Business Maverick

‘IRREGULAR BILLING PRACTICES’

Mediclinic whistle-blower claims spark flurry of industry investigations

Mediclinic whistle-blower claims spark flurry of industry investigations
(Photo: Gallo Images / Misha Jordaan)

A whistle-blower’s allegations have opened a can of worms and are being investigated across SA’s medical schemes industry.

A whistle-blower who has made explosive allegations that Mediclinic hospitals are guilty of irregular billing practices this week sent details of where auditors can start their investigations.

The email, which Daily Maverick has a copy of, details how the paper trail can be traced and which responsible parties should be interviewed and questioned. The email sent by the whistle-blower on Monday seems to be a direct response to an invitation from Mediclinic’s chief executive, Greg van Wyk, for more details. In an emailed response last week, Van Wyk challenged the whistle-blower to come forward.

In his email, cc’ed to medical schemes and various media, Van Wyk said:

“Upon learning of the first e-mail containing the first set of allegations, the leadership of Mediclinic immediately commissioned an independent forensic investigation by ENSafrica, a reputable law firm to investigate the allegations and the implicated hospital operations. I can share here that the forensic lawyer from ENSafrica who will lead the investigation is Mr Steven Powell, a highly credible and independent forensic expert. He is familiar with independent investigations of this nature and has a sound understanding of the business dynamics of the healthcare industry.

“I would like to invite you to engage directly with the appointed independent forensic lawyer, Mr Powell, ([email protected]) to shed more light on the allegations you make in the e-mails.

“We view the accusations in an extremely serious light as they impact business-critical and valuable relationships with employees, patients, doctors, healthcare funders and other stakeholders. Again, I stress to you and those copied here that Mediclinic prides itself on applying uncompromised ethical practices throughout every aspect of its entire business.”

Mediclinic reiterated this in its response to questions from Daily Maverick.

The response from the whistle-blower has been swift, with details of how the alleged fraud spans different job functions from reception to the billing department, case managers, confirmation clerks, credit controllers and patient admin managers. The allegations have opened a can of worms and sparked investigations across the medical schemes industry.

Medical scheme administrators investigating

Ryan Noach, the chief executive officer of Discovery Health, says the medical scheme has already commenced an investigation into relevant claims from Mediclinic.

“We have been assured by Mediclinic of a full and thorough investigation into the matter, including a comprehensive report back on the findings and outcomes of the independent review they have commissioned. Discovery Health Medical Scheme will determine what further action is required from these external and internal investigations,” Noach said.

Likewise, Medscheme (owned by Afrocentric) has indicated that it will be conducting its own investigations, as has Momentum Health Services.

However, Jeremy Yatt, principal officer of Fedhealth, one of the many medical schemes contacted by the whistle-blower last week, said he would be “very surprised” if Mediclinic management was found to be guilty.

“At a hospital level, maybe an employee is trying their luck, but it seems unlikely that this was [company] policy, as alleged,” he said, adding that hospitals don’t need to resort to fraud, since they already account for the lion’s share of medical schemes expenditure.

Medical schemes spent R74.3bn on hospitals in 2021

The latest industry report from the Council for Medical Schemes, which has also voiced its concern, pegs hospital expenditure by medical schemes in 2021 at R74.3-billion.

According to the report, the average amount paid per beneficiary for hospital services increased by 18.56% to R8,346.40 from R7,039.74 in 2020. Just over 92% of the total hospital expenditure was paid to private hospitals. Expenditure on hospital services paid on a fee-for-service basis amounted to R57.34-billion in 2021, and close to 64.39% of this was attributed to ward fees, theatre fees and consumables, with expenditure on medicines (in-hospital) standing at R5.07-billion.  

‘Reimbursement would be the minimum’

Damian McHugh, the executive head of marketing at Momentum Health Services, confirmed the administrator had launched its own comprehensive retrospective investigation going back at least a year. Although the investigation is focused on Mediclinic, McHugh said forensic investigators may take a closer look at the billing practices of the other private hospital groups.

“This could just be a disgruntled former employee, but the level of information is detailed and they seem to know exactly what they are talking about. If these allegations are true, it would be quite alarming. I think at the very least, medical schemes will expect to be reimbursed where there was incorrect billing applied,” he said. The Council for Medical Schemes made a similar statement over the weekend.

McHugh also noted that the problem might be confined to the six hospitals mentioned by the whistle-blower, rather than a company-wide problem.

“There’s just no way to know until we investigate. We are liaising with Mediclinic and will compare investigation results once the process is complete. This is a lot of data we are talking about,” he said.

The six hospitals that the whistle-blower has singled out are Mediclinic Kloof, Mediclinic Morningside, Wits Donald Gordon Medical Centre, Mediclinic Cape Gate, Mediclinic Vergelegen, and Mediclinic Panorama. DM

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Comments - Please in order to comment.

