If I grabbed one third of your company’s annual budget and gave it away to a bunch of unscrupulous individuals, how pleased would your executives be about this? Furious probably. Yet when it comes to our healthcare system in the UAE, this is essentially what is happening.
Here at Willis, we’ve estimated that the Middle East loses AED3.67 billion to health insurance fraud and abuse each year. That’s an astonishing 30 per cent of all health insurance spending. The sad reality is that, while the majority of healthcare professionals act with the utmost honesty and integrity, a few play the system, adding on unnecessary tests or even charging for procedures never performed.
The Willis Towers Watson 2016 Global Medical Trends Survey shows that the cost of healthcare in the UAE is rising at a rate of 15 per cent, significantly outpacing inflation. There are many reasons for this but addressing abuse of the system is a clear priority for anyone paying premiums. Employers take note. You have a huge role to play.
So in this article I will examine the ways in which healthcare insurance fraud can hurt your business and set out the information you need to reduce your company’s exposure.
Defining healthcare insurance fraud and its impact
Firstly, I should clarify the difference between fraud and abuse in this case.
We define fraud as the intentional act of deceiving, concealing, or misrepresenting information that results in unnecessary healthcare costs being paid. Fraud is illegal and a good example is a falsified claim, such as a made-up prescription.
Abuse is the engagement in practices that are inconsistent with clinical standards, leading to unnecessary costs being paid. An example is providing a treatment or ordering a test that isn’t necessary.
It is difficult to accurately quantify the costs of fraud; after all, by definition it occurs somewhat under the radar. However, I see at least five ways in which it can impact on premiums and lives:
1. Increased premiums: UAE authorities estimate that 5 per cent of all health insurance claims are illegitimate. This in turn forces premiums up by 20-30 per cent as insurers attempt to recuperate losses. Keep this up and the premium will quickly become unaffordable for both the employer and the employee.
2. Benefit cutbacks: The more expensive a premium becomes the more likely there are to be cutbacks in the quality of the coverage. Employers are often forced into cuts, such as losing dental plans or outpatient cover, to save on premiums.
In fact, benefits have already been trimmed in government programmes due to spiraling costs. In 2016 The National reported that the Health Authority Abu Dhabi (HAAD) had begun stripping benefits offered by Daman to expats and by Thiqa to Emiratis.
3. Increased co-payments and deductibles: This is another knock-on effect of rising premiums – whereas previously an employer may have been prepared to foot the bill for the entire company health insurance cover, rising premiums are necessitating a change of tack.
Co-payments are on the increase, with employees paying around 20 per cent of the pharmacy or clinic cost from their own pocket. It forces them into an impossible deadlock. In 2016, HAAD announced that a 20 per cent co-payment would be introduced for members of the Thiqa health insurance plans. However, the plan was scrapped less than one year later after the charges quickly became unaffordable for many employees. It remains to be seen whether the UAE government steps up its efforts to stamp down on fraud as an alternative way to save money.
4. Maxed out benefits: Quite often benefits come with a limit. This could be a group or individual limit and it could be per consultation, per year or over a lifetime. If fraudulent claims begin to stack up, the limit will quickly max out. Then when an employee makes a vital and valid claim, the individual finds the cover exhausted.
Let’s take the very minimum cover stipulated by the Dubai Health Authority (DHA) as an example. A total limit is set at AED 150,000. For medicines it is AED 1,500 per year. These limits are already stretched by rising rates of chronic disease here in the UAE. Back in 2009 the UAE Government Health Survey showed that 17 per cent of Emiratis had high blood pressure; by 2016 this had risen to 25 per cent. That is a substantial burden – but when you add fraud into the mix then life becomes even tougher for the poorest in society.
5. False records: Entering false or inflated diagnoses into medical records leads to this information becoming part of a patient’s documented history. Not only could doctors provide the wrong medication as a result of this information, or even make life or death decisions on the basis of it, but insurance providers also rely on it to make projections on a patient’s likely future cost to the healthcare system. In extreme cases an employee may find that they’ve become uninsurable because of a disease they never had.
(Simon Stirzaker, Regional Leader, Health & Benefits at Al Futtaim Willis, UAE. He came to the Middle East in 1994 where he was instrumental in the shaping and development of the health insurance market in both the UAE and Saudi Arabia and has over 20 years’ senior management experience in the region. Prior to Al Futtaim Willis, Stirzaker was the Regional Head of Development & Strategy for Middle East at the Royal Bank of Canada. He holds a BA degree in accounting and finance from Birmingham University, UK.)