Fraud drains R30bn from South Africa’s health-care sector

South Africa’s health-care sector is losing an estimated R30bn a year to fraud, waste and abuse, with corrupt billing practices, fake health-care providers and procurement irregularities placing enormous pressure on both the public and private health systems.

The staggering figure emerged on Monday, on the first day of the 25th annual Board of Healthcare Funders (BHF) conference in Cape Town, where health-care leaders warned that fraudulent activity is driving up health-care costs while eroding public trust.

The annual conference brings together medical schemes, funders, regulators, policymakers, clinicians and industry leaders to discuss the future sustainability of South Africa’s health-care system.

Addressing delegates, Leonard Lekgetho, acting head of the Special Investigating Unit (SIU) and chairperson of the Health Sector Anti-Corruption Forum, said experts’ estimates suggest that as much as 15% of all health-care claims are affected by fraud, waste and abuse.

“When you look at fraud, waste and abuse, it is increasingly becoming a major challenge, particularly in the provision of private health care. Billions are lost every year, and ultimately it is medical scheme members who pay the price through higher contributions and reduced benefits,” he said.

Lekgetho outlined several corruption risks identified by the forum, including doctors conducting remunerative work outside the public service while neglecting their duties in state hospitals.

It is common to find doctors employed in public hospitals spending working hours at their private practices. In some instances, they even bring their private patients into public hospitals for treatment. This is one of the serious abuses we have identified

—  Leonard Lekgetho, acting SIU head and Health Sector Anti-Corruption Forum chair

“It is common to find doctors employed in public hospitals spending working hours at their private practices. In some instances, they even bring their private patients into public hospitals for treatment. This is one of the serious abuses we have identified,” he said.

He also raised concerns about doctors deliberately referring patients for procedures in public hospitals to shield themselves from medical negligence claims.

Other corruption risks include:

• procurement irregularities within health departments;
• counterfeit medicines and medical devices;
• bogus health-care practitioners;
• anti-competitive practices such as price-fixing;
• irregular medical waste disposal contracts; and
• fraudulent medical scheme billing.

Lekgetho said common forms of health-care fraud include:

• claims for services not rendered;
• billing for brand-name medicines instead of cheaper generics;
• deliberate manipulation of medical billing codes;
• duplicate claims;
• excessive charging for health-care services;
• over-servicing patients through unnecessary tests or medication;
• Claims submitted on behalf of non-members;
• Pharmacies claiming for medicine while dispensing non-medical items; and
• cash-related fraud.

“There is extensive abuse of ICD [International Classification of Diseases] coding, duplicate claims and excessive billing for services and medical supplies. These practices continue to cost the sector billions,” he said.

The SIU is currently investigating several major matters involving the health-care sector, including:

• the Life Esidimeni tragedy;
• the National Health Laboratory Service (NHLS);
• the Health Professions Council of South Africa (HPCSA);
• the Council for Medical Schemes;
• medico-legal claims;
• Tembisa Hospital; and
• matters involving the Office of the State Attorney.

We are facing very real headwinds, economic volatility, policy uncertainty, changing funding models, growing disease burdens, ageing populations and rapid technological advancement.

—  Katlego Mothudi, BHF managing director

Lekgetho said anti-corruption interventions have already resulted in:

• 306 disciplinary actions;
• 377 criminal cases;
• 360 regulatory actions; and
• recoveries amounting to R3.9bn.

To curb health-care fraud, the forum has recommended establishing:

• integrated fraud intelligence platforms;
• real-time information sharing across health-care stakeholders;
• greater use of artificial intelligence and predictive analytics to detect suspicious claims;
• dedicated anti-fraud task teams;
• stronger accountability measures;
• improved public awareness; and
• enhanced whistleblower protection.

Opening the conference, BHF managing director Katlego Mothudi said the health-care sector was facing unprecedented challenges that demanded greater collaboration and innovation.

“We are facing very real headwinds, economic volatility, policy uncertainty, changing funding models, growing disease burdens, ageing populations and rapid technological advancement,” he said.

“Health-care leaders are being asked to do more with less while responding to changing patient expectations and increasingly complex health needs.”

He said the conference reflected a shared commitment to:

• strengthening health-care systems;
• improving access to quality care; and
• ensuring the long-term sustainability of health-care funding in South Africa.