  • Johan Buys says:

    regardless any fraud, the scale of expense is frightening. For a non-hectic procedure that needed time in hospital, I compared the hospital fees (excluding theater, doctor, etc) and decided next time I’ll be better off asking the doctor if we could do the op in a five star hotel to save costs.

    Imagine the Mount Nelson charged you R4000 pppn to share a room with another guest you don’t know from a bar of soap…

  • Dale Taylor says:

    How is the review by ENS independent if it has been commissioned by Mediclinic?

    • Susan Keegan says:

      All power to the whistle blower, but don’t be surprised if this is the end of his or her career. Mediclinic and all the others in the medical profession who massage their bills have far too much to lose.

      A relative of mine who has been undergoing monthly treatment in a Mediclinic hospital regularly queries her account because of charges for services she didn’t receive. Staff don’t even bother to act embarrased at the ‘oversights’. They can’t understand why she insists on the overcharges being reversed because ‘you don’t have to pay for this… The medical aid will pay.’

      She queried an ‘ambulatory fee’ of R850 on her account every time she visits the hospital. They explained that it’s a charge levied on patients who walk from the reception area to the procedure room themselves! She was outraged but the staff weren’t at all concerned. ‘It’s a routine charge’ they said. ‘Don’t worry about it… the medical aid will pay’. They seem to have no concept that the patient is actually the one who picks up the tab for over billing.

      In my experience, the medical aid companies are as bad. I tried for months to get my medical aid to deal with the fraudulent overcharging for a procedure carried out on me by a plastic surgeon. He charged R45 000 for a procedure that should have cost about R12 000. I phoned and emailed the medical aid repeatedly, asking them to investigate and refuse the claim. They could not understand my complaint. ‘What is your problem? The medical aid will pay.’

  • Gerhard Vermaak says:

    Strange that the go to answer is always that it is a disgruntled employee, this is a huge industry just based on the figures in the article, do you honestly think there is gonna be no fraud? me thinks the medical aids should take this seriously as it affects our contributions which go up sometimes double digit figures yearly! where there is smoke there is fire and the CEO’s should start looking at their operating models, a sick person has no strength or ability to go through his bill and it is submitted directly to medical aids, MSM please do not let this slide, if there are companies fleecing the system they should be exposed!

  • Graham Stewart says:

    I suggest that patients should co-sign the charges before they are submitted to the medical aid for payment. We are only made aware after payment has been made

  • Rory Macnamara says:

    No smoke without fire. why is it every time a whistle blower comes to light it is put down to a disgruntled employee? the employer is never wrong – what codswallop! their self-righteous indignation is sickening!

  • Alley Cat says:

    I look forward to the results of this. Some years ago I was admitted for tests (not at a mediclinic hospital) and picked up from the bill that the cardiologist had charged for a test that he never performed.
    I queried it with the dr, but just got obfuscation from his receptionist. I alerted Discovery medical non aid to this, but never got feedback, so I don’t know if they paid him or not or whether they took action against him. I never received a thank you. Got me wondering how often this happens when some practitioners think you are asleep / out of it and charge for services not rendered.
    Discovery seem to be quick to deny claims or pay a VERY low minimum for medication but one wonders if they really examine bills before they pay under hospitalisation benefits? And our contributions just keep increasing every year.

    • Enver Klein says:

      I can concur, I delivered my own son in hospital as the gynaecologist was nowhere to be found. His bill however listed a delivery fee. I requested the medical aid not to pay the fee, which fortunately they did not, there was no further action from the gynaecologist.

  • Corry Versluis says:

    Medical aids are excessively charged by hospitals. They in turn pay the medical aids rebates and all the costs are put onto the clients by way of increased contributions, levies and co-payments. It is a sick degenerate model.

    • Bob Dubery says:

      Medical aids, especially the big ones such as Discovery and Medscheme, contract rates with healthcare providers and try very hard to keep those rates down (because the less they pay, the more they make). Things get truly ugly when you don’t have medical aid. Now you are outside of any contract between funder and provider, and you will feel the invisible hand of the market squeezing your wallet and your savings. Note that the hospitals may not employ doctors who practice or who admit and are thus not responsible for whatever doctors charge.

  • Peter Streng says:

    It is clear that the entire value chain from (referring) doctors, specialists etc to the path labs, to hospitals etc etc are milking the medical aid schemes, who are forced, because of it, to significantly increase annual premiums.

