Jig is up for medical aid scammers
Medical fraudsters beware. Insurance companies are watching you. They know your “urgent hospital stay” was actually a chance to chill – and pocket some cash. Take the cases of two Discovery medical scheme members. One was admitted for vomiting and heartburn after eating a cheese-and-tomato sandwich. The diagnosis changed from indigestion to infectious diarrhoea. He received a single dose of Imodium and antibiotics administered intravenously, and remained in hospital for five days.
Another Discovery member was admitted to hospital for asthma, although the casualty admission notes made no mention of wheezing or respiratory distress. On the third day in hospital, a physiotherapist treated the patient for lower back pain – but no mention of back pain was cited in the nurse’s notes. Instead, the notes said the member asked to be admitted to hospital.
Both members had a hospital cashback policy. This is a popular product sold by insurance companies that provides beneficiaries with a lump sum of between R3 000 and R5 000 if they are hospitalised longer, usually, than three days.
The cashback plans are intended to help cover the shortfall a patient might face if their hospital costs are not fully covered by their medical aid schemes.
But some unscrupulous policyholders, working with doctors and hospitals, are using it to enrich themselves. And in the process, medical schemes and long-term insurance providers are losing millions.
Marius Smit, the head of forensic services at Discovery Health, said it was difficult to give accurate figures on how much the scheme was losing as a result of this.
“But Discovery Health recovered more than R288 million from all types of fraudulent medical claims last year,” he said.
Latest statistics from the Association for Savings and Investment SA (Asisa), which represents life insurers, show that 375 cases of hospital cashback-plan fraud, totalling R3.8 million, were recorded in 2012. It could have been worse. There were 549 cases in 2011, totalling R4 million.
Last year’s statistics are still being finalised by the association, but Brad Frank, a policy adviser at Asisa, said he believed the figures would increase. “KwaZulu-Natal remains the hot spot, but we are seeing a growing trend in Limpopo and Gauteng as well,” he said.
Smit agreed, saying Discovery’s forensic team has noted the trend in all three provinces. “Discovery Health has a team of ... investigators and analysts who are able to identify and detect anomalies and outliers within the scheme claims data,” he said.
According to Smit, data compiled by forensic investigators show that, on average, people intending to milk the scheme are admitted to hospital five times more often than those who don’t have cashback insurance. Their hospital stays are also 40% to 60% longer.
Some members implicated in the scam were expelled from the scheme and now face criminal charges. Smit said: “Investigations are in progress and we are working with the medical practitioners and hospitals to resolve these issues.”
Peter Kerford, the head of forensic investigations at insurance firm MMI Holdings, which also offers hospital cashback plans, said it was difficult for insurers to combat this because they “do not have the pre-authorisation processes that medical schemes have”.
“We only receive claims after a person has been admitted. But schemes have this process and can alert us when they suspect something,” he said.