Counting the Cost of Medical Aid Fraud


“The reduction and elimination of fraud, waste and abuse will impact on medical aid contribution increases,” says Gerhard van Emmenis, Acting Principal Officer of Bonitas Medical Fund. More importantly, benefits could be enriched to pay for even more critical healthcare and treatments. He says, “Fraud, waste and abuse is one of the biggest contributors to escalating healthcare costs as the fee-for-service model of payment encourages people to over-charge or over-service for profit.”

The cost of irregular claims

Last year Bonitas identified over R79 million in irregular claims involving medical practitioners. Money which could have been used to pay for around 57,000 more GP consultations or eight lung or liver transplants. “It’s a travesty that greed ultimately denies others the opportunity for quality healthcare,” says Van Emmenis.

The private healthcare funding industry spent over R150 billion on private healthcare in 2016. Of this a staggering 10-15% of these claims contained elements of fraudulent information – adding an estimated R22 billion to the annual cost of private healthcare in South Africa.

Who are the culprits?

The culprits are not just medical practitioners. Guilty parties are found all along the healthcare delivery chain – from medical practitioners through to employees, service providers and members. There has also been an increase in collusion between members and healthcare providers.

The trends

Van Emmenis says fraud may not necessarily be on the increase but the high-level analysis means medical schemes are uncovering substantially more fraud than previously.

Identity fraud: Current trends seem to be ‘bogus doctors’ who submit claims, using another doctors’ practice number.

Time-based health practitioners: “2016 data revealed a massive increase in costs for allied/auxiliary service providers,” says Van Emmenis. “These are your dieticians, physiotherapists, psychologists and most time-based non-surgical healthcare practitioners. Using big data analytics, we are now able to identify these culprits much sooner, some of whom claim as much as 50-60 working hours a day!”

Other fraudulent activity

Waste and abuse is far higher than fraud and is more easily quantifiable in terms of values as it is usually a clear contravention of tariff codes or a rule that exists. Most of the common practices include:

  1. Billing for services not rendered (over billing).
  2. Using incorrect codes for services (at a higher tariff).
  3. Waiving of deductibles and/or co-payments.
  4. Billing for a non-covered service as a covered one.
  5. Unnecessary or false prescribing of drugs.
  6. Corruption due to kickbacks and bribery.

Economic downgrade

When the economy is bad, people including medical practitioners and suppliers can get desperate. There are so many ways in which the system can be manipulated. For example, if a doctor does not get enough patients to cover his expenses he may well resort to abuse or fraud. If a member has used all their out of hospital expenses, a doctor might admit the patient to hospital just to access more benefits. If hospital occupancy is low, the hospital may well extend the stay.

Who pays the price?

As medical aid schemes became acutely aware last year during the increased tariff period, everyone suffers, including the general public. Schemes have to introduce double-digit increases which are sometimes unaffordable. This forces members to buy down or leave the medical scheme and join the public healthcare sector. This not only creates an additional burden on the state where they are already under-resourced but medical schemes start to stagnate if they are losing members and the vicious cycle of premium increases continues.

What is the best deterrent?

“In our experience, the biggest single deterrent to fraud, waste and abuse is making it known that we are actively investigating every suspicious or unusual claim or activity. Education in terms of the relationships with medical aids, their members and the healthcare providers goes a very long way in curbing the abuse of medical aid benefits and, as such, our approach to fraud management speaks to this education component in all the matters we deal with.”

We believe in ‘prevention is better than cure’, and encourage the members to participate in the process. For example by checking their accounts and questioning strange or unfamiliar claims.


Van Emmenis believes that working together is the only way to combat this scourge in the industry. To this end SA Fraud Prevention Services (SAFPS) is encouraging all the roleplayers to come aboard its new initiative. This is a listings database where details of reported and investigated cases are captured to enable all members of the initiative to mitigate their risk with the sharing of information and identifying serial abusers or fraudsters.

