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									                                                                          “Working together for a skilled tomorrow”




                                    Learning Materials

             Unit Standard Title:                           Describe the control of fraud in Healthcare
                                                            Benefits Administration


             Unit Standard No:                              12321


             Unit Standard Credits:                         8


             NQF Level:                                     4



                                         Learner Guide

                             This outcomes-based learning material was
                                             developed by
                                     INHLE Business Solutions
                                            and reviewed by
                                Medihelp and Eternity Private Health
                             with funding from INSETA in October 2003.


                                The material is generic in nature.
                 Its purpose is to serve as a guide for the further development
                     and customization of company-specific, learner-specific
                          and situation-specific learning interventions.



                                                     Disclaimer:
  Whilst every effort has been made to ensure that the learning material is accurate, INSETA takes no responsibility
  for any loss or damage suffered by any person as a result of the reliance upon the information contained herein.




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Unit Standard No.12321                                                                                                                           Page 1

TABLE OF CONTENTS


1      UNIT STANDARD.........................................................................................................................2

2 MODULE 1: DESCRIBE FRAUD AS IT OCCURS IN A HEALTHCARE BENEFITS
ADMINISTRATION ENVIRONMENT...............................................................................................6
    2.1       INTRODUCTION ....................................................................................................................7
    2.2       THE CONCEPT OF FRAUD IN HEALTHCARE INSURANCE..............................................................8
    2.3       ACTIVITY SHEET: ...................................................................................................................12
    2.4       WHY DO PEOPLE ENGAGE IN FRAUD OR FRAUDULENT BEHAVIOUR ? ........................................13
    2.5       INDICATORS OF FRAUDULENT ACTIVITY AND HOW THEY CAN BE IDENTIFIED ..15
    2.6       TASK.....................................................................................................................................18
    2.7       TASK.....................................................................................................................................19
    2.8       HOW TO SPOT HEALTH FRAUD BY PAULA KURTZWEIL ..............................................................20
    2.9       TIP-OFFS TO RIP-OFFS ............................................................................................................22
    2.10      TASK – EXTRA READING .......................................................................................................27
    2.11      TASK – EXTRA READING. ......................................................................................................28
    2.12      TASK – EXTRA READING .......................................................................................................31
    2.13      RESEARCH TASK (AC 1.4)..................................................................................................33
    2.14      TIME TO REFLECT ...................................................................................................................34
MODULE 2: DEMONSTRATE KNOWLEDGE AND UNDERSTANDING OF LEGAL ASPECTS
RELATING FRAUD IN HEALTHCARE BENEFITS ADMINISTRATION. .................................35
    2.15 LEGISLATION GOVERNING FRAUD AS IT APPLIES IN MEDICAL SCHEME
    INSURANCE ....................................................................................................................................36
    2.16 RESEARCH TASK - LEGAL RECOURSE (AC 2.2).......................................................................39
    2.17 TASK – THE COST OF FRAUD ...................................................................................................41
    2.18 MEDICAL SCHEMES ACT – AMENDMENTS AND DECLARATIONS ..............................................44
    2.19 TASK – OFFENCES AND PENALTIES .........................................................................................46
    2.20 TIME TO REFLECT ...................................................................................................................47
3 MODULE 3: DEMONSTRATE KNOWLEDGE AND UNDERSTANDING OF INTERNAL
PROCESSES AROUND THE INVESTIGATION OF FRAUD IN HEALTHCARE BENEFITS
ADMINISTRATION. ..........................................................................................................................48
    3.1       GENERIC ANTI-FRAUD PLAN OUTLINE ..........................................................................49
    3.2       RESEARCH TASK – INTERNAL FRAUD POLICY (AC 3.1)...........................................................51
    3.3       TASK - TOOLS AVAILABLE .....................................................................................................52
    3.4       RESEARCH TASK - INTERVIEW ................................................................................................52
    3.5       RESEARCH TASK – FRAUD PROCEDURE AND PROCESS (AC 3.2 AND 3.3).................................53
    3.6       TIME TO REFLECT ...................................................................................................................54
4 MODULE 4: ANALYSE TRENDS AND THE IMPACT OF FRAUD IN A HEALTHCARE
BENEFITS ADMINISTRATION ENVIRONMENT. ........................................................................55
    4.1       RESEARCH TASK - THE ANALYSIS OF TRENDS AND THE IMPACT OF FRAUD (AC 4.1- 4.3) ........56
    4.2       TIME TO REFLECT ...................................................................................................................59
5 MODULE 5: EXPLAIN CONTROL MECHANISMS USED TO CONTAIN FRAUD IN
HEALTHCARE BENEFITS ADMINISTRATION. ..........................................................................60
    5.1       CONTROL MEASURES .............................................................................................................61
    5.2       TASK ......................................................................................................................................63
    5.3       TASK – EXAMINING RISK ........................................................................................................64
    5.4       TASK – QUALITY CONTROL PROGRAMME (AC 5.3).................................................................65
    5.5       TIME TO REFLECT ...................................................................................................................66




