Overcharging in healthcare ‘has become common practice’

Kamalanathan says most patients were unaware of whether a procedure was necessary but agreedOvercharging in private hospitals for healthcare has become common practice where medical fraud has reached an endemic level, says an industry player.

It is not uncommon to see at least 20% in excess billing charges in private hospitals across the country, and there is an urgent need for whistle-blowers to help tackle this problem, said Eximus Medical Administration Solutions Sdn Bhd MD Dr Kamalanathan Sappani at a recent insurance forum in Kuala Lumpur.

“In Malaysia we do not have syndicated medical fraud as yet. Healthcare fraud here is two-pronged with patients making false insurance claims to cheat insurance companies, and in another situation, both individuals and healthcare providers, including doctors, physiotherapists, pharmacies, medical equipment suppliers conspiring to siphon illegally from insurance companies,” he told The Malaysian Reserve on the sidelines of the International Claims Convention 2016 entitled “Medical Fraud”.

Hospitals and doctors are also taking advantage of ignorant patients and conducting unnecessary procedures, he said.

“There are many cases that can be treated as outpatient or day-care procedures, but these cases are being admitted and clogging up hospital beds. Every day of stay at the hospital means nursing, hospital bed, equipment and medication charges and these add up to an excess of 30% to 40%. What should have been RM1,000 for a day-care or outpatient treatment is now RM1,400,” he said.

“When a patient is admitted, the sad part is he may go back with more complications like lung, wound and many other infections. All unnecessary surgical and other procedures are harmful to the body. It has become a moral hazard” he added.

Kamalanathan said most patients were unaware of the hazards. When told to undergo a procedure, they were not aware of whether it was necessary but agreed.

“They may not have a serious problem in the first place. As a third-party administrator, we determine whether our clients’ patients require any medical procedure that is being recommended by the doctors at the hospital.

“I have flatly refused doctors when they called me. We administer bill payments on clients’ behalf, so we vet their employees’ bills to ensure that they are not inflated,” he said.

He said that there are a lot of insured clients who do not mind the unnecessary procedures and tests as the charges are borne by their insurance companies, but are ignorant of the harm posed to their health.

“A scar cannot be erased, damage to the body cannot be undone and the body is so precious that nobody should be subjected to unwarranted examinations, as every procedure will result in some change in the body.”

Kamalanathan said that the computerised tomography (CT) scan and magnetic resonance imaging (MRI) scan should only be done when clinical signs of a disease are exhibited and the doctor feels that the patient requires treatment, and not solely based on the scan findings.

The most common medical fraud, he said, was “unbundling”, where four separate bills are presented for a single surgery, which is redundant billing.

“The normal practice is that the charges are divided into 75% for the hospital and 25% for the professional surgeon. When professional fees were increased by 14.5% in April 2014, hospital charges went up correspondingly. The former can be monitored but hospital charges are difficult to monitor,” he said.

Kamalanathan said the European Healthcare Fraud and Corruption Network estimated that RM1.66 trillion (US$415 billion) is lost globally due to healthcare fraud each year.

According to the intelligence unit of the Economist, the US alone reported approximately 10% or RM221.6 billion of its annual allocation for Medicare and Medicaid was skimmed in “off the book thefts” from a total healthcare expenditure of US$1.7 trillion. In Europe the figure reached RM240 billion per year.

Looking at figures closer to home, The Financial Cost of Healthcare Fraud 2011 Report by University of Portsmouth claimed that 7%-10% of Malaysia’s national allocation of RM14.4 billion for healthcare was leaked annually due to fraud.

According to Singapore-based Khoo Teck Puat Hospital senior consultant hand surgeon Dr Vaikunthan Rajaratnam, the findings entitled “Medical Fraud and its implications” in 2012 showed Malaysia’s medical fraud was between RM1.3 billion and RM4.6 billion.

Professional services firm Deloitte in its “2015 Healthcare Outlook South-East Asia” estimated healthcare expenditure in Malaysia at US$13.7 billion in 2013, equivalent to 4.4% of gross domestic product. That proportion is expected to rise to 4.5% by 2018 as spending growth outpaced economic expansion.

“In ringgit terms, the nation’s healthcare spending is projected to rise by an average of 10.5% per year, growing from an estimated US$13.7 billion to US$22.9 billion by 2018,” it said.

Deloitte said that continued spending growth would help to offset demand, as the number of Malaysia’s elderly increased, western lifestyle diseases increased, consumer awareness of healthcare services grew and access to these services improved.