HUMAN beings are not born to be bad people. Sometimes, circumstances and the surrounding environment or society compel people to lose their integrity and moral values.
That is why fraud is a pervasive problem that knows no boundaries, regardless of the industry, the size of the company and even the country.
Imagine these examples from the Board of Healthcare Funders: A physiotherapist billed for 93 appointments in one day. She billed another scheme for more than 100 appointments on one day; a doctor who billed a scheme for 107 two-hour appointments in a day, which would have meant he had worked 214 hours in one day and doctors who supposedly treated patients in Durban, Bloemfontein and Pretoria on the same day.
We in the medical aid and insurance industry are some of the hardest hit, thanks to some of the corrupt doctors, pharmacists, physiotherapists, radiologists, pathologists and service providers who are ripping off medical schemes. In some cases patients and medical aid members collude with practitioners and other service providers.
There is no doubt that medical insurance coverage is a necessity rather than a luxury. But when it comes to medical aid premiums and claims people often have a love-hate relationship with their medical aid company. They love it when it pays and hate it when the claims are due or it does not pay.
That reflects the basic idea of medical aid insurance. The medical aid company is gambling and hoping that the main member or dependents may get sick, but so sick as not to exceed their threshold. Members want the medical aid companies to pay the cost of their consultations and medicines when they are sick. On the other hand, health professionals want to see as many patients as possible to claim from the medical aid schemes.
Most of the time, the medical insurance company is right. This sometimes leads to some policy holders believing that they are paying for nothing and plotting devious ways to defraud medical aid schemes.
Industry analysts say medical aid and insurance fraud could be as high as about R22 billion at the last count.
So why do people become involved in fraudulent medical insurance activities? As given in the examples by the Board of Healthcare Funders, the common reasons or causes of fraud vary and may include the urge for financial gains, opportunity to get rich quick, greed, demotivated and disgruntled employees getting even with the company or superior, and to meet budgetary targets.
US researchers have developed what is called the “fraud triangle”. They say three elements must be present in order for someone to commit fraud. First, there must be the motive or pressure to commit the fraud. This element is usually in the form of a real or perceived financial need, but it can also take other forms, such as the desire to get even with authorities or organisations and even the employer.
Second, the researchers say perceived opportunity to be able to commit the fraud and get away with it must be present. Here, weak or missing internal controls often are enabling factors. There can also be abnormal circumstances beyond someone’s control, like financial pressures from family members.
The third element is rationalisation, or the ability of perpetrators to find a morally acceptable excuse that justifies why their actions aren’t a crime.
Common rationalisations include “everybody does it”. Billions of rands are lost every year through medical aid fraud. To a small and even a big business, this can not only wipe out profits but also put it in jeopardy of survival.
For us, fraud is a threat to the medical aid industry and health industry in general, not just because it eats at the bottom line, but because it affects the industry’s public standing, which is closely tied to the affordability of our members who want coverage.
So how can you identify a medical aid con artist? Not easily. He or she may be a member of a well-organised fraud ring, your family doctor or lawyer, a friendly neighbour, an employee and even a close relative. While most people won’t defraud outright, the same people won’t hesitate to lie or exaggerate on a medical aid claim. Their rationale: Insurance companies have a lot of money, right?
A lot of times, when it comes to medical aid fraud, there is often a co-ordinated and potentially sophisticated effort playing out to take advantage of any gaps in the claims process. In some cases fraud-related activities involve someone in the industry.
Some researchers have coined “hard” and “soft fraud” in the medical aid industry. Hard fraud is a deliberate attempt to either stage or invent an illness or injury. Sophisticated conspiracies involving doctors, lawyers and their patients or clients are widespread and this is one of the most costly forms of medical aid insurance fraud. A single crime ring can cost the system millions of rands a year.
Soft fraud is an opportunity fraud, where a patient exaggerates a claim based on a legitimate illness or injury. For example, it’s soft fraud when a car owner involved in a fender-bender inflates the injury claim to cover the policy deductible or the cost of the insurance premium. On the goods insurance side, exaggerating the amount or value of items stolen from a vehicle or home also is soft fraud.
What can we do to prevent and eventually eliminate medical aid fraud? To make an environment conducive for fraud prevention, fraud awareness and anti-fraud management initiatives have to be properly established and implemented.
For example, organisations must establish whistle-blower programmes and formalised disciplinary procedures for offenders.
Then there are technical anti-fraud methods, which include all the databases that have been and continue to be created to combat fraud. For example, at Helios IT Solutions, an innovative ICT services provider that specialises in technology-based solutions to the health-care industry, we have fraud-fighting tools to ensure that potential fraudulent claims are flagged.
The tools enable proactive data analytics and modelling of fraud risk resulting in fraud detection and prevention. It is always hard to defeat the scourge of fraud if people are unethical, dishonest, having bad attitude or habits, and have the mindset to collude and commit fraud.
Also, awareness programmes to highlight or focus on ethics and moral values would go a long way to educate and make people maintain their good characters.
Strong controls are needed to reduce the perceived opportunity for medical aid fraud. Providing proactive measures to detect the fraud, through methods such as fraud-risk assessment, fraud-risk modelling and anonymous hotlines, gives society the chance to help stop fraud and, at the same time, increase the perception of detection, thereby preventing possible future frauds. This, in turn, can help to create a positive work environment that increases employee morale and reduces the pressure or motives to commit fraud.
Additionally, management should consider publicising the results of fraud investigations to demonstrate to employees that fraudulent activities won’t be tolerated and will result in termination of employment. Dishonest or greedy people commit fraud if they have an opportunity to do so. The task of the management in any organisation is to prevent the opportunity for people to commit fraud in a fraud-prone environment. This can be done by putting in lots of control procedures and measures to ensure that such chances or occasions will not be there for people to take advantage of.
We need to be mindful that it will be difficult to completely eradicate medical aid fraud, no matter how complex and tight the fraud-prevention controls and anti-fraud management agendas that an organisation or country has in place.
This is because it is hard to manage or change the mindset, character, habits and attitude of people/fraudsters.
Fraud is a crime, and, like all crimes, it doesn’t happen only to other people. It is not something for just the auditors, accountants or management to deal with. Fraud prevention should be the responsibility of every company, the country and our society at large.
In the final analysis, accountability, responsibility, integrity and honesty, fairness, transparency and openness will help us reduce medical aid fraud.
Let us work together to eliminate this menace.
Advocate Andy Mothibi is executive director for legal, governance, risk, compliance & audit at Afrocentric Health, which owns health-care assets such as Medscheme, Helios, Allegra and Aid for Aids.