Health insurance fraud is rising in the GCC region, but some measures are already in place to detect and deter such practices.
By Cynthia Ang
Healthcare fraud is a worldwide problem and the GCC region is no exception. Compulsory health insurance coverage has not only transformed the region’s healthcare landscape, but also led to more abuses of the system.
While the exact impact of fraud on the healthcare business is difficult to measure, some industry reports put the annual cost of fraud and other fraudulent practices to the healthcare industry at around US$1 billion. Other reports estimate fraud to be about 3-10% of total healthcare expenditures. A few examples of fraud and other fraudulent practices include identity theft, over-prescription of unnecessary medications, claiming for excessive tests and treatments, and keeping patients in hospital longer.
Mr Robin Ali, Consultant, Health Funding Department, Dubai Health Authority (DHA), said the threat of healthcare fraud to insurance companies in the region varies by country, depending on the degree of regulation of both the healthcare sector and the health insurance market. “The threat to insurers is both internal and external, with fraud perpetrated by insurance employees, either alone or in collusion with providers, as well as fraud perpetrated by individuals within hospitals and clinics and occasionally by groups of individuals,” he observed.
Impact of fraud
Insurers, already operating in a highly competitive market, are stepping up efforts to clamp down on abuse as well as calling for more regulation of claims that are fraudulent in nature.
In two of the fastest-growing health insurance markets in the GCC – Saudi Arabia and the UAE – there are already reports of higher premiums due to health insurance fraud. It is estimated that premiums in Saudi Arabia could rise by up to 10% as providers battle fraudulent claims and falling profits. According to reports, the Kingdom’s health insurers are losing up to 15% of their revenues to fraudulent claims.
On the other hand, the Emirates Insurance Association has reportedly estimated that around 5% of paid claims are a result of abuse or fraud.
The misuse of health insurance is a major international concern, said Dr Sherif Adel Mahmoud, Regional Head of Healthcare – Operations at AXA Gulf. “Having been identified as a major driver in pushing up costs that causes higher premiums for insured population, all healthcare industry stakeholders have started to focus their efforts in controlling fraudulent and abusive behaviours that are eroding the healthcare benefits for UAE citizens and residents by unethical claims,” he said.
Varying degrees of awareness
Awareness of fraud among the payer community (insurers and administrators) is extremely high, said Mr Ali. However, “if you mean strictly the healthcare sector (hospitals, clinics and pharmacies), then the awareness varies down the management chain with higher management being very aware and lower-ranking staff being aware usually only if they come across instances of fraud or are involved personally in fraudulent activity. Regarding abuse, there is a general awareness that this takes place but of course, no one will admit to doing it”.
Agreeing, Dr Mahmoud said that the awareness across all market players differs in terms of depth of knowledge as well as reaction. But he noted that the industry is seeing “some progressively evolving practices of fraud control”, from ad-hoc fraud detection through internal processes of reporting and training, to the more advanced practices of data analytics.
While insurers should be interested in doing more, the problem is that many of them in the region rely upon third-party administrators (TPAs) to process claims and therefore either are not aware of the scope of the problem or do not have the information or resources to tackle it themselves, said Mr Ali. For example, only five insurers out of 45 offering health insurance administer in-house in Dubai. He opined: “It would be useful if TPAs publish not only their initiatives in dealing with fraud prevention and detection, but also publish their successes. In this way, insurers could at least be better informed when they choose a TPA.”
He added that insurers tackling fraud risks are being increasingly assisted by access to market-wide claims data collected by some regulators, as well as the regulator “cleaning up” the market place. “For instance, in Dubai, all insurers, TPAs and now, intermediaries (including individual sales people), are required to register for permits. DHA is also putting in place rules and standard formats for scheme claims records that insurers provide to each other for underwriting, a key source of manipulation and destabilisation of the health insurance market.”
Government-led initiatives
GCC regulators are also become more proactive in their efforts to stamp out healthcare fraud.
