Better healthcare and affordability of the same is pivotal for a rapidly emerging economy like ours. In India, as per reports the medical trend rate which refers to per person cost increase due to medical inflation is likely to grow at a double rate of the inflation.
Health insurance is the best tool for individuals and corporates employees to mitigate the risk of an unwanted financial burden which can deplete the lifetime savings of anyone in case of a medical emergency. Fraud in health insurance is a perennial problem and the insurance industry is bleeding since provenance to grapple with this menace.
As per a research conducted the current trend has shown significant market deviation in settlement of claims with various malafide accommodative practices prevailing in market. Cases of bogus and inflated billing, calendar shifting, forgery, stationary misuse like ghost billing and patient swap or impersonation are continuing to haunt the insurers.
Some cases of cheat are also performed in collusion with the hospitals, doctors, pharmacy and intermediaries involved. Fraud cases of incorrect location and claims from hospitals which does not even exist have also come into the picture. The net worth of these fraudulent medical claims is about a whopping tens of billion in the US and more than thousand crores in India per year.
There is a growing need for having an operative mechanism to handle specific claims under health Insurance which comes in the grey area. As we move year on year there is a hefty cost involved against these fraudulent claims, however most often we value these claims to be close to the cost or deplete the margins of insurers resulting in premium spike or modified offerings or adjustments during settlements for individuals and corporates.
Efforts are underway in the industry to surmount this ever increasing challenge with the end objective of achieving the highest level of integrity and helping proper settlement of genuine claims, protect corporate customers against letting employee indulging in malpractices, setting up an internal redressal mechanism to prevent future recurrences, better bargaining power for future premium pricing and keeping overall premiums in control for the benefit of the policyholders.
Frauds prevalent in healthcare industry can be broadly categorized as to be on the part of Intermediaries, consumers or healthcare providers. Hereunder we discuss five salient ways to prevent fraud in health insurance for a sustainable future and creating a win-win situation for both the consumer and insurer and the society as a whole.
- Setting up the internal processes: All insurers are required by the regulator to have a board approved Anti-fraud policy for systematic handling of fraud cases. Triggers identified based on suspected cases can be useful in fraud detection and management. Claims from a hospital or bills from a pharmacy or diagnostic centers far away from residence of claimant, inflated bills can be identified by general treatment costs for the specific treatment, bogus bills for services not rendered, admission claims from blacklisted entities are some of the doubt points. Check on deceiving misselling strategies by the agents and importance of correct information in the proposal forms should be imperative in fraud control on the part of setting internal processes by the insurer.
- Set up the Paradigm: General insurance council has already advised insurers to report health fraud cases and share data on fraudulent claims including investigation details with documented evidence when it suspects any fraud on the part of healthcare provider. In a similar move the regulator IRDAI requests Insurers and TPAs to investigate at least 20% of overall claims to detect fraudulent cases. Statistics on these cases and action taken is mandatory to file with the regulator in form FMR 1 and FMR 2 every year. Such investigation can help to build an industry wide fraud repository of the tainted healthcare providers, the types of fraud and the amount involved.
- Flag the Suspects: After investigation the requirement will be of sharing the knowledge in form of meaningful databases with industry players, intermediaries, regulating agencies and public which could lead to flag the suspects perpetuating the fraud. The data then published and rating of healthcare providers can help establish their credibility.
- Role of Third party administrator: – TPA’s has a greater role to play as it is the prime entity handling the claims in a close relation with hospitals and other healthcare providers. Checking of bills without proper signatures and stamp, claims where treatment or diagnosis procedures is not in line with the disease, reimbursement claims where network hospitals are available in the vicinity of policyholder, supporting documents with insufficient details and specialist notes unavailable, overwriting identification are some of the triggers where the TPA can identify fraudulent cases. As most of the insurers have an in-house TPA, a due diligence in claims processing can curb the increasing fraud cases. Proper identification of the insured by an identity card and verification at the time of claim for requisite documents and ensuring the correct services are provided at the correct cost is the role of the TPA which is imperative in fraud management.
- Customer Awareness: – Awareness is the key to control fraudulent selling and make customer know the rights and benefits they are entitled to under the mediclaim policy. Protection of respective health ID cards, not to share policy details with anyone except authorized representative, disclosing correct details in proposal form and collecting and maintaining genuine health record documents are some of the issues customers should be made aware upfront. And the merits of acting as a prudent policyholder and the demerits of perpetuating a fraud should be made clear to the policyholder upfront at the time of policy issuance only.
Health insurance fraud can be mitigated and managed well if proper technological capabilities are developed with a good structure within the insurance company, TPA and intermediaries involved. This will lead to a greater claim payment capabilities for genuine claims and strengthen the concept of Insurance, which is sharing the loss of few in need among many.