Invisible doctors; imaginary hospitals, and even invented patients.
Add to these the possibility of links to gangs; foreign settings, typically complete with palm trees and five-star hotels; and, suddenly, the business of international medical insurance provision looks like a subject ripe for the attention of a thriller writer.
Some may find it hard to credit, but every day, medical insurers say, they are expected to pay out on bogus claims – claims filed not by patients but by what appear to be medical providers, the very people one would normally expect to be trustworthy.
And it’s a growing problem, the insurance companies claim. They cite a Global Health Care Anti-Fraud Network (GHCAN) estimate that fraud and mistakes in healthcare cost around US$260bn (£200bn) a year, or the equivalent of about 6% of global healthcare spending.
That’s equivalent to the GDP of Finland or Malaysia being stolen from the insurance industry every year, they note.
In the middle
To be sure, there are times when policyholders find themselves stuck in the middle between a fraudster – or alleged fraudster – and an insurer. And at times like this, they are less concerned with the cost of fraud to the global private medical insurance industry than in getting the best treatment they can for themselves or a family member – and not having to pay more than their policy would have required them to in the process.
‘A growing problem’
Andy Edwards, chief operating officer at AXA PPP International, says the size of the amounts believed being lost to fraud shows why insurers “need to take the risks of fraud seriously”.
“I think it can be considered a growing problem, certainly because we’re still detecting as much, if not more, fraud year-on-year,” he adds.
“And with the [advances] in technology, it is only going to become easier to commit [such fraud] crimes.”
And this, in turn, means both customers and insurers are going to be forced to pay more, if better means of controlling the fraud aren’t found.
“With large sums of money often involved, it’s an issue insurers take extremely seriously, not least because it has the potential, eventually, to influence premium prices, if not identified and resolved quickly.
“What’s more, it has the potential to increase in the coming years, with spending on healthcare in America alone set to rise by over 5% annually.
“When addressed globally, this means providers need to be on the lookout for the signs of fraud, such as billing for services not rendered, or misrepresentation of dates for the service provided.”
Importance of systems
Beverly Cook, managing director of UK-based global insurance broker Expacare, also believes the problem of fraud in the international insurance industry is growing, and that it highlights the importance of ensuring that the systems and processes in place to identify and prevent such fraud are the best that they can be.
The most common kinds of medical fraud, according to industry experts, are:
False invoicing: Creating invoices for real patients who have not received the treatment they are billed for;
Exaggerating invoices: Billing for treatments which have not occurred, even though there may have been a legitimate admission or treatment;
Inflated bills: Billing for higher-cost items than were actually used – for example, charging for branded drugs when generic ones were used;
Collusion with patients: Providers falsify medical reports or invoices so the patient can get insurance cover for ineligible treatment – such as cosmetic treatment, which isn’t covered by insurance;
Over-treatment: Carrying out medically-unnecessary treatment and billing for it: for example, keeping a patient in hospital for longer than is needed, or even carrying out unnecessary treatment;
Over-servicing: Subjecting the policyholder to unnecessary diagnostic testing;
Upcoding: Providers claim for a more complex treatment than has actually been conducted: for example, invoicing for an arthrotomy (or arthroplasty) when a less invasive arthroscopy is actually undertaken.
He argues that most medical services providers are honest, but that some do engage in fraudulent activities.
“It could be said that fraud has increased, but some say that heightened awareness has contributed to increasing the levels of fraud uncovered or suspected,” Sommerford says.
“Personally, I think [fraud, not reporting] has increased.
“What we have seen in recent years is an increase in a more organised approach, with fraudsters taking out policies in fictitious names/companies; creating fake providers, with fake websites, email addresses, contact numbers and fake medical records and invoices.
“These are long-term frauds, with the fake policies sometimes having no claims for a number of years, before high-cost claims are submitted with ‘treatments’ by the fake providers.”
April International UK’s business development director Joe Thomas says that while April believes genuine cases of fraud and attempted fraud are rare, “we have experiences some isolated cases that have required further investigation in Greece, Bulgaria, Cyprus, Egypt and Turkey”.
“If a patient is insured for medical expenses, there is always the risk that clinics start overcharging, claiming for treatment that wasn’t provided to the customer, including costs for non-existent ambulances and alleged admissions when they were in fact outpatient procedures,” he adds.
“We recently had a fraud case in Ghana, a country which is on our assistance provider CEGA’s high risk list. The case was successfully intercepted, and the fraud prevented by CEGA.
“A client claimed to have incurred hospital expenses after having contracted typhoid, but investigations by CEGA showed that the hospital could not be traced, nor could the doctor in question, so the claim was rejected.
“CEGA estimates that by regularly monitoring and challenging suspected fraud, they are able to save insurers in excess of 4% of total indemnity spend.”
AXA’s Edwards says that there can be links between medical provider fraud and conditions in the jurisdictions in which it occurs, as increases in suspicious activity often correlate with situations in which the country in question “may be facing its own economic issues”.
“Ultimately it’s down to us to be aware of what’s happening globally in conjunction with reviewing claims data, to ensure we’re reacting quickly to changes in circumstances that could lead to providers committing opportunistic fraud because of their circumstances,” he adds.
“We have had cases where, within 24 hours, we have [had] local investigators visiting small marketplaces in a suburb of Delhi, and [got] pictures of supposed provider premises, which turned out to be completely fictitious.
“We have [also] been able to tap into local expertise in areas that are hard to get information from – government hospitals in rural China, for example. And [we’ve] found billing fraud in almost all corners of the world.”
The GHCAN report notes that in some places, criminal enterprises are moving into medical fraud, attracted by the profit that it can generate.
“These organised groups have defrauded insurance companies through elaborate schemes against government-sponsored programmes, private health insurers and the property and casualty insurers,” the report notes.
It highlights an incident in 2015 in which 102 members of an Armenian crime syndicate were indicted in the US.
“The gang operated a health clinic in Miami that paid individuals to refer ‘patients’ of staged accidents, and billing private insurance carriers ‘for treatments that were either not medically necessary or were not provided’,” the report says.
“The Armenians allegedly had ties to Russian and Eastern European crime gangs as well.”
What can be done?
Insurance industry experts, as noted above, say vigilance is the key, which includes keeping up with the latest technology the crooks are using to carry out their frauds.
Edwards says AXA PPP has a dedicated fraud team that looks to harness technology and investigation skills does just this, with teams of claim handlers who are “well-skilled to spot suspicious activity”.
“As such, our teams can handle potential fraud cases in real time, and before payments have even been made.”
This article originally appeared in the December 2016/January 2017 issue of International Investment magazine.