  • Anne Swart says:

    I’m not at all surprised. The entire industry should be investigated. How is it even legal that the patient and Medical Aid principal member is bypassed completely and all hospital billing, procedure billing, medication billing and doctor billing is sent directly to the medical aid and paid without any input from the patient and or member. How is that even legal?
    In my experience all practitioners have the thought process that the medical aid pays. No. I pay. I am the principal member. I pay the very handsome monthly contribution to the MA. And I pay if there is a shortfall. Also, after hospital discharge, when I have phoned doctors asking for their invoices – they are shocked that I even ask.

    Any legal minds out there, familiar with our Constitution? How is it legal to bypass the billed party?

    Wait until we have a whistleblower from the mental health care hospitals. The billing that goes on there is really questionable.

    Well done Whistleblower. I hope protection is provided.

    Fact. The hospital invoice party is the patient or principal member. The doctors / procedures invoice party is the patient or principal member. How dare they simply bypass the invoice party?

  • Love the quote that “at least the medical aids must be reimbursed”. How about reimbursing the members who have had to just suck up the massive increases every year?

    • Medical schemes are non-profit. Any reimbursement will likely go to their reserve fund. They might then decide to put through a lower contribution increases or more likely like during COVID they might do deferred contribution increases.

      The administrators will have no righ to any reimbursement imo.

      • Ritey roo roo says:

        Med Aid schemes might be “non-profits but have you ever been to any of their headquarters? Look at Discovery and tell me that looks like a non-profit with a straight face

        • Johan Buys says:

          That is exactly what people don’t understand. Discovery is not a health company or a health expert. It is a toll company. Decades ago there was I think AMA. Non-sexy, charged back-office admin fees for processing invoices. The medical aid funds are legally owned by the members, not the administrators. A surplus or shortfall goes to member reserves. Then around the 90’s came the new sexy and improved medical aid administrators that conjure up R2000 discounts on airline flights.

  • Matthew Hall says:

    Hey, DM, can we see that email please? You say you have it…

  • Bob Dubery says:

    There is a story about F1 racing that I love. It goes back to the climactic last race of the 1997 season, and the post race fallout with accusations flying in multiple directions. In particular there was a charge by Ferrari that Williams and McLaren had conspired to fix the race result. This was remarkably candid because the only way Ferrari could have come by the information they said they had was by listening into and then decrypting the radio communications between the Williams team and their drivers – which was illegal under EU law (the race was in Portugal).

    But one journalist put it to a member of the Williams team that everybody did this (listened in) and that everybody knew that everybody did it, and so surely Williams must have been up to it as well.

    The response was no. Frank Williams calls in team management and drivers at the start of every season, reminds them of the team’s values, tells them how his team will go racing and what they will not do, and he doesn’t care if other people do those things and profit, HIS team don’t do that. The reply went on that if after that, anybody so much as mentioned any of those things to Sir Frank, that would be career-ending.

    But in the corporate world they always have values but nobody takes them seriously the way Sir Frank did. They will take every chance they can, turn a blind eye to what is going on in the lower ranks, and then when they get caught they will fire a single “rogue” employee.

  • Johan Buys says:

    Decades ago, in the early days of Big Data, our firm ran some basic logic for the then largest medical aid administrator. It was shocking.

    Every procedure attaches inherent logic. So a hip replacement takes xx minutes, you should not do a double hip replacement on a deceased person, etc

    We found AMAZING surgeons that operated 31 hours per day! We even found doctors that had performed vasectomies on female patients. There were hundreds of GP that would need to run 18h a day solid 15min per patient to get to their claims. No lunch, no golf. That takes dedication. They shut many crooks out from ever being allowed to submit claims even if the medical ethics committee would not pull their license.

  • Donald bemax says:

    This has been going on for years..I came across an incident where 5 alcohol swabs were used from a box of 200.. the patient was billed for the box. The best place to start is the consumable’s used in the theatre.
    Swabs, gloves, syringes,sutures etc.

  • Not only do the overservice the patient but the patient have no say on what the treatment procedure will be and fully trust the medical staff to ” look after their interests”! Overstay in the ER so that they can increase the bill is a good example of this and this happens daily. Patient Rights are not adhered to and the patient trust the hospital staff fully. If a dr request a CT-scan or a MRI-scan they trust the dr, which is not always the right choice! CT or MRI scans are expensive and some do it routinly which is overservice! Mediclinic should look at ALL their hospitals and not only those who were mentioned – you will be surprised what will be uncovered IF the investigation is conducted without fear or favor!

  • Well, I have a problem as a cash patient to remove my gallbladder is now running over R100k after more and more bills rolls in proudly done by Constantiaberg mediclinic’s drs. Things I never agreed to, tests on my galbladder(already removed) I never agreed to. Its like milking a cow till there is nothing left. So, I think mediclinic as a whole is out to take everyone for as much as they can, cash patients and all.

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