South Africa: Fraud in the medical schemes industry

Discovery Health’s CEO, Dr Jonathan Broomberg, has estimated that fraud in the medical schemes industry will cost South Africa between R8.22 billion and R43.2 billion.

Various types of fraud have been flagged recently, such as “card farming”, in which medical members allowed other non-members to be treated on their card, buying general merchandise such as nappies and perfume from a pharmacy and subsequently submitting a claim to cover the cost from the medical aid.

Per a BDLive report, the most recent scam to hit Discovery involves lump sums which are paid out by hospital cash plans. Such hospital plans are sold by insurance companies and provide beneficiaries with a lump sum of money in the event that they are hospitalised. These cash plans are intended to help cover the shortfall which a patient might experience if the hospital costs are not fully covered by their medical scheme.

Dr Broomberg said that, especially in Kwa-Zulu Natal, doctors have been admitting patients to hospital who were not ill and then submitting false claims on their behalf to both the relevant medical aid scheme, as well as their cash plan provider. The “patient” would then split the lump sum paid out by the insurer with the doctors and the syndicate in question, which fraudulently enriches them unduly, thereby leaving both the medical scheme and the cash plan provider out of pocket.

Discovery recently busted a syndicate which involved the admission of a 12-year-old child who was admitted to hospital for six days with a “diagnosis” of haematemesis, which entails the vomiting of blood. The child in question had been admitted to hospital six times over the past two years. However, the child was not attended to by a doctor, but by a psychologist and was discharged without any of the usual investigations associated with haematemesis.

As a result, Discovery Health is working closely with insurance companies to crack down on this kind of fraud, by sharing data and scrutinising the claims submitted by medical scheme members who also had cash plans much more closely.

Medical schemes terminate the memberships of patients involved in this kind of scam and report doctors to the Health Professions Council of South Africa, which is the statutory body charged with overseeing doctors’ conduct and issuing their licences.


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