One of the major rallying calls for the implementation of the National Health Insurance (NHI) is the fact that medical care in South Africa is excessively expensive.

The cost of medical care is mainly driven by the fact that there are no tariffs when it comes to pricing. However, the cost issue is partially being driven by Fraud, Waste and Abuse (FWA) which is something that medical schemes have long bemoaned as an industry scourge.

Health Minister, Zweli Mkhize, said that the NHI will hopefully put a stop to FWA, or at least apply the brakes to it. But as Christoff Raath – Joint CEO of Inside Actuaries and Consultants – said at the Institute of Health Risk Managers seminar, this is not an easy bull to capture.

Staggering magnitude
When assessing the FWA issue, Inside Actuaries and Consultants worked closely with a number of medical schemes which included the Government Employees Medical Scheme (GEMS) – the country's largest private medical scheme – and Discovery Health – the country's largest open medical scheme – to try and see what the industry is dealing with.

"The level of FWA in the industry is staggering. If we look at the industry, 10% of the collective turnover of the medical industry (which is estimated to be R200 billion) is lost to FWA. That's an estimated R22 billion a year. This is believed to cost an extra R192 to R410 per principle member of a medical scheme on a monthly basis," said Raath.

It is not easy to address the FWA issue when its actual cost to the industry is not easily quantifiable.

Issues of morality
The next challenge that industry faces when it comes to FWA is issues of morality.

While fraud – when detected – is punishable by law, there is no way to prosecute a supplier, doctor, or medical practitioner of waste or abuse.

And it seems as if it isn't even clear cut when it comes to prosecuting fraud. "There are a lot of instances in the industry where health practitioners wrestle with issues of morality and principle. A surgeon is performing surgery on a patient that they know won't be able to foot the bill of the procedure if there is a co-payment. The surgeon takes pity on the patient and changes the code of the procedure to one which requires the medical scheme to pay for the procedure in full. Technically, this is fraud, but the surgeon justifies his actions by saying that he acted in the greater good," said Raath.

There are even instances where this does not take place in life-or-death situations. South Africa currently has the highest rate of cesarean sections in the world. And medical schemes don't have an issue with pre-approval of these procedures provided that a medical practitioner supplies them with a letter motivating the need for the procedure over a natural birth.

If the procedure is not an emergency, then there would typically be a co-payment involved. Most medical schemes are complaining about the fact that nearly every cesarean section is now suddenly labelled as an emergency which means that they must pay for them in full, no question.

Shooting fish in a barrel
The issues of morality place medical schemes in serious predicaments and makes them prime target for this kind of abuse. Like shooting fish in a barrel.

If a medical practitioner always has a justification for their actions, and medical schemes take issue with it (labelling it as fraud), how long will it be before the public start (wrongly) accusing medical schemes of looking for reasons not to pay a claim?

We always refer to the Nathan Ganas case with Momentum. The insurer was ...

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