Medical aid schemes under fire for inflating money lost to fraud

Medical aid schemes have come under fire for inflating the amount of money lost to fraud, waste and abuse. It has emerged that they estimate their losses to be about 15% of total claims, while the Section 59 investigation says it should be 7 % at the most.

The public hearings held by the Council for Medical Schemes are probing alleged racial profiling of Black and Indian private medical practitioners by medical aid schemes.

The three major Medical Aid Schemes, GEMS, Discovery Health and Medscheme have highlighted fraud, waste and abuse as the main drivers of claims. They say these accounts for at least 15% of their losses.

Advocate Adila Hassim asked Head of Forensics at Medscheme Doctor Paul Midlane for specific amounts.

“How much is lost to FWA (Fraud Waste and Abuse)?  How do you quantify that?,” asked Hassim.

“Last year, we quantified about R350 million,” answered Midlane.

“What percentage is that of the total,” Hassim further questioned.

“Well if we paid R36 million, I would have to say 1% maybe? It’s a very small percentage.”

Acting Managing Director of Medscheme Dr Lungi Nyathi sought to justify the 15%.

“The reason we worked on 15 % is because based on statistics that have been proffered; one in the healthcare industry in other countries. There are some numbers that are given by the insurance industry in South Africa, which is slightly similar to us, but again, it’s not in the healthcare space and I don’t think that the intention is to make the problem seem so big. But the importance for us is if there is indeed a problem this big then we should endeavour to find it.”

Advocate Tembeka Ngcukaitobi, who is chairing the probe, says it is unacceptable that South African schemes work on international statistics that have not been tested in the country.

“The problem I have with this discussion is that schemes have come to us with a grossly inflated figure of 15%, 20%. When you actually interrogate them the number reduces substantially to 1% because they try to justify the drastic measures they are taking against doctors, against a speculative loss and it seems that it’s really to cause confusion to make us believe that the problem is bigger than it actually is.”

Advocate Adila Hassim says they believe fraud, waste and abuse should be addressed, but with accurate amounts being shared.

“You shouldn’t confuse the questions to be saying that there isn’t a need to investigate fraud. That’s not the point. The point is there’s been a consistent exaggeration. There’s damage caused by that exaggeration. It’s not accurate it also influences the way you do your investigations.”

Private Forensic Investigators from Discovery and Medscheme are expected to make their submissions in private hearings on Friday.