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PMI fraud – the fightback begins
Health insurers are stepping up their efforts to target healthcare provider fraud, which is said to cost consumers and corporates millions of pounds each year.
December 2008 Features
In November 2008, the Health Insurance Counter Fraud Group UK (
Until recently, the issue of fraud in health insurance was scarcely ever discussed or even considered. Yet for many years this has been known to be a problem in countries such as the US and South Africa which have insurance-based healthcare systems.
The NHS Counter Fraud and Security Management Service has also known for some time that medical fraud is a problem in the NHS and, in 2003, AXA PPP healthcare performed an audit of a large sample of claims, checking healthcare providers’ bills back to original medical records. The results showed that, while most providers were honest in their dealings with insurers, there was a small minority which were not.
Both in the UK and overseas, most healthcare fraud is perpetrated by providers of healthcare services. Because payments are generally made directly to providers, there is limited scope for customer fraud. But health insurers are not immune from other types of fraud and we do also see cases involving GPs, customers, employees and insurance intermediaries. Some recent cases which illustrate the types of problem we have encountered are shown below.
PROVIDER FRAUD
The most common types of provider fraud are upcoding, misrepresentation of the treatment provided or the patient’s medical history, charges for procedures not actually performed and unbundling.
Upcoding is where a bill is raised for a more complex treatment than is actually carried out. It is very difficult to spot since the claim is for the right type of treatment in the right part of the body – it is just that the extent of treatment is exaggerated.
An important recent case is that of Dr Ahluwalia, whom the General Medical Council suspended from practising this year for upcoding claims to the value of £85,000. Four health insurance companies gave evidence to a hearing where it was found that Dr Ahluwalia claimed for performing therapeutic gastroscopy (looking into the stomach and performing an operative procedure) when in fact the medical case notes showed that, while the stomach had been examined, no actual treatment had been given. This case was brought to light from data analysis which showed that this specialist billed 100% of procedures as being therapeutic.
MISREPRESENTATION
Misrepresentation is where false information is given – either in a medical report or by false invoicing. Again this can be difficult to spot. A number of insurers received claims for MRI scans from a clinic in London. It was only when a bill was also received from a hospital for an MRI scan in the same patient that enquiries were made. It was discovered that the clinic had been billing for a test which looked at the way in which the patient stood on a pressure pad. The clinic concerned had coined the name Motion Realtime Imaging (MRI) for this test and had told the patients that this was called an MRI scan. The term “MRI” should of course be used for Magnetic Resonance Imaging – a relatively expensive investigation for which benefit in the region of £600 per case can be claimed. Furthermore, the bills had been raised in the names of various doctors but with instructions to pay directly to the clinic. The doctors confirmed to the investigators that they had not ordered the tests in question. Further enquiries showed that the bills had been raised by a podiatrist who was not in fact a recognised provider of services to insured patients. The podiatrist repaid all the sums concerned – one insurer receiving £70,000 – and he was suspended from practising for one year by his professional body.
Other cases of misrepresentation include cosmetic clinics performing procedures such as tummy tucks and claiming to be treating hernias and cosmetic dentistry clinics claiming to be providing restorative dentistry.
UNBUNDLING
Unbundling is where invoices are raised for multiple services when in fact a single service is being provided and the “extras” are part and parcel of the main service. It is akin to a decorator charging for decorating a room and then claiming that wallpapering, painting, labour and materials are all extra. But while this example is obvious once unbundling is couched in medical jargon it is much less so – especially for non-medically qualified claims assessors. For example, a bill could be raised for functional endoscopic sinus surgery (FESS) and additional claims made for nasal polypectomy, diagnostic sinoscopy and intranasal antrostomy, all of which are in fact part of FESS. There have been numerous cases of unbundling investigated by all insurers and many now have systems that recognise unbundling and disallow the unacceptable “extras”.
CUSTOMER AND GP FRAUD
Customer fraud normally involves failure to disclose material facts at underwriting or collusion (with their doctor) with misrepresentation. A recent case involved a customer who took out a medical insurance policy and immediately made a claim for cancer treatment. Both the customer and their GP maintained that this was a new condition diagnosed after enrolment. However, when investigators reviewed the medical notes it was evident that the customer had taken out the policy to obtain treatment for a pre-existing condition. All costs were recovered and, while this might seem hard, it must be remembered that insurance is intended to cover the costs of unforeseen events and that customers are expected to enter into their dealings with insurers in good faith. In this case, the customer could have had immediate treatment on the NHS but chose instead to try to obtain private treatment, the costs of which would have had to be borne by the majority of honest policyholders had he succeeded.
