South Africa’s health care is awash with fraud, waste and abuse, with 11% of the Covid spend alone — R14.8bn of R138bn — being probed by the Special Investigating Unit (SIU).
The Council for Medical Schemes (CMS) estimates that the health-care sector loses R22bn-R28bn a year to to these needless costs. Experts in the sector believe that up to 15% of health-care claims include an element of fraud, waste and abuse.
At the recent Board of Healthcare Funders conference in Cape Town, brokers also came in for a roasting from MediCheck founder Mark Hyman. He says they collectively “sit on a beach and do nothing”, costing the industry R2.5bn a year.
Andy Mothibi, head of the SIU, cites the Organisation for Economic Co-operation & Development (OECD) estimate that 45% of global citizens believe the health sector to be “corrupt or very corrupt”. The OECD says that, globally, 1.6% of annual deaths in children under five — about 140,000 — can be attributed to fraud and corruption.
Mothibi chairs the Health Sector Anti-Corruption Forum, which was established at the presidential health summit in 2018 and is part of the national anti-corruption strategy.
He says his unit’s high-priority investigations were part of preparations for universal health care. “For the NHI [National Health Insurance] to be successful it has to be implemented simultaneously with an equal improvement programme,” he says.
According to actuary Gregory Whittaker, potential litigation payouts in the public health-care sector as of March totalled R109.7bn, with annual claim payments averaging R2bn. He says the private sector quantum is unknown but annual rates for occurrence-based cover for obstetricians/gynaecologists has increased tenfold, from R109,240 in 2009 to R1m in 2019, because of litigation.
Chronic government underfunding, insufficient regulatory oversight and lack of transparency in governance breed corruption and reduce the quality of health care
— Andy Mothibi
He listed the top reasons for fraud, waste and abuse as:
- Overservicing and duplication in medical services;
- Procurement and purchasing irregularities (R138bn spent on Covid, R14.8bn under investigation by the SIU);
- Registration and accreditation irregularities (one in 10 medical products in developing countries are substandard or falsified);
- Collusion (state attorney and claimants);
- Medicolegal fraudulent and oversettled claims;
- Overpricing of services and products; and
- Public sector health-care workers working in the private sector without permission.
Mothibi says: “Estimation is difficult, but in the public sector the auditor-general estimates unauthorised, irregular, fruitless and wasteful expenditure for nine provincial health departments at R11.1bn to the end of March 2019, while the CMS’s 15% of [fraudulent, wasteful and abusive] claims came to R27.9bn in 2019.”
Whittaker says: “Everyone shares the burden. It translates into higher premiums and out-of-pocket expenses, reduced benefits and coverage. He says there are also instances of people being subjected to unnecessary or unsafe procedures which could result in malpractice claims.”
Mothibi lists fictitious medical claims related to doctor negligence in public hospitals, procurement irregularities, counterfeit medicine and health-care devices, unregistered medical practitioners, price fixing, issuing of medical waste disposal contracts to unqualified companies and fraudulent billing among the incidents of fraud or waste.
He says there are many reasons for this sort of abuse, including failing to vet a doctor’s practice number, insufficient sanctions by regulators, conflict of interest, inadequate sectoral co-operation (such as data sharing), law enforcement agencies not fully understanding health sector legislation, and inadequate education or awareness of medical scheme beneficiaries.
Mothibi emphasises that “chronic government underfunding, insufficient regulatory oversight and lack of transparency in governance breed corruption and reduce the quality of health care”.
Hyman says brokers take commissions, often “without lifting a finger” to help medical aid members. Surveys show that most members have brokers, but never hear from them, he says.
Statistics indicate that broker commissions in 2021 totalled R2.52bn.
“A broker with 500 clients earns R63,930 a month. It allows a broker who never sees his client to sit on a beach and enjoy a wonderful life with a passive income,” he says.
He sums up the way forward with one word: “Transparency.” He says that with so many medical schemes and so many members, consumers struggle to get a complaint or a query across.
“The average time it takes to get through to a call centre is between four and eight minutes, with various computerised options. If you get through, the call centre person reads off a script and has no knowledge or understanding of how to properly escalate a complaint.”
Hleli Nhlapo, MD of the medical schemes division for Dental Information Systems, says improved member education is crucial.
Hyman knows of one scheme that received more than 120,000 calls a day. “How much of that could be resolved if brokers were doing their jobs?”
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