Cosmetic cheats costing PMI dearly


From tummy tucks disguised as hernias to nose jobs dressed up as deviated septum operations, Beverly Cook, managing director of Expacare sees healthcare fraudsters becoming increasingly cunning

Beverly Cook, Expacare
Beverly Cook, Expacare

Year-on-year, fraud and abuse of private medical insurance policies, whether international or domestic, places an enormous financial burden on a system already facing unprecedented cost pressures.
And  the directive on patient 
mobility coming into force in October 2015, which means EU citizens can travel to other countries for treatment, means for international PMI the situation is set to get much worse. So the industry must move fast to tackle fraud head on.
Part of the problem is that fraud is very difficult to quantify. Much of it is hidden and there is much debate as to where the line between false billing and fraud is drawn.
Conservative estimates put the 
cost of fraud within the EU at around €50-60bn annually, but others suggest that these figures woefully underestimate the scale of the problem, which could stand at anything between 3 and 10 per cent of insurers’ total treatment bill.
But what has been more striking recently has been the increase in atypical insurance claims.
An obsession with the body beautiful appears to have influenced claims trends recently. Providers have witnessed claims being made for tummy tucks, which are reported as hernias, often claimed for post-pregnancy. Also on the rise are nose jobs being reported as supposed deviated septums.
In some instances it is difficult to discern between the real medical issues and the fraudulent cases. It may be that a member does have a hernia and they are tagging a cosmetic procedure onto an otherwise genuine claim. However it may be that the treatment is purely cosmetic and that there is no underlying condition at all.
In such cases, a medical report from the treating doctor can clear up the 
eligibility issue. But on some occasions information may be unclear or in a few cases the information provided is an attempt to misguide an insurer to enable ineligible treatment to go 
ahead. When such discrepancies occur on a person’s medical history this can make it easier to assess whether information has been falsified and whether fraudulent activity is in fact taking place.
Healthcare transparency has long been a barrier to identifying whether claims are true or false. Accurate measurements of activity will lead the way when it comes to overcoming these problems, alongside an intelligent use of business analytics which can stop perpetrators in their tracks before fraud occurs.
Without measures to crack down on this fraudulent activity the industry will inevitably suffer. Healthcare inflation is currently at an all-time high, and this, coupled with expensive state-of-the-art treatments and drugs and an ageing demographic across much of Europe, means private medical insurance costs are skyrocketing. It is a sad fact that abuse and fraud by a small minority contributes directly to administrative costs that inflate healthcare premiums for all.
It is widely believed that fraud tends to be perpetrated by healthcare providers rather than customers as many insurers pay hospitals and doctors directly, and the scope for customers to make money fraudulently is limited.
But most providers we come across are honest – it is a small number who exploit these technically complex 
services with frauds that can range from a simple exaggeration in a claim to billing for a service which has 
not been provided at all. These 
people inflate healthcare premiums for us all.
Even more worrying for the industry as a whole are consumer attitudes towards fraud, with tolerance seemingly rising according to polls. Nearly one in four Americans said it is okay to defraud insurers according to a 2003 Accenture survey. Over four-fifths said that it is okay to inflate a claim to cover the deductible.
The figures of those committing healthcare fraud make for sobering reading. It is a challenging problem and one which has a direct, negative impact on human life with reduced resources available to fund good quality patient care.
While quantifying the scale of the problem is still problematic, we have come a long way over the last few years and I believe that the industry is now making good judgements based on reducing this activity from the unusual to organised crime.