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Unit Standard No.12321                                                                          Page 2

1 UNIT STANDARD

1.    TITLE:      Describe the control of fraud in Healthcare Benefits Administration.
____________________________________________________________________________

2.      UNIT STANDARD NUMBER:

3.      LEVEL ON NQF:                           4

4.      CREDITS:                                8

5.      FIELD:                                  Business, Commerce and Management Studies
        Sub Field:                              Finance, Economics and Accounting

6.      ISSUE DATE:

7.      REVIEW DATE:

8.      PURPOSE:

        This unit standard introduces the concept of fraud and its control in Healthcare Benefits
        Administration.

        The qualifying learner is capable of:

                 Describing fraud as it occurs in a Healthcare Benefits Administration
                  environment.
                 Demonstrating knowledge and understanding of legal aspects relating to fraud
                  Healthcare Benefits Administration.
                 Demonstrating knowledge and understanding of internal processes around the
                  investigation of fraud in Healthcare Benefits Administration.
                 Analysing trends and the impact of fraud in Healthcare Benefits Administration.
                 Explaining control mechanisms used to contain fraud in a Healthcare Benefits
                  Administration environment.


9.      LEARNING ASSUMED TO BE IN PLACE:

        There is open access to this unit standard. Learners should be competent in
        Communication and Mathematical Literacy at Level 3.


10.     SPECIFIC OUTCOMES AND ASSESSMENT CRITERIA:

        Specific Outcome 1:             Describe fraud as it occurs in a Healthcare Benefits
                                              Administration environment.

        Assessment Criteria

        1.1       The concept of fraud is explained with authentic examples.

        1.2       Parties who could commit fraud are identified in Healthcare Benefits
                  Administration environment.

        1.3       Ten possible indicators of fraudulent activity are listed and an indication is given
                  of how these could be identified in practice.
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Unit Standard No.12321                                                                          Page 3


        1.4      A portfolio of evidence of fraud is collected for ten case studies involving at least
                 three different parties.


        Specific Outcome 2:             Demonstrate knowledge and understanding of legal
                                        aspects relating to fraud in Healthcare Benefits
                                        Administration.

        Assessment Criteria

        2.1      Legislation governing fraud is identified as it applies in Healthcare Benefits
                 Administration.

        2.2      The legal recourse available to Healthcare Benefits Administrators in cases
                 where fraud is identified with authentic examples of each.

        2.3      The consequences of committing fraud are explained for at least three different
                 acts of fraud.

        2.4      The impact of fraud is explained in relation to the healthcare system.


        Specific Outcome 3:             Demonstrate knowledge and understanding of internal
                                        processes around the investigation of fraud in
                                        Healthcare Benefits Administration.
        Assessment Criteria

        3.1.     The internal policy relating to fraud is described for a particular Healthcare
                 Benefits Administrator or case study.

        3.2.     The procedure to follow if fraud is suspected is explained with reference to a
                 particular Healthcare Benefits Administrator, or case study.

        3.3.     The process followed in order to gather evidence and present a case is
                 described with reference to a particular Healthcare Benefits Administrator or case
                 study.

