Council for Medical Schemes ‘deeply disturbed’ by allegations of billing fraud against Mediclinic

The Council for Medical Schemes, the designated regulator for the medical schemes sector in South Africa, stated that it was gravely concerned and disturbed by the claims of billing irregularities and other fraudulent behaviour made against the renowned hospital group, Mediclinic International.

THE COUNCIL for Medical Schemes (CMS), the designated regulator for the medical schemes sector in South Africa, stated that it was gravely concerned and disturbed by the claims of billing irregularities and other fraudulent behaviour made against the renowned hospital group, Mediclinic International.

Last week, an anonymous whistle-blower accused Mediclinic of irregular billing practices in six of its hospitals.

In an e-mail from an anonymous source, the person identifying themselves as a whistle-blower said they worked as a clinical case manager and coder and alleged that at the hospitals, patients’ conditions were manipulated to either bill at an ARM (alternative reimbursement model), or coding was used to “carve an account out” to bill for services where the loss would be too significant for the hospital.

“Case managers are also expected to ‘open’ in-hospital accounts for patients who died in the emergency room, and these accounts are mostly ICU accounts because of the high cost of resuscitation medication, and were moved from the emergency room account to the ‘hospital ICU account’ because the fixed fee for these high cost incidents again resulted in higher losses for the hospital,” the source said.

Mediclinic said last week it had appointed Steven Powell, the head of law firm ENSafrica’s forensics practice, to head its independent audit following claims of account manipulation.

CMS said on Friday that, unofficially, the CMS had not as yet received any formal complaint, however, it noted these allegations in serious light.

According to the Registrar, Dr Sipho Kabane, CMS concern stemmed from the real possibility that medical scheme member’s funds might have been acquired by these Mediclinic hospitals through fraudulent means.

“The consequences of these fraudulent transactions would have led to scheme members suffering premature exhaustion of their funds leading to unnecessary out-of-pocket and catastrophic health expenditures” he said.

According to CMS 2022 medical scheme industry report, medical scheme members paid close to more than R32 billion in out-of-pocket payments.

“CMS has always championed for an industry free of Fraud, Waste and Abuse (FWA). On this matter, we stand as the protector of medical scheme members interest, as mandated by Section 7 of the Medical Schemes Act 131 of 1998,” it said.

The Registrar said, “We are interested in the extent and depth of these possible fraudulent acts by hospitals. We are calling for a comprehensive, unhindered and speedy investigation of these allegations by an objective and trusted authority.”

Furthermore, the investigation should not just aim to get the names of the responsible parties apprehended but should also ensure that the funds involved are quantified and returned to their rightful owners – the medical scheme members.

Against this backdrop, it said these allegations underscored CMS’s focus on FWA and the need to ensure that all stakeholders in the health-care value chain work together.

Last week, the National Department of Health told Independent Media that it noted with concern allegations of patient bill manipulation at private hospital group Mediclinic, but said it was not in a position to investigate private hospitals as they remained relatively unregulated.

In June Mediclinic International delisted from the JSE, London Stock Exchange and Namibian Stock Exchange after a consortium, with Switzerland’s MSC Mediterranean Shipping, led by the Johannesburg-listed investment firm, Remgro, completed the $4.44 billion (at that time R74.3bn) acquisition of the health-care group.

It is unclear what the implication are for Remgro and its shareholders should allegations made against Mediclinic be found to have merit.

Companies such as EOH, Steinhoff, Tongaat Hulett lost billions of rand in the aftermath of wrongdoing, while their reputations were left in shreds.

– BUSINESS REPORT