Deloitte study reveals extent of medical claim fraud

Londiwe Buthelezi

A critical review by Deloitte of the medical aid claims process has shown that complex medical schemes’ systems and the overwhelming data received daily were enabling the proliferation of bogus medical claims, and that most schemes did not invest enough in fraud and risk management.

The last few months has seen a rising in fraudulent Medical Aid claims.Picture: Timothy Bernard 11.04.2013. Credit: inlsa

Following a recent experience where he was charged incorrectly for tests conducted on his son, Deloitte Western Cape associate director Jaco Boshoff has analysed medical aid data and found that the amount of data processed by medical aids made it impossible to always detect and understand fraud.

He pointed out that most medical schemes processed terabytes of claims data on a daily basis. Just 2 terabytes contains data that is equivalent to that of an entire academic research library.

With overwhelming data to be processed, coupled with daily reporting pressures, the management of medical schemes relied solely on their risk departments to deal with fraud and risk issues.

“The challenge, however, is that most risk departments do not have the mandate to prioritise the agenda of information technology and, many rarely employ forensic data analysts to provide them with a holistic view of risk,” he said.

Deloitte studied forensic data over five years of some of South Africa’s leading medical aid providers and consulted service providers. Deloitte works with a service provider that manages more than 20 medical aid funds.

But Jonathan Broomberg, the chief executive of Discovery Health, the country’s biggest medical scheme, said it had invested substantial resources in fraud management.

The scheme was using the latest big data analytics, as well as its own proprietary forensic software algorithms, to identify and prevent incidents of fraud.

During the Board of Healthcare Funders’ (BHF) investigator training indaba last month, it was reported that fraud was costing medical schemes about R22 billion a year. Estimates suggest that every medical scheme member paid at least R2 500 a year towards fraud.

Incidents of hospitals charging daily theatre hours in excess of 40 hours a day, specialists and general practitioners claiming to have seen over 50 patients daily and hospital beds being filled for a weekend but no treatment being provided were uncovered.

But when Boshoff, who specialises in forensic analytics, studied the medical schemes’ systems he found that in most instances, members and service providers did not understand scheme rules and the tariff codes when submitting their claims. When their claims were rejected, service providers simply tried other tariff codes until the claims were processed successfully.

“There are paediatricians who submit claims for patients who are over 30 years old,” Boshoff said of one of the examples he came across.

The confusion stems from the fact that medical aid products changed every year while the underlying medical aid systems were not always in sync with the changes.

But Graham Anderson, the principal officer of Profmed, said those who committed medical fraud did so because they understood the systems better. He said medical schemes had been aware for years that medical fraud was taking place on a huge scale in South Africa.

But Discovery Health said the estimate of R22bn was extremely high as international data suggested that losses to health-care fraud and abuse accounted for between 3 percent and 15.4 percent of claims paid.

Applying these estimates to South Africa indicated that fraud costs might be between R3bn and R15bn each year.

Last year, Discovery Health recovered more than R250 million in fraudulent claims for the schemes it managed.

During the BHF indaba, investigators gave examples where some practitioners claimed to have treated patients in Durban, Bloemfontein and Pretoria on the same day.

Boshoff found that another contributor to medical fraud was the fact that members rarely verified service provider claims, as hospital claims were often processed by the hospital and submitted for payment to medical schemes without the patient reviewing it first.