        3.4.     Tools available for information management are described with reference to a
                 particular Healthcare Benefits Administrator or case study.


        Specific Outcome 4:             Analyse trends and the impact of fraud in a Healthcare
                                        Benefits Administration environment.
        Assessment Criteria

        4.1.     A data set is compiled; trends in the data are identified to provide a benchmark
                 against which to measure suspicious incidences in own work situation.

        4.2.     Data is analysed to establish trends in statistics generated by a Healthcare
                 Benefits Administrator.

        4.3.     A recommendation for possible corrective measures is made based on an
                 identified trend or suspicious incidence.

        4.4.     The potential impact, if fraud is not identified and managed, is described for a
                 particular case study.
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Unit Standard No.12321                                                                         Page 4




        Specific Outcome 5:             Explain control mechanisms used to contain fraud in
                                        Healthcare Benefits Administration.
        Assessment Criteria:

        5.1.     Possible control measures that could be used to manage fraud are listed for at
                 least three parties.

        5.2.     The risk if a Healthcare Benefits Administrator does not implement adequate
                 control measures is explained with reference to the Healthcare Benefits
                 Administrator, providers and members.

        5.3.     The role of a quality control programme is described in terms of managing fraud.


11.     ACCREDITATION AND MODERATION:

        This unit standard will be internally assessed by the provider and moderated by a
        moderator registered by INSQA or a relevant accredited ETQA. The mechanisms and
        requirements for moderation are contained in the document obtainable from INSQA,
                       INSQA framework for assessment and moderation.


12.     RANGE STATEMENT:
        The typical scope of this unit standard is:
        1. Parties who could commit fraud include employees, providers, policyholders,
           software houses/vendors, brokers and Trustees.
        2. Fraudulent activity can be identified in claims, reports, phone calls, information
           received and other documents.
        3. Legislation governing fraud includes the Medical Schemes Act, Income Tax Act,
           Health Professionals’ Act, Healthcare Insurance Act, Pharmacy Act, law of contract,
           Policy Holder Protection and FAIS legislation.
        4. The impact of fraud on medical inflation, patient rights, restrictions, scheme
           governance members, cost, quality and access.


13.     NOTES:

                CRITICAL CROSS FIELD and DEVELOPMENTAL OUTCOMES:

                 This unit standard supports in particular, the following critical cross field
                 outcomes at unit standard level:

                 1.      Learners are able to organise and manage themselves effectively by
                         becoming responsible citizens in identifying incidences of fraud in a
                         Healthcare Benefits Administration environment.
                 2.      Learners are able to collect, organise and critically evaluate information in
                         gathering evidence and presenting a case.
                 3.      Learners are able to describe the control of fraud in a Healthcare Benefits
                         Administration environment.
                 4.      Learners are able to identify and solve problems in recommending
                         possible corrective measures when suspicious incidences or trends are
                         identified.
                 5.      Learners are able to use science and technology effectively and critically,
                         showing responsibility towards the environment and the health of others
                         in using a computer system to manage fraud.
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Unit Standard No.12321                                                                    Page 5

                 6.      Learners are able to demonstrate an understanding of the world as a set
                         of related systems by recognising that problem-solving contexts do not
                         exist in isolation in understanding the effect of fraud in Healthcare
                         Benefits Administration on different parties and the risk if adequate
                         control measures are not in place.
                 7.      Learners are able to communicate effectively in explaining concepts and
                         the consequences of fraud and presenting a portfolio of evidence.
                 8.      Learners are able to act as a responsible citizen in understanding the
                         concept and impact of fraud on the healthcare system.
                 9.      Learners are able to work as a member of a team in following procedures
                         relating to fraud.




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Unit Standard No.12321                                                                      Page 6



2 MODULE 1:         Describe fraud as it occurs in a Healthcare
  Benefits Administration environment.
        .
        LEARNING OUTCOMES

    1. The concept of fraud is explained with authentic examples.

    2. Parties who could commit fraud are identified for Healthcare Benefits Administration
       environment.

    3. Ten possible indicators of fraudulent activity are listed and an indication is given of how
       these could be identified in practice.

