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Medical Schemes
Monday, May 13, 2013 - 10:21
Sneak attack

Medical schemes could drive down total healthcare costs by establishing “aggressive fraud detection systems”. This way schemes could save up to 20% on fraudulent or over-charged GP and pharmacy bills and as much as 10% on specialist bills. This would lead to savings for medical scheme members in the form of reduced monthly contributions.

Indeed, according to George Roper, CEO of Agility Global Health Solutions [Africa] (Agility Africa) and Professor Jacques Snyman, Product Development Director at Agility Africa, administrator and risk Management Company for medical schemes, including Resolution Health Medical Scheme, consumers should take a long, hard look at a scheme’s ability to combat fraud/over-charging prior to signing on the dotted line.
“Fraud costs the medical scheme industry billions of rands a year, which is estimated between 7% and 15% of total medical scheme costs,” says Roper. He adds that a good question to ask before signing up is: what systems the scheme has in place to ensure that fraudulent claims are kept to the bare minimum and what these claims are currently costing the scheme.
He believes, however, that many schemes place a larger priority on member satisfaction to the ultimate detriment of fraud detection. “Consumers tend to regard those schemes that process and pay out claims quicker as providing a better service. As a result, the majority of claims received are processed as fast as possible without dedicating enough time to investigate and scrutinise the validity. However, more sophisticated IT systems can ensure a superior turnaround time with minimal to no error, ensuring that member expectations are adhered to without compromising the scheme. Agility Africa’s system, for example, assesses all claims in real time and will immediately identify fraudulent claims, whilst approving and paying out valid claims within the same timeframe,” he says.
When it comes to the healthcare industry, prevention is always better than cure, he says. It’s far more cost effective to invest in systems that prevent fraudulent claims from being processed at all, than to recover the payment afterwards. Agility Africa’s IT systems, implemented on behalf of its client schemes, trawl through claims data and can almost immediately identify when a fraudulent one has been submitted, in time for the scheme to reject it. This allows members of Agility client schemes to have both the benefit of quick turnaround and payment of claims, whilst protecting all stakeholders from fraudulent activities.
“For example, someone may go to the dentist to have work done on a tooth. The dentist will claim for that procedure, plus work done on another tooth,” says Roper. “Agility Africa’s IT system keeps a history of all claims related to a particular patient, and may find that the additional tooth was extracted three years prior, providing the scheme with the necessary information to reject the claim.”
It is then the patient’s full right to claim back any additional money from the provider so that they are not out of pocket. Roper recommends that medical scheme members request an upfront quote from the provider prior to undergoing an expensive procedure. Ensure that the relevant procedural codes are included. “Next, check with your medical scheme that the codes correlate with the procedure and that all costs are covered,” he advises.
Due to the highly technical nature of medical treatment and provider skills, consumers tend to treat the process differently to going shopping. “However, that’s exactly what you’re doing and you should always be aware of your right to ask for information about how much you will be charged and for what purpose. Consumers should always keep in mind that they have an important role to play in combating fraud with the end-goal being lower monthly contribution increases.”
However, Snyman believes that, while most medical scheme members are on the receiving end of fraud, others collude with service providers to defraud medical schemes.  “In some cases, doctors are regarded as ATMs. Members pay them a visit, get cash from the provider and ‘return’ the money by submitting a false claim to their medical scheme,” he explains.
He warns that sophisticated IT systems, such as Agility Africa’s, are able to track provider behaviour and identify patterns of illegitimate claiming. “In these cases, the medical scheme can use the data to approach the provider and either negotiate a change in their behaviour, or ultimately open a case of fraud.”
‘Code farming’ is a common fraudulent or over-charging practice where providers charge for one coded procedure and then add a number of related procedures that were never performed. A provider could attempt to claim for both procedures whilst only one was delivered. “However, our IT system is highly intelligent and sensitive and will immediately identify this as potential over-servicing. The scheme is immediately alerted that further investigation is required,” Snyman explains.
Schemes that have contractual relationships with hospitals are also more likely to be in a position to deter fraud and over-servicing, particularly when it comes to consumables. “We estimate that, on an average hospital account, approximately 3% of total costs can be ascribed to product charges that are not included in the contractual agreement. However, most schemes check bills of more than R10 000 or R20 000 manually, meaning that over-charging often slips through the net, unless a rules-based system follows up on it.”
Fraud does not only occur on high cost claims. For example, some providers charge for a full box of needles during a surgical procedure rather than individual units. “Agility Africa’s IT system scrutinises each line item and rejects those that cannot be justified and can save schemes, and ultimately consumers, millions of Rand each year,” explains Snyman.

Copyright © Insurance Times and Investments® Vol:26.5 1st May, 2013
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