top of page

Allegations of unfair practices by medical schemes and administrators

This article received via email from Discovery Health (24 May 2019)

As an organisation, Discovery’s values of integrity, honesty and fairness extend to every aspect of our business, as well as to our role in broader society. One of South Africa’s greatest challenges right now is the scourge of corruption, and our values require that we take the strongest possible stand against corruption wherever we encounter it. Against this background, many will be aware of recent allegations by a lobby group of health professionals that various medical schemes and administrators, including Discovery Health and Discovery Health Medical Scheme, engage in “racial profiling” and intimidation of African and Indian healthcare practitioners during fraud and billing abuse investigations.

There is absolutely no basis to these accusations whatsoever. Discovery Health’s fraud investigation processes are objective, impartial and fact based. They comply fully with every aspect of the applicable legislation, and they have been tested and approved in courts of law. The entire forensic investigation process was audited and tested by an independent legal firm, which last year gave the Discovery Health Board solid assurance of the soundness of our processes. Simply put, we have a zero-tolerance approach to corruption and fraud, and we adhere to the highest legal and ethical standards when conducting these investigations.

Fraud and billing abuse are major issues in the medical aid environment. The Council for Medical Schemes (CMS) estimates that fraud and billing abuse account for about 15% of medical aid contributions, equivalent to R30 bn per year. This misappropriation of funds by unethical or dishonest practitioners and other stakeholders increases scheme costs unnecessarily, depriving members of funds that could be used to fund critical healthcare services. It is also a key factor in driving up the cost of medical aid contributions every year. Fraud, therefore, poses a material threat to the long-term sustainability of schemes.

Discovery Health takes fraud and billing abuse extremely seriously. We have a contractual and ethical duty to ensure that members’ funds are disbursed to pay for valid claims only. We devote substantial resources to investigating any suspicious practices and to recovering misappropriated funds. Our forensic recoveries amounted to just over R600 m in 2018. Over and above these direct recoveries, our forensic investigations create a measurable halo effect by sending a clear signal to other potential perpetrators that fraud will be identified and rooted out. We estimate that this halo effect saves the Discovery Health Medical Scheme and our other medical scheme clients a further R450 m to R500 m per annum. The total savings due to our fraud management activities are, therefore, over R1 bn per year, every cent of which is returned to our clients. While the amounts involved are material, it’s important to place this in the context that the vast majority of the 35 000 healthcare professionals that we interact with are honest, and we are grateful for the excellent healthcare that they deliver to our members. To date, less than 1% of all billing practitioners have been blocked for payment due to evidence of repeated fraudulent practices or complete refusal to engage with us in our investigations.

We have never and will never use race or any other identity factor in our fraud investigations. More than half of all investigations arise from external tip-offs from members or other practitioners. The balance are identified from detailed technical analysis of our claims data, using advanced statistical methods including artificial intelligence tools. We have no idea as to the race, gender or any other identity factor when initiating an investigation, and we have no interest in these factors. At no stage do we request a patient’s detailed confidential clinical information, but rather we use administrative information to confirm or eliminate suspected fraud or billing abuse.

The Council for Medical Schemes (CMS) has launched an investigation into these various public allegations. We strongly support this important intervention by the CMS, and will cooperate actively with this process. In the meantime, we will continue to act according to our contractual and ethical obligations, and to conduct our business ethically, fairly and legally, as we always have done.

12 views0 comments


bottom of page