    4. A portfolio of evidence of fraud is collected for ten case studies involving at least three
       different parties.




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Unit Standard No.12321                                                                       Page 7



2.1 INTRODUCTION

It is no secret that industry players acknowledge and that there are huge losses, which can be
attributed to fraud and fraudulent activities and which cut across all sub sectors of the financial
services industry.


The following will give you an idea of the environment in which fraud continues to leave its mark
in South Africa.


        Major organisations seem unable to protect themselves from economic crime.


       Economic crime occurs even though management and auditors believed effective
        controls were in place.


       Perpetrators include well known figures in business and government using their
        positions to bypass checks and balances inside and outside the organisation.


       In some instances, employees were aware of improper acts and chose not to take
        action.




It can be said that fraudulent and dishonest activities are not something new to our society.
Certainly the above information on recent scandals and reports lead us to question what it is we
can do to minimize the occurrence, and thereby, the effect of fraud. In this learner guide, we will
focus more specifically on fraud as it occurs in the Healthcare Insurance Industry.




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Unit Standard No.12321                                                                    Page 8



2.2 The concept of Fraud in Healthcare Insurance


What is Fraud?


Fraud is a w ilful, illegal or w rongful m isrepresentation, with the intent to
deceive or prej udice another person.




The Big Picture …


I n order t o underst and t he c onc ept of Fraud or Fraudulent A ct ivit y, one has t o
underst and t he c onc ept of E c onomic Crime, or, a t erm used m ore frequent ly –
“Whit e-c ol l ar” c ri me .


This has been defi ned i n several different w ays, t o nam e a few:


       “A non-vi ol ent c rim e for fi nancial gain c om m it t ed by m eans of dec ept i on,
        by persons w hose oc c upat ional st at us is ent repreneurial, professional, or
        sem i -professi onal and ut i lizing t heir special occ upat ional skills and
        opport uni ti es. ”


       “A non-vi ol ent c rim e for fi nancial gain, utilising dec e pt ion and c om m itt ed
        by anyone havi ng speci al t ec hnic al, and professi onal know ledge of
        busi ness and governm ent, irrespect ive of the person’s occ upation. ”


       “A n int enti onal m i srepresent at ion of t he t rut h, or appropriat ion of som e
        financ i al benefi t i n order t o induc e or t ake from anot her, som ething of
        value or t o surrender a l egal right. ”


       Ec onom ic Crim e alw ays i nvolves one or m ore persons, w ho w ith int ent ,
        ac t openl y or sec ret l y t o deprive anot her of som et hing of value, for t heir
        ow n or som ebody el se’ s enric hm ent. ”


The Instit ut e of i nt ernal Audit ors defines fraud as;




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Unit Standard No.12321                                                                               Page 9

            “Fraud encompasses an array of irregul ari ti es and illegal acts,
            characteri sed by intentional misrepresentation. I t can be perpetrated
            for the benefi t of, or to the detri ment of the organi sation. I t can al so
            be perpetrated by peopl e i nside and / or outsi de the organisation”.


W hen investi gat ing fraud, proof m ust be obt ained for all four elem ent s of fraud
in order t o get a c onvict i on i n c ourt, being;
       1.        I ll egal / w rongful.
       2.        Mi srepres ent at i on.
       3.        I nt ent.
       4.       P ot ent i al / act ual prej udic e or harm (prejudic e / harm does not need t o
                be ac t ual – i f there i s pot ential prejudic e / harm , fraud c an be deem ed
                t o have been c om m it t ed).


Bearing the above in mind, it should be noted that the term “white-collar crime” is often used
interchangeably with the term “Commercial Crime”.


This has been defined in as being:


“White collar crime committed by or on behalf of a business or commercial entity”. 1


What is meant by the term “White Collar” – White Collar refers to the type of people who
commit the crime, usually taken as being people who would wear a white collar to work,
or administration / management people.


Whilst remembering that there are many types of Economic Crime, some which are committed
over longer periods of time than others (which will determine its level of complexity), there is one
common denominator present in all of these crimes – the element of GREED! It is this, which
motivates perpetrators to commit acts of fraud again, and again, thereby resulting in them being
caught out.


