Hospital cash scams rife in KZN

An "organised scam" involving at least one hospital group, a number of doctors and unscrupulous patients has resulted in insurance companies being milked through bogus or excessive claims.

Abuse of hospital cash plan schemes offered by many long-term insurance companies is highest in KwaZulu-Natal, says the long-term insurance ombudsman, Judge Brian Galgut, who has urged the relevant parties to take urgent steps "to curtail this trend as soon as possible".

He said in his annual report released last week that hospital cash plan complaints had increased significantly in 2011 and continued last year.

"It would seem, from the extent of the problem, that these claims are part of an organised ‘scam'," said Judge Galgut.

"Although insurers have advised the office that they are investigating the problem, at this stage it has not had any effect and the problem is not diminishing but has carried on into 2013."

The deputy chief executive of the Association for Savings & Investment SA, Peter Dempsey, said while it was a common problem throughout the country, it was more prevalent in KZN because of insurance fraud syndicates and the small number of doctors and hospital groups who started the scam and had not yet been caught.

Last year, the Daily News reported on the association's claim fraud statistics for 2011 and, for the second year running, KZN had the highest number of fraudulent and dishonest insurance claims submitted.

Statistics for last year are yet to be released.

Dempsey said: "When a person buys a hospital cash plan, in the event of hospitalisation on recommendation of a medical doctor, a person is paid out a daily amount by the insurer." It can be between R500 and R1 500 a day.

However, a patient can submit a claim to the insurer only once they have been discharged from hospital.

This meant that all doctors and hospital fees were fully covered by medical aid and the insurance claim was pocketed by the patient, said Dempsey. "So this type of fraud is very tempting."

In 2011, most claims related to admissions for pelvic inflammatory disease, which independent medical practitioners have said was usually treated on an outpatient basis and did not require hospitalisation. But if it did, they said it would be for three days at most.

In his report for that year, Judge Galgut disputed the length of time patients claimed for hospitalisation for the disease. Some who had claimed for six to 10 days were treated by gynaecologists in the same hospital group.

Galgut was not convinced, based on the medical information submitted, that the extended stay was warranted and said his office was also unconvinced by the medical motivation submitted by the two gynaecologists.

In his latest report released this week, he said the trend had continued, but the difference now was that the claims were more diverse and the number of medical practitioners had grown.

One KZN patient had claimed from insurance for hospital stays between January 2010 and February last year: five days for chest pains, six to seven days for the flu, five days for lower abdominal pain and repeated admissions for pelvic inflammatory disease of between six and 11 days.

"What has remained the same (since 2011) is that most of the complainants belong to one medical scheme, the same hospital group is involved and the modus operandi has not changed," Judge Galgut said in report for last year.

He said smaller private hospitals could also benefit because they would claim from the medical aid scheme for costs such as the patient's stay, X-rays and scans.

"The patient pays nothing and when he or she gets home, they submit a claim to their insurer under their hospital cash back plan," said Dempsey.

However, deputy ombudsman Jennifer Preiss pointed out that the medical scheme was not part of any wrongdoing. "The complainants who are making excessive claims belong to this one scheme and the scheme has no doubt been paying claims for excessive periods of hospitalisation," she said. "The scheme will therefore be disadvantaged as well."

While insurers had already reported practitioners to the Health Professions Council of SA, the problem was yet to be solved, Preiss said.

She added that the SA Insurance Crime Bureau had also started investigating the excessive claim cases. "This may lead to some action being taken against the wrongdoers."

Health Professions Council spokeswoman, Bertha Peters-Scheepers, confirmed that it had received complaints from insurers.

She said the council was concerned about the number of fraudulent cases against practitioners, as well as the guilty verdicts and the impact they might have on the healthcare industry.

Meanwhile, the ombudsman's office has received complaints for the first time that some insurance companies were cancelling certain hospital cash plan policies based on certain criteria.

For example, one insurer cancelled policies where the claimant had more than four claims in the preceding year.
The ombudsman has since engaged with the insurers concerned and pointed out there needed to be good reason to cancel such a policy.