Rising medical insurance premiums are a result of several factors such as inflation in healthcare costs, demographic changes and increased usage rates. Another understated factor is health insurance fraud. When the healthcare system is abused, it is usually individuals and employers who bear the cost of fraud.
What is health insurance fraud?
Medical insurance fraud is generally defined as knowingly and willfully executing a scheme or treatment to render services that are medically unnecessary, or over-utilizing services that result in unnecessary costs to the healthcare system, including health insurance providers.
Potential offenders can be anyone - patients, hospitals, doctors, vendors, suppliers, or even pharmacists.
Health insurance fraud unduly inflates healthcare costs, and the cost is eventually incurred individuals or employers by way of higher insurance premiums. In addition, if a medical provider encourages the patient to go for unnecessary tests or treatments, it can pose considerable risk to the patient's health.
A report by the consultancy group Booz Allen Hamilton estimated that the UAE was losing more than AED 3.67 billion (USD 1 billion) a year due to health insurance abuse or fraud. The National news website states that over-prescription for medicines and unnecessary tests have pushed up insurance premiums in the UAE by nearly 20%.
So how do we detect fraud and more importantly what are the preventive steps that can be adopted for correction and prevention?
Common areas of fraud
According to Fraud Magazine, the ten common healthcare provider frauds by patients and medical practitioners are:
- Billing for services not rendered.
- Billing for a non-covered service as a covered service.
- Misrepresenting dates of service.
- Misrepresenting location of service.
- Misrepresenting provider of service.
- Waiving of deductibles and/or co-payments.
- Incorrect reporting of diagnoses or procedures.
- Overutilization of services.
- Corruption (kickbacks and bribery).
- False or unnecessary issuance of prescription drugs.
In some cases, this includes minor offences like prescribing unwanted medications or ordering expensive but unnecessary procedures, such as MRI scans. In addition, sometimes people are kept longer than necessary in the hospital, especially in the intensive-care unit. These infractions are more prominent when the patient is covered by health insurance.
It is essential that employees are educated on fraud that can be committed by medical providers or hospitals. It is always a good idea to get a second opinion in case of expensive or major surgeries or procedures.
Here are some preventive measures for employers to train employees on how to recognize fraud by medical providers:
- Always keep your health insurance card on you. Immediately report lost or stolen cards.
- Never sign empty or incomplete claim forms.
- Never sign more than one claim form per doctor per visit.
- Inform your insurer if you do not complete or take any medical services after pre-authorization.
- Inform your insurer if a medical provider offers to waive your co-payment or deductible.
- Inform your insurer if a provider offers to bill the insurer for a service that is not usually covered.
- Ask questions. You have the right to know every detail about your medical care.
- Get claims preauthorized wherever possible.
- Carefully consider procedures or treatments that are not really required. This is particularly serious as it poses significant and unnecessary health risks.
Fraudulent claims by employees
According to some surveys, misuse of care by employees is the second most commonly cited reason for increasing healthcare costs.
For example, more than one laborer who may not have cover have been known to use the same health insurance card. This is often the case because sometimes no photos are placed on ID cards, leaving them open to misuse.
Inflated procedures, unnecessary admissions, prolonged ICU stays, and several simultaneous treatments are some other forms of abuse. It is imperative that employers develop systems or checks when it comes to monitoring employees on this front.
Problems faced by insurance companies
As quoted by Michael Bitzer, CEO of Daman, “There is a thin line between abuse and fraud. As an insurance company we have certain guidelines in place to define what tests you should undergo in certain conditions but healthcare is very broad and you cannot define every diagnosis and every guideline. We try to apply reasonable medical judgment for the individual claim”
Logistically, it is difficult for insurance companies in the UAE to assess and investigate each claim. In 2012, Daman had just 25 employees in its fraud investigation department and 1,401 medical providers in its health insurance network in the UAE, resulting in 1.53 million claims processed every month!
The Way Ahead
Data on healthcare fraud is scare but the World Health Organization reiterates that countries that have gone furthest in tackling fraud are those that have strong financial and medical accountability systems.
In Norway for instance, health care providers use a software that can stop fraudulent billings before they are paid. An estimated 60% of the abuse in Norway's healthcare system was detected as a result.
The Centers for Medicare and Medicaid Services (CMS) in the United States is beginning to use predictive modeling technologies to detect patterns of health-care fraud. This is done via a system developed by the private sector that is designed to catch fraudsters before the damage is done.
In China, the government “has tried a number of micro measures” to combat healthcare fraud. These include preventing doctors from receiving kick-backs from the recommendation and sale of pharmaceutical products by centralizing drug procurement at hospitals.
In the UAE, several initiatives have been put in place to prevent health insurance fraud. There is the Gulf Healthcare and Anti-Fraud Association (GHAFA) while nearly a dozen Middle East and North African insurance providers are part of the Global Health Fraud Hub.
As the healthcare industry grows in the UAE, the incidence of medical insurance fraud will also increase. There has to be firm and intensive efforts by the industry and regulators to make sure that fraud is eliminated or reduced effectively.