Fraud, abuse rife in private healthcare
• Schemes pay more than 92% of contributions directly to expenses, writes Alf James
Private healthcare is a privilege few could afford without medical aid or health insurance. As the cost of private healthcare continues to escalate with above inflationary increases year on year, choosing a medical scheme able to control costs is critical, says Paul Midlane, GM: healthcare fraud and abuse at Medscheme, a subsidiary of the AfroCentric Group.
He points out that a stay in an intensive care ward of a hospital can quickly run into millions of rands, which few have as disposable income.
“There are the hospital costs, the anaesthetist fees, surgeon fees, medication and a whole range of incidental expenses linked to a single health event. A 20-minute consultation with a specialist can easily cost more than R1,000 a time excluding the potential pathology and radiology costs if you need blood tests or X-rays done.”
The Council of Medical Schemes (CMS) has reported medical scheme contributions increased by about 9% between 2014 and 2015 and the average contribution increase announced by open medical schemes for 2017 is 10.3%.
According to the council, medical scheme contributions increased by 8.1% to R151.6bn as at December 2015 from R140.2bn in December 2014. The total gross medical healthcare expenditure increased by 8.9% to R138.9bn from R127.6bn in 2014. Total hospital expenditure by medical schemes comprised R51.4bn, or 37.1%, of the R138.6bn medical schemes paid to all healthcare providers in 2015. Total medical scheme expenditure on private hospitals increased by 9.36%.
The amount paid to allied healthcare professionals increased by 12% from R8.9bn in 2014 to R10bn in 2015. This category accounted for 7.2% of all benefits paid by schemes in 2015.
The heart of the problem is that private healthcare is treated as a commodity; however, it is anything but for the consumer who gets sick. To that member, it is a necessity.
“The bottom line is that it has become expensive, because no one questions the cost. To ensure that their members can have direct access to healthcare treatment, medical schemes generally reimburse healthcare practitioners, pharmacies and hospitals directly, unless there is a good reason not to.
“As a result of this practice and the complex nature of healthcare coding and medical scheme benefits, members do not check their statements or question the cost of the services they receive. Members do not shop around for the cheapest hospital, nor do they negotiate the lowest rates with their doctor, they just accept what they are told because they have no incentive to do otherwise.
“Their only incentive is to get healthy as quickly as possible.”
It is much easier to fight with the medical scheme to pay for everything after you are healthy again than to negotiate upfront with your practitioner or surgeon when you need to get the treatment urgently.
“This is the underlying problem,” says Midlane. “It has become too easy for healthcare providers to get paid without questions being asked.
“Healthcare providers and facilities are remunerated on a fee-for-service basis and every life is associated to a rand value — private healthcare has become a commodity.”
He says administrators and managed-care organisations are constantly accused of unnecessarily increasing medical scheme costs, yet they exist to be the gatekeepers for the nonprofit medical schemes by ensuring a member receives the highest quality treatment for the most cost-effective price.
“Medical schemes pay more than 92% of contributions they receive directly towards healthcare expenses, which is phenomenal when compared to other general insurers who often spend anywhere between 10%-20% on claims processing and administration, in a much simpler and less complex environment than healthcare.”
He says medical schemes and their administrators have to invest substantial sums of money on analytical software capable of detecting irregular claims and ensuring only valid healthcare claims are paid to healthcare providers and facilities. With the benefits of using predictive analytical software and big data, Medscheme is now uncovering the real extent of fraudulent and abusive claiming, and the picture is not pretty.
“Opportunistic fraud and abuse is rife among healthcare practitioners and facilities where it is estimated that at least 10% to 15% of all claims are fraudulent or highly abusive in nature. In a R150bn industry, that is a substantial expense.
“Healthcare fraud and abuse occurs in many creative and different ways; however, it is much harder to contain due to a variety of factors including the volume of claims associated to one healthcare event, the need for quick access to healthcare, the emotive nature of the story linked to every claim submitted, the unintended consequences of prescribed minimum benefits and the assumption a healthcare provider or facility is compelled to act in your best interest, with little consideration to potential downstream costs to your medical scheme.”
All these factors combined have created a perfect storm, according to Midlane. “As long as a medical scheme continues to pay, a person will not ask whether the physiotherapist or dietician was a necessary expense, nor whether that 15minute specialist consultation was worth R1,200 or if the pharmacist has dispensed the generic, but claimed for the more expensive original, or if your medical scheme also paid for that pathology account you keep getting in the mail.”
He says the only time questions are asked is when there is a double-digit increase to members’ contributions at the end of the year.
MEMBERS DO NOT CHECK THEIR STATEMENTS OR QUESTION THE COST OF THE SERVICES THEY RECEIVE