GP fraud is also seen from time to time. The Fraud Act 2006 makes it an offence to dishonestly make a false statement, to omit information or abuse a position of trust with the intention of causing loss to another. The fraudster does not have to stand to make any gain or even to succeed in his deception.
In a recent case a policyholder took out a policy that covered treatment of pre-existing conditions but only if the customer had been symptom free for two years after the enrolment date. The customer proceeded to claim within six months of starting their policy for treatment of hip pain. The information provided by the GP was that the patient had been experiencing increased pain over a three month period and, when questioned further, maintained that this medical history was correct. The customer went on to claim for three hip replacement procedures. In due course investigators requested and examined the patient’s medical records and it was evident that incorrect information had been given by the customer’s GP, which meant that two of the operations should not have been covered. An out of court settlement was reached with the GP.
MARKETING AND RELATED FRAUD
Internet marketing is a popular way of selling insurance policies and a number of companies market their products on “cash back” sites, which offer incentives such as cash back and free gifts when a product or policy is taken out through them, with the cost of the incentives ultimately being borne by the company offering the product.
A number of insurance companies, including Norwich Union Healthcare (NUH), have utilised some of these sites to market and sell their products. During 2007 NUH and other insurers encountered a spate of online applications that were using bogus bank accounts and that had cost them tens of thousands of pounds. As a response, the insurers successfully stopped the activity or put in place robust controls. NUH was successful in recouping a full recovery of the overpayment.
INTERMEDIARY FRAUD
An insurer obtained a new corporate client through an independent intermediary. However, the intermediary had deliberately understated the risk on the group and as a result the insurer significantly underpriced its offer, exposing the insurer to a risk in excess of £100,000.
Investigators were soon alerted and their investigations indicated that the intermediary’s motive for understating the risk of a number of such groups was to build a portfolio of seemingly valuable business, which they then sold to an unsuspecting, reputable intermediary. Investigations subsequently identified that the entire portfolio of business was fraudulent; false signatures were also identified on a number of policies.
The fraud created victims of 20 corporate health insurance policyholders, at least one insurer and the unsuspecting intermediary who had bought the business in good faith. Civil legal action is pending and the matter is currently being investigated by the police.
The UK HICFG is committed to working jointly with the NHS Counter Fraud and Security Management Service and with the regulatory and criminal justice authorities to safeguard customers’ interests and to drive fraudsters from the UK healthcare industry. The majority of people working in the industry are committed professionals working honestly for the benefit of their patients. However, within their ranks are a small number of criminals who exploit the system for their own ends – the group’s mission is to ensure that they do not succeed.
Health Insurance Counter Fraud Group: background and history
The Health Insurance Counter Fraud Group UK (HICFG) is an industry initiative to prevent and detect fraud within healthcare and the insurance industry. The HICFG membership consists of 11 health insurance companies. The structure and purpose of the group is in line with NHS counter fraud initiatives to prevent and detect fraud within healthcare. The organisation’s motto ‘fraus est celare fraudem’ is a legal maxim meaning “It is a fraud to conceal fraud”.
Until about 2000, there was little awareness of healthcare fraud in the UK. This started to change as the NHS Counter Fraud and Security Management Services began to highlight cases of fraud in the public sector and to obtain prosecutions. In 2003, AXA PPP healthcare conducted an audit of 650 medical insurance claims across the UK which concluded that there was a small but definite level of fraud in claims for private healthcare at a level which would affect customer premiums. They set up a full time dedicated healthcare counter-fraud unit and other insurers quickly followed suit.
The HICFG was started in July 2001 as an informal group of interested individuals who met to discuss issues of common interest and to exchange information and suspicions about potential frauds under some agreed terms of reference. Initially only Norwich Union Healthcare and AXA PPP healthcare conducted joint investigations but cooperation has increased and as a result of other joint working and sharing of intelligence, a number of other cases are now being considered by the General Medical Council – which licenses and regulates doctors.
In 2008 under the chair of Ray Collins from PruHealth, the group decided to substantially increase its profile and level of activity. It is now much more formalised and this year hosted training sessions and an annual conference. A number of bodies such as the Association of British Insurers, the NHS Counter Fraud Service and the City of London Police attend the group and it now actively assists with investigations of doctors in the public sector.
INSURER MEMBERS:
AXA PPP healthcare • Bupa • CIGNA Healthcare • CS Healthcare • Exeter Friendly • Groupama Healthcare • Norwich Union Healthcare • PruHealth • Simplyhealth • Standard Life Healthcare • WPA
UK PARTNERS
Association British Insurers City of London Police NHS Counter Fraud and Security Management Service NHSScotland Counter Fraud Services
GLOBAL PARTNERS
Australian Health Insurance Association
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