Fraud, waste and abuse (FWA) in the healthcare industry is one of the main drivers of healthcare inflation. The private healthcare industry spent over R150 billion in 2016. Of this, a staggering 10% to 15% of claims contained elements of fraudulent information – adding about R22bn to the annual cost of private health care.
Over the years, there has been an increase in the abuse of members’ benefits by some medical service providers and fraudulent claims as a result of collusion between providers and, in some cases, members. These practices undermine the financial sustainability of medical schemes and are detrimental to their members.
Identifying and combating FWA is a key focus area for Bonitas, and we have made great strides in this fight.
Who is affected?
Because a medical scheme is a non-profit organisation that operates solely for the benefit of its members, FWA has a direct impact on the entire membership base. There are more incidents of waste and abuse than of fraud, and they are easier to quantify, because there is usually a clear contravention of a tariff code or a rule. Examples of FWA are:
• Billing for services not rendered (over-billing);
• Using the incorrect codes for services (at a higher tariff);
• Waiving of deductibles and/or co-payments;
• Billing for a non-covered service as a covered one;
• Unnecessary or false prescribing of drugs; and
• Corruption because of kick-backs and bribery.
We have adopted a zero-tolerance approach to FWA to minimise the impact of these practices and, to some extent, address them. In 2015, we introduced an analytical software program to identify anomalies or irregularities that could indicate FWA. The software is a robust solution that detects irregular claiming behaviour, both for claim types and service providers.
Bonitas’s activities to detect and clamp down on FWA were amplified last year, with excellent results:
• Total quantified value for interventions: R129.8 million (R79m in 2016);
• Waste and abuse recoveries: R35m (R22m in 2016);
• Total paid by the fund: R47m (October 2017); and
• Decrease in claiming behaviour of identified healthcare providers: R75m (R31m in 2016).
Bonitas investigated 35 cases of healthcare providers submitting fraudulent claims. These were reported to the South African Police Service (SAPS) and the Specialised Commercial Crime Unit, and criminal cases were subsequently instituted. Five cases were finalised, and all five healthcare providers were found guilty of fraud.
The sanctions included:
• Laying criminal charges with the SAPS against the perpetrators;
• Reporting the medical service providers to the relevant regulatory bodies;
• Applying section 59(2) and (3) of the Medical Schemes Act against the medical service providers;
• Taking civil action against the perpetrators; and
• Terminating membership where necessary.
Most of the healthcare providers implicated in the reported criminal cases were speech therapists and audiologists. Four of the convicted healthcare providers were medical technologists from Limpopo who submitted false claims for services that were not delivered. They were charged with 180 counts of fraud, made up of 21 171 claims. We constantly engage with the police and the crime unit to ensure that progress is being made with these cases.
One healthcare provider, practising as a general practitioner, was found guilty of fraud after he pleaded guilty to the charges against him. The practitioner was also submitting claims to Bonitas members for services not rendered and using an unregistered locum. He was sentenced to five years’ imprisonment (which was suspended) and a fine of R185 000.
In addition, 52 healthcare providers have been reported to the Health Professionals Council of South Africa. Three are serving prison sentences of between nine and 10 years, while one received a suspended sentence. Another is awaiting sentencing. The remaining 30 criminal cases are at various stages in court.
Last year, we updated our forensic detection software to identify irregular claims at pharmacies. This resulted in a 40% increase in identified FWA, an 85% increase in recoveries, and a positive change in claiming patterns from healthcare providers, resulting in a decrease in claims. This amounted to a saving of R75m as of September last year.
Various actions have been taken to recover money from errant providers. In some cases, blacklisted healthcare providers who had their practice numbers barred by Bonitas simply acquired new practice numbers and came back onto the system. This prompted us to introduce the manual screening of all new practice numbers. This process has yielded positive results: 63 healthcare providers who were trying to circumvent sanctions have been identified and blocked. We also introduced a process whereby a healthcare provider with an outstanding amount will be blacklisted by the credit bureaus.
Based on our zero-tolerance approach, we will continue to build on the successes of last year and take further strides to conquer FWA, while enhancing our working relationships with all stakeholders. Although we have systems in place to identify FWA, we appeal to anyone who suspects any kind of wrongdoing to report it to their medical scheme immediately (see “How you can combat FWA”, above).
Kenneth Marion is the chief operating officer of Bonitas Medical Fund.