All insurance companies face a high level of fraud, but it’s a little-known fact that it’s an extreme problem for medical aid schemes. Recently at the Council for Medical Schemes’ inaugural Fraud, Waste and Abuse Summit, it was estimated that fraudulent practices cost members somewhere between R22-billion and R28-billion a year.

That would constitute about 25% of all premiums paid by SA’s 8.8 million medical aid members. Or to put it another way, if there were no fraud, your medical aid bill would come down by a quarter, and given the way they have been escalating that would be a very welcome discount.

SA’s largest medical aid scheme, Discovery, for example, investigates about 3,500 potential fraud cases a year, and 82% of them turn out to be valid, according to documents provided by the scheme.

Why is this so high? For one thing, medical aid fraud is kinda easy. With an insurance claim on a car that has been in an accident, for example, the value of the damage is comparatively simple to quantify and the evidence of the accident is most often very obvious.

With medical aid fraud, it’s costly for the medical aids to investigate and the nature of the fraud is often complex. How do you know whether a doctor has, in fact, examined a patient and for how long?

Weirdly, one of the examples of fraud Discovery has had to deal with is the supply of fraudulent sick notes. The doctor was supplying fraudulent claims for consultations. Discovery had to use undercover investigators to test the allegations.

Some of the claims are simply stupid. One doctor claimed he was treating 50 patients a day. But mostly, the way medical aid schemes find out about it is through tip-offs by patients. About 53% of fraudulent claims are discovered in this way and the remainder is found out by applying statistical algorithms.

When a fraud is suspected, a medical aid scheme requests an interview with the medical professional, and, of course, this ends up being a pretty tough interview. Often, to assess whether the doctor had seen the patients or clients he or she claimed to have treated, the medical aid demands to see the patients’ files. It’s a touchy point for privacy reasons, but often there is no other way.

If there is fraud, the medical aids demand the money back, and if it’s paid and the fraud is not serious, they stay on the payment system. But if it is serious, they get booted, and that is a big, big problem for medical professionals.

This week, a hearing was held at the Human Rights Commission, where Dr Donald Gumede, chairperson of the National Health Care Professionals Association (NHCPA) made allegations of “racial profiling”. (See our report here.) Three medical aids testified at the hearings, denying the claims of course. In fact, the medical aids claim they have no data at their disposal that specify the race of doctors. They use the Board of Health Funders’ PCNS online portal system which doesn’t carry any demographic identifiers.

Gumede told Business Maverick that the vast majority of people who have been cut off are black. There have been “one or two” white people, but 99% of those who have brought their complaints to the NHCPA are black, he said.

The medical aid schemes, he says, are so powerful and rich, they are able to bully people into submission. And he makes the tricky point that handing over patient case files is an invasion of privacy. The medical aid schemes “hold all the cards,” he says.

But the problem for Gumede and the NHCPA is that correlation is not causation; just because the majority of victims of medical aid banning orders are black doesn’t necessarily mean they are being targeted on a racial basis.

But it does, obviously and sadly, say something about the skewed nature of South African society – and perhaps also the tendency to see problems that are essentially social in nature through a racial lens. BM