia Malan (MM): How serious is fraud in the private health sector?

Botho Mhozya (BM): It’s estimated that between 3% and 10% of health-care spend across the world is attributed to fraud, waste and abuse. At Discovery, recoveries (of around R500m per year) represent about 1% of our health-care claims costs. The issue has a far-reaching impact on [affordability of] health care, both in South Africa and across the globe.

MM: What are the most common types of fraud in the private health-care sector?

BM: One is card farming, which is when an insured member allows their friends or family to use their card to get medical care. Another one is ATMing. This is when members and a health-care provider collude. The provider submits a claim to Discovery and then, on receipt of payment, the health-care provider splits the funds with the member. There’s also submitting false claims, for services that were never delivered, and submitting claims that disguise services for cosmetic surgery [while] understanding that it’s an exclusion within the medical schemes. For example, [someone] submits a claim for an appendectomy, but meanwhile they’ve had liposuction [surgery to remove fat from your tummy, hips, thighs or buttocks]. 

MM: How do you pick up fraudulent behaviour?

BM: Our systems look for outlier trends [among all the claims we receive]. We also have a team of around 44 forensic investigators, who analyse and audit claims, supported by 50 [more] people [such as] coding, clinical and nondisclosure experts, as well as actuaries and analysts. It’s a big team that looks for irregular patterns and overservicing.

MM: If, for example, someone had plastic surgery and claimed for their appendix being removed, what would that team of analysts do to pick up this fraud?

BM: Our reports will often look at [a patient] relative to [their] peers. So we would pick up that [for example] certain codes are used more than [among] peers and more than our national benchmarks. Once we’ve picked up that anomaly, we audit the claims and look for suspicious behaviour. We also [get in touch] with the practices [if] some untoward behaviour [is suspected], or ask for hospital records to ascertain what happened in theatre and look at ancillary claims linked to that medical event [such as from the pharmacy], to get an overview of the incident before we call it fraud.

MM: Once you’ve caught a fraudster, how do you deal with them?

BM: We get in touch with the clinician and present our findings, and then allow them to provide supporting evidence around the anomalies or trends we’re seeing. If we [then] identify a provider as having been fraudulent, a legal process takes place. For blatant fraud, like ATMing or card farming, we have to report [the perpetrators] to the HPCSA [Health Professions Council of South Africa] and also to the South African Police Service. Along with that process, there’s an acknowledgment of debt: if a provider acknowledges that they were fraudulent or [engaged in] wasteful behaviour, a payment process is put into place. All monies that are recovered through these investigations go back into the trust that holds members’ funds.

MM: What is an example of a recent discovery of fraud and how did it play out?

BM: [We recently dealt with] a syndicate [that] involved both member and provider collusion, working across multiple practices. In that instance, our analytics were able to quickly pick up the relationship between those practices and the members involved through the auditing process. 

MM: Many people in the country are concerned that the NHI fund will be a really big pot of money that would be open to corruption and abuse. What kind of rules would you like to see in place to prevent that from happening?

BM: Fraud exists across all industries, whether public or private. You need robust processes in place to detect fraud in a timely manner and recover those funds. At Discovery, there’s a team of experts: forensic investigators, a clinical team, coding specialists, actuaries and analysts. One would expect a similar composition of skills to detect fraud within the NHI fund. 

MM: If you didn’t have these measures in place to detect corruption and fraud, how much more would premiums have been? 

BM: As a direct impact of the work we do on fraud, we’ve managed to keep contributions 14% lower than what they would be if we didn’t have those processes in place.

This story was produced by the Bhekisisa Centre for Health Journalism. Sign up for the newsletter.