2.2.1 Essential Elements of Economic Crime

                                                  3 factors present in all
                                                  ECONOMIC CRIMES



       It is essential that there is            There is an opportunity to        A perpetrator is necessary to
           something of value                 take the “thing of value” without
                                                                                      commit the offence.
                                                     being caught out.
1
    Bologna “The Accountant’s Handbook of Fraud and Commercial Crime”
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Unit Standard No.12321                                                                      Page 10




There are five elements to economic crime:
       A perpetrator
       Somebody who has acted with unlawful intent
       Someone has parted with something of value
       A person who has parted with something of value, does not realize it at the time
       The perpetrator or someone else has benefited from the act


Remember, from these broad definitions, that there are many types of economic crime, of which
Fraud is but one type.


Variations of Fraud
However, there are also many variations of Fraud such as:
       Bank Fraud
       Coupon Fraud
       Computer Fraud
       Insolvency Fraud
       Non profit organization Fraud
       Stock and Bond Fraud


    Despite there being many variations of fraud (depending on how creative the perpetrator
    can be!), the different varieties can mainly be grouped into two main categories:


           Specialised Fraud
            This is unique to certain types of businesses and the perpetrators are likely to be
            persons involved in that industry. Insurance industry fraud is likely to fall into this
            category particularly for the false claims, which are submitted by clients. Apart from
            this, other opportunities for fraud arise in this environment


            For employees, who, for example work in the claims department, who falsify bank
            records of clients, only to benefit from it themselves.


           Generalised Fraud
            This is a type of fraud, which all people are likely to encounter in general business
            operations. Other variations of fraud that occur in the corporate environment include,
            amongst others:



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Unit Standard No.12321                                                                        Page 11

            o    BANK FRAUD – mainly committed by employees and clients of the bank, such
                 as the passing of bad cheques, fraudulent loans to non-existent clients, etc.


            o    COMPUTER FRAUD – although this is more a “means of crime” rather than a
                 type of crime. As an instrument of crime, the computer may be used in many
                 creative ways by fraudsters to commit economic crime.


            o    COUPON FRAUD – Usually applies to those who operate a business whereby
                 coupons are collected and submitted to a clearinghouse for refunds or rebates on
                 products.


            o    INSOLVENCY FRAUD – this refers to the hiding or non-disclosure of assets
                 from creditors.


            o    NON PROFIT ORGANISATION FRAUD – This type of fraud is mainly a tax
                 fraud, where the business poses to be a non-profit making organisation to evade
                 payment of income tax.


            o    INSURANCE FRAUD – depending on the sub sector within which the insurer
                 operates (Short term, Healthcare, Collective investment schemes), the type of
                 fraud varies. In Healthcare insurance the parties who are likely to commit fraud
                 would be clients, members of staff (including management) and the
                 intermediaries or advisors of the organisation (tied agents or independent
                 brokers). The fraudulent activity varies from misrepresentation of client details on
                 applications to fraudulent claims with falsified documents.




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Unit Standard No.12321                                                      Page 12



2.3 Activity Sheet:


GROUP REFLECTION:
Discuss in your group, which areas within a Healthcare Insurance organisation
are likely to commit Fraud and which parties would be involved?


Who is likely to commit Fraud and Which departments within Healthcare Insurance
what incidents of fraud are likely to organisations are susceptible to Fraud being
occur?                              committed?




 Completed By:             Signed                    Date

 Assessed BY               Signed                    Date
 :
 Moderated By              Signed                    Date

 Comments




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Unit Standard No.12321                                                                         Page 13

2.4 Why do people engage in fraud or fraudulent behaviour?

It is said that 25% of people are always honest, 25% of people are actively dishonest and the
remaining 50% will be dishonest if they see an opportunity. However, research into fraudulent
behaviour indicates that it is linked to a combination of factors, such as:


       A “non-sharable” pressure
        As most victims of fraud believe that it won’t happen to them, so too, most perpetrators
        of economic crime tend to believe that they will not be “discovered”, or caught out. They
        live on the belief that it is highly unlikely that their fraudulent activity will be discovered
        and tend to repeatedly commit the act of fraud, fuelled mainly by their greed.


