Back in 2009, it was pretty astonishing that fraud and wastage within the SA private healthcare sector was reportedly costing R13 billion a year. That huge estimate came from the Board of Healthcare Funders of Southern Africa (BHF), which represents the interests of most medical schemes in South Africa, Namibia, Lesotho, Zimbabwe and Botswana.
And it seems that the problem isn’t on the road to recovery. If anything, it’s getting worse. In July this year, Michelle David, a partner at the international law firm, Eversheds, said that she believed fraud-related losses were now costing medical schemes over R15 billion a year.
In terms of how this affects individual scheme members, David says that figures from the South African Medical Association showed that R150 of a member’s average contribution in 2002 went to combating fraud and covering the losses it causes. By 2010, this figure had risen to an estimated R400.
David says the level of fraud is now completely ludicrous and runs throughout the entire spectrum of medical aid claims. “On one side we have fraud being committed by the service providers. This ranges from medical practices that are overbilling through to pharmacies that are dispensing medicine that patients never asked for. And on the other side, med-aid members are getting cash, groceries and even expensive kitchenware through their medical schemes.”
Secure transaction control
Marius Coetzee, MD of Ideco Biometric Security Solutions, is adamant that levels of fraud within medical schemes can be cut dramatically by using fingerprint technology. “If you want to reinforce security within transactions, you have to be able to confirm the identities of the people involved in those transactions. If you can’t authenticate, you can’t differentiate – you can’t tell one person from another.”
To illustrate this point, Coetzee uses the straightforward example of card-sharing – a really simple fraudulent practice whereby a medical scheme membership card is used by a non-member. “We need to accept the fact that any transaction based on a card is wide-open to identity-based fraud. People share them and we can all use one another’s cards. Medical scheme cards are no exception.”
The ability of fingerprint-based identification to prevent this type of fraud has been proven repeatedly in SA. Thousands of local organisations now use fingerprint scanners instead of cards to securely manage workplace attendance and to accurately record their employees’ working hours for payroll purposes. “Buddy-clocking and the consequent losses caused by payroll fraud has been eliminated at these organisations,” says Coetzee. “People can no longer share their cards and clock-on at work for one another.”
Apply identity control into healthcare
Aside from the role that biometrics can play in preventing buddy-claiming, fingerprint technology has the potential to accelerate and reinforce the security of processes within other areas of the healthcare sector. Although perhaps not as immediately obvious as preventing card-based fraud, biometrics offer the potential to deliver a variety of benefits that flow directly from accurate identification.
Coetzee refers to Ideco’s approach as Applied Identity Control or AIC. “We are looking at ways in which the principles of AIC can enhance a huge variety of business processes,” he says. “The integrity and validity of so many processes and transactions are reliant upon recognising – identifying – the people involved. And this is particularly true of the healthcare sector which is so obviously highly focused on people. There is a very strong and direct link between accurate processes and accurate identification.”
Once we start thinking along these lines, it becomes clearer that, for example, managing patient identity has many implications – such as dispensing and administering medicines through to handling their records. In these instances, Coetzee says that the principles of AIC would require implementing straightforward mechanisms to record all the related transactions and link them directly to the fingerprint-based identities of everyone involved. “We can securely manage many different activities that relate directly to a patient’s identity.”
Dr Jonathan Broomberg, CEO of Discovery Health, recently told Business Day that the company spent significantly more than R10m a year to prevent and investigate fraud. Presumably, this expenditure contributes to the company’s ability to recover about R250m a year through being able to prove fraudulent activity.
A 2011 report by KPMG, Medical Schemes Anti-Fraud Survey, found that of the R145 billion claimed for medical treatments between 2007 and 2009, more than R67m was attributable to fraud committed by members, with service provider fraud amounting to nearly R152m. During the three-year period, 11 200 cases of fraud were investigated and the survey was based on responses from eight medical schemes representing 84% of all SA scheme members.
Given all the contrasting figures, there is clearly not a definitive figure concerning the Rand value of medical scheme fraud. But as the old saying goes, the absence of evidence is not evidence of absence. What is perhaps more important than achieving consensus on the cost of fraud – both in terms of direct losses and the indirect losses of attempting to deal with it – is the fact that it is a recurring problem. It just goes on and on, year in, year out.
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