In March, the DHA announced its partnership with software provider SAS to develop a new solution to detect fraud, waste and abuse in Dubai’s health insurance market. The E-claimlink solution provides advanced monitoring and analysis of claims data by both the DHA and the Emirate’s health insurance providers to drive market efficiency and restrain wasteful practices. The advanced analytics system will help the regulator to track claims, monitor patient diagnoses, prescriptions and clinical outcomes, and assess overall financial performance.
The Health Authority – Abu Dhabi (HAAD) has introduced a policy which states that kickbacks are to be regarded as health insurance fraud. In addition, HAAD has introduced a standard provider contract requiring all contracts between insurers and providers to meet minimum standard terms and conditions. It is a condition of such contracts that reimbursement of healthcare fees are made in accordance with a mandatory tariff, which dictates the price paid for basic services. Together, these measures are expected to curb the practice of insurance payments being used to pay commissions or kickbacks between providers.
In February, National Health Insurance Company (NHIC), which manages the basic mandatory national social health insurance scheme – Seha – across Qatar, launched its “Be Our Eyes” campaign, aimed at getting public support in reporting suspected fraud and abuse. It has also urged both members and service providers to be cautious in using Seha and warned against any attempt to defraud and abuse the scheme.
Over in Saudi Arabia, medical policies are sent directly to the server of the Council of Cooperative Health Insurance (CCHI), which acts as a centralised database through which activity can be monitored. In addition, the CCHI staff are also trained in identifying and dealing with medical fraud.
An industry-wide joint initiative to share fraud-related information has also been proposed. Dr Mahmoud said: “There is no more effective way of controlling fraud than sharing information. The future is actually pulling us towards creating a hub where information on fraudulent trends can be shared among all industry players, keeping, of course, the level of confidentiality of individual data. It is a key control tool to start inserting in the industry mind-set that fraud and abuse is going to be flagged and the whole market should take care.”
Need for greater efforts
While government initiatives are the cornerstone for anti-fraud measures, Dr Mahmoud said there is still a big room for improvement, especially at the providers’ end. Furthermore, abusers need to be penalised not only financially but also by legal actions and strong as well as effective processes. “This legal framework will bring everyone on board at the same level of understanding of the economic as well as social impact of abuse,” he said
Insurers also have an important role to play. Dr Mahmoud said AXA Gulf has formalised a concrete strategy aligned with AXA Group’s fraud control strategy. This strategy operates in three directions: a concurrent control where extensive and frequent training is delivered to the operation team enabling them to identify, detect and report fraud; a retrospective control where campaigns of file review and audits are being conducted by a dedicated and accredited team of fraud investigators; and an analytical and predictive approach flagging abnormal trends across providers and insured.
Mr Ali said that education is key to understanding the issue, particularly among healthcare workers, many of whom are unable to detect fraudulent activity or are unaware of what is meant by waste and abuse. He elaborated: “Insurers and administrators should have active fraud, waste and abuse (FWA) units to monitor and inspect provider and physician activity. A strong claims data-backed programme of monitoring and inspection on the part of regulators can support such activities.
“In addition, health regulators should implement and monitor adherence to clinical guidelines for the major chronic or ‘lifestyle’ illnesses that are prevalent in the region. This will have the effect of reducing abuse.”
Prevention is better than cure
With the GCC’s healthcare expenditure expected to hit as high as $80 billion in 2015, this will not only present the opportunities for growth in revenues, but also for fraud. The problem is compounded as the patterns of fraud schemes change rapidly with time and as perpetrators change their approach, together with the fact that the full extent of healthcare fraud cannot be measured accurately.
But it is never too late and the steps taken so far should send a strong message to the market. Joint initiatives among the industry stakeholders to promote a deeper understanding of the underlying issues and threats are also likely to reap positive results.
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Fraud, abuse and waste in health insurance
• Fraud – an intentional act of deceiving, concealing or misrepresenting information that results in monies being paid to an individual or group.
• Abuse – a practice that includes overprescribing, recommending and charging for unnecessary procedures and other practices by both patients and practitioners that result in non-fraudulent advantage to the perpetrator.
• Waste – the extent to which health funds and resources are used either intentionally or unintentionally in a wasteful or inefficient manner.
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