Bonitas actively participates in industry initiatives including the SAFPS, The Healthcare Forensic Management Unit (HFMU) and Association of Certified Fraud Examiners (ACFE) as well as a range of associations focused on preventing fraud.

Another important aspect of this initiative is the coordination of collaboration among healthcare insurers, where knowledge, skills, operating structures and many other important aspects can be shared.

Who deals with the perpertrators?

The only body who can deal with this is the Health Professionals Council of SA (HPCSA) or the Pharmacy Council. There is no one monitoring the hospitals. The Medical Schemes Act states that it is a criminal offence but, due to volumes and complexity, it is difficult to prove intention beyond reasonable doubt. A more effective measure is to stop payment.

“We believe the HPCSA are too lenient on offenders. According to Section 66 of the Medical Schemes Act, medical aid fraud, committed either by a member or a healthcare practitioner, is a criminal offence which carries a fine or imprisonment or both,” says Van Emmenis.

Fraud and abuse is committed by a small number of healthcare providers but is a major cost driver in terms of financial impact. Bonitas is leading the way in effectively detecting and preventing the fraud because substantial losses are suffered and it adds between R192 and R410 per month to every principal member’s medical aid contributions.

In conclusion Van Emmenis says it will take a combined effort of the regulatory bodies, the professional associations and the medical schemes to raise the necessary awareness and stop fraud, waste and abuse going forward.

Prosecution and consequences

A member found guilty of committing fraud will have their membership terminated. All fraudulent claims submitted will be reversed and the member will be liable for them. A criminal case will also be opened. In addition, members who commit fraud may also have their employment jeopardised – especially in cases where their medical aid contributions are subsidised by their employer.

In instances where a healthcare provider is guilty of committing fraud, all fraudulent claims will be reversed. The provider will be reported to the relevant regulatory body and a criminal case will be opened.

Examples of medical aid fraud, waste and abuse

Psychologist billing for extra hours

A psychologist was investigated after his claims were analysed. It was found that he was claiming for services, rendered to Bonitas members, for durations up to 57 hours per day, which is impossible. The psychologist was operating a sole practice and did not employ any additional psychologists and services and claims are hour-related.

After an investigation was conducted it was established that the psychologist submitted false claims and used the following methodology:

  • In some instances the psychologist was not known by the members, but had obtained their details fraudulently.
  • Claiming for services not rendered could be cancelled retrospectively upon discovery of the fraud, leaving them in financial distress should they or their dependants subsequently had being hospitalised for genuine treatment. They also face criminal prosecution that will not only impact themselves but also their employment, as longer hourly sessions were claimed.
  • Some members consulted once but the psychologist submitted claims on a monthly basis.

A criminal matter was lodged and the psychologist was prosecuted for fraud.

Pharmacies approving claims for non-medicinal items

Information was received that several pharmacies, in a specific area, were supplying members with cash, toiletries and groceries. The pharmacist then submitted false claims to cover the costs for the non-claimable articles.

Upon further investigation, it was found that pharmacists of six pharmacies were operating in conjunction with several GPs to carry out this scheme. The following modus operandi was uncovered:

  • The members will receive non-claimable articles such as toiletries, cash and groceries.
  • The pharmacist submits false claims for high-cost medication to cover his expenses.
  • The pharmacist obtains a false prescription from participating GPs to cover for claims submitted for scheduled medication.
  • The GPs then also submit false claims for consultations without consulting with the members.
  • Allowing other people to use your medical aid card.

A full-scale investigation in conjunction with the SAPS was lodged and an undercover operation was conducted, pharmacists from six pharmacies and several GPs were arrested and prosecuted successfully for fraud.

“These examples paint a very gloomy picture,” says Van Emmenis. “They reveal not only how our own members were involved but also how their fraudulent actions quickly spread to allow further fraud against the scheme in their names. These members also clearly did not realise the extent of the impact of their fraudulent actions on themselves. Their membership employers usually subsidise contributions.”

If you suspect any medical aid fraud, contact our independent Whistleblower Hotline on 0800 112 811.



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