A weapon in the fight against health insurance abuse

‘Mystery-shopping’, the tool increasingly employed by healthcare insurers around the world to uncover evidence of abuse among service providers is now being added to the arsenal of fraud-busting tactics used by local players as well, the Observer has learnt.
Long recruited by all manner of watchdog agencies, market research specialists, and even large corporate organisations, to evaluate service standards, compliance with regulation, health and safety guidelines, and so on, mystery-shoppers are either employees or paid professionals who pose as customers to be the “eyes and ears” of their recruiters on the ground. In the Gulf region, the use of mystery shoppers by large healthcare insurers to combat fraud among service providers is well-established — a tactic that some local insurers are rolling out in Oman as well.
An executive attached to a leading healthcare insurer, who asked not to be named, explained: “Insurers are forced to employ mystery-shoppers because of the significant jump in costs being invoiced by some service providers (private clinics, hospitals, dental clinics diagnostic centres, blood labs, opticians, pharmacies, and so on). This is eroding our profitability on top of the fierce competition in the healthcare insurance business that forces many of us to operate on low margins.”
In the sights of healthcare insurers are four broad categories of fraud and abuse that they claim are hurting their business:

Performing medically unnecessarily
services to drive revenue growth
Although vociferously contested by service providers, many private healthcare establishments are accused of prescribing tests and providing services over and above what is medically necessary for patients. The goal, say insurers, is to primarily generate revenue for the organisation at the cost of the insurer.
“Unnecessary tests can add around 20-25 per cent to our cost burden,” said the insurance executive. “True, it’s difficult to take the physician in question to task because he or she can insist that the tests are prescribed in the interest of the patient as an abundant precaution. Still, we believe that if the physician is professionally ethical and personally scrupulous, the cost burden from unnecessary tests and services can be reduced to 10-15 per cent.”
Compounding the problem for insurers, as well as for patients who are not covered by health insurance, is what is reported to be a system of incentives and commissions for doctors of hospitals and polyclinics on the revenue they generate for their employers.
A local physician with over 25 years of practice in the local private health sector said: “Many hospitals not only encourage but also oblige their physicians to generate revenue as part of productivity or performance targets. Commissions are offered on revenues generated as a result of prescriptions for lab and diagnostic tests, in-patient referrals, and other services. I personally know of a private doctor who makes more in commissions that on his monthly wages.”
Fees for Patient Referrals
Also of concern for insurers is what is widely believed to be a system of payments and commissions offered to individual doctors or service providers for referrals of patients to third party service providers, such as large hospitals or diagnostic labs. Commissions vary between 10-15 per cent typically, it is alleged.
The ethicality of commission-based patient referrals is questionable because they provide an incentive for doctors to prescribe tests, such as CT-scans, MRIs, ultrasound scans and so on — all of which can be relatively pricey, even when such tests are not medically required. The victim is ultimately the insurer, it is claimed.
The insurance executive explained: “An MRI, for example, can cost as much as RO 120 for ordinary patients, although with discounts and under special arrangements, it can be reduced to RO 70. This cost is ultimately borne by the insurer if the patient in question is insured. As a thumb rule, if 70 per cent or more of such tests are negative, then the doctor prescribing these tests is more likely to be driven by the prospect of referral fees.”
A Ruwi-based General Physician (GP) who has refused to be part of the practice said: “I’ve been offered up to 15 per cent on referrals to certain diagnostic centres, but as I abhor this practice, I tell these centres to extend that same benefit to the patients instead, in the form of a discount.”

Misrepresenting non-covered treatments as medically necessary covered treatments
These forms of alleged abuse, according to insurers, typically occur in services involving dentists, opticians, and so on. It involves patients who are not covered for certain procedures, such as teeth cleaning, polishing, whitening, scaling, and so on — procedures that are predominantly cosmetic and not medical in nature — are presented, for example, as dental problems like cavities, root canal treatment, and other more serious maladies.
Likewise, opticians sometimes give in to their customers’ pleas for pricey eyeglass frames, branded lenses and other products and services that are not authorised under their policy terms. These requests are billed to the insurer in the guise of some eye problems or disorders. To combat these practices, insurers typically enlist the help of other opticians to help unearth fraud in invoiced bills, it is learnt.

False patient billing
A less common practice, it involves the use of the insurance card of a member by a relative or friend often with the connivance of the service provider. Invoices are raised in the name of the cardholder.
Asked for his take on these alleged practices, a high level representative of one of Muscat’s oldest polyclinics, who declined to be identified, said: “Where there is anecdotal evidence of health insurance abuse, it’s not on the scale that it is perceived to be. Private healthcare establishments are predominantly professional in their dealings.”
In the lead up to the rollout of a mandatory health insurance system for expatriate employees of private sector organisations, insurers have appealed for regulatory provisions in the new framework as a safeguard against potential fraud and abuse. The Capital Market Authority (CMA), which is working on the new guidelines, is expected to unveil a draft framework during the course of this year.