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Anti-counterfeit lessons for medical insurance industry

Medical fraud is an expensive nuisance. FILE PHOTO | NMG
Medical fraud is an expensive nuisance. FILE PHOTO | NMG 

Illicit trade is to manufacturers what medical fraud is to both public and private health insurers: an expensive nuisance.

Both drain revenue from firms, pose a health risk to consumers and patients and impose a huge financial and administrative burden on regulators. There are even overlapping areas between the two, such as when pharmaceutical drugs are counterfeited.

The shadowy nature of these activities makes it difficult to come by statistics. Global illicit trade is estimated at $1.77 trillion while medical fraud is estimated at an annual figure of $477 billion.

The worry is that the latter is becoming so lucrative that it has begun to attract the attention of criminal gangs akin to those in the counterfeit industry who use their gains to fund terrorism.

Industry estimates show fraud at 20 per cent of all medical claims processed and this figure will rise with the implementation of the universal healthcare. Where public funds are involved, scams proliferate due to the huge scope of government projects making it difficult to track monies.

Unfortunately, the common and often false view is that these costs are borne by ‘rich’ insurance companies. Health care fraud affects everyone through increased insurance premiums, higher costs of providing healthcare and in worst case scenarios, the loss of lives.

Unlike the case of illicit trade where contraband can be intercepted and used as evidence, health insurance fraud is very difficult to detect because it consists of abuse of the system, misuse and waste.

Technology can and does offer adaptive but not holistic solutions to this problem. For example, biometric devices may help mitigate impersonation but will not fully address billing irregularities.

Prosecution numbers for medical fraud by the Insurance Fraud Investigative Unit (IFIU) at the Insurance Regulatory Authority (IRA) remain relatively low, not because the regulator is incompetent, but because the investigative difficulties that arise cannot be tackled without the joint effort of all stakeholders.

The IFIU does work closely with the police and the judiciary, but it requires a proactive plan involving medical insurers, service providers and the public to win this fight.

In 2015, the agency commissioned and launched a manual which collated all laws related to illicit trade, as a common reference point for all and to ensure that charges for offenders incorporated all aspects of the law to prevent instances where penalties were insufficiently punitive.

Prosecutors and law enforcement officials were also trained to use the manual. Due to these efforts, the registration of cases by the agency has since gone up.

As things stand currently in the health sector, efforts are feeble and scattered. Health care fraud will never be a thing of the past unless the health sector brings out the big guns.

More inter agency collaboration and information sharing amongst stakeholders are crucial strategies.

In a recent KPMG survey, medical fraud was identified as one of the key challenges to customer satisfaction in the industry. Anti-fraud awareness programmes for beneficiaries of health insurance should also be organised.

Anne Ndung’u is a communication specialist.