       A perceived opportunity for the perpetrator (it is easy)
        Forensic auditing reports reveal that most fraud today involves a conspiracy of two or
        more persons (known as collusion), and that the combination of access that each party
        in the conspiracy has, will certainly enhance the ease with which the fraud is committed
        (the theory that “many hands make light work”!).


       Some way to rationalize and justify the behaviour as being acceptable
        Perpetrators of economic crime do not have to contend with, for example, the risk and
        fear associated with robbing a bank (this is usually far more risky and difficult owing to
        the complicated electronic protective systems and armed guards who make their
        presence felt). For these perpetrators of economic crime, the theft usually occurs by
        misrepresentation and involves stealth and deceit. There is hardly ever the element of
        violence and it ends up being quite a “silent”, “non-threatening” crime, where the victim
        doesn’t even realize that they are being robbed, and the perpetrator has little chance of
        suffering bodily harm.



       Greed (the belief that crime does pay)
        It is unfortunately not possible to tell exactly how well fraud does pay because most
        fraud is undiscovered fraud! In fact recent studies have disclosed that only 20% of fraud
        is discovered by auditors. However, when a fraudulent act is discovered, in practice, it is
        rare that the accused is charged with the total proceeds of the crime, as the charges are
        usually limited to instances where the evidence can be clearly seen.


        The organisation makes it easy for people to commit fraud by not implementing
        measures to prevent, or at least limit, fraud.


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Areas in the industry where fraud could be committed, and parties who could be involved
in fraudulent activity.


Which then are the areas in Healthcare insurance where fraud can occur and who are the
people who commit it?


There are many divisions or business units within Healthcare insurance (as well as different
parties) who could commit fraud, such as:


         At the point of sale (by advisor/client)


         At new business stage (by client/advisor/staff)


         At underwriting stage (by advisor/client/underwriting clerk)


         At policy issue stage (by member of staff)


         Whilst servicing the client – the policy servicing stage (by clients/members of
            staff/advisors)


         Upon maturity or a claim arising on the contract (by clients/members of
            staff/advisors/medical practitioners)


Who are the parties who commit fraud?
This varies from the client to members of staff, to intermediaries or advisors who market the
products, to families of clients and the members of the medical fraternity themselves.




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Unit Standard No.12321                                                                          Page 15

2.5 INDICATORS OF FRAUDULENT ACTIVITY AND HOW THEY CAN
    BE IDENTIFIED

Depending on which area of the insurance policy cycle you are looking at, there are bound to be
indicators or “red flags” to indicate that an act of fraud has been committed.


One of the key indicators of fraud, no matter what the profile of the perpetrator, has got to be
the LIFESTYLE of the person. Most perpetrators cannot resist spending their ill-gotten gains
and it is evident from their sudden generosity toward others, acquisition of expensive vehicles,
new clothes and club memberships, which result in the suspicion toward them. A key indicator
would therefore be where the perpetrator is living in an affluent area, or wearing designer suits,
which are not entirely affordable, given his current income category. Investigators have caught
out many an offender when they visit him in his home and discover the inconsistency between
the offender’s lifestyle and his income.


Another key indicator is that the perpetrator is, more likely than not, to be a REPEAT
OFFENDER. The chances are that as the investigation is carried out, that other instances of
fraud are detected and this will help build the “pattern” of fraud, which will go towards proving
the INTENT of the perpetrator, which is necessary to prosecute him/her.


Some examples of indicators of fraud by POLICYHOLDERS / CONSPIRATORS in the
CLAIMS STAGE of a policy would be:


    1. FORGED OR INVALID DOCUMENTS
    Examples of this would be documents such as post mortem reports, identity documents,
    medical reports and death certificates which are not authentic or appear suspicious. It can
    also happen if doctor gives false reports, or officials from Home Affairs issues a death
    certificate on a body, which is different to that of the insured (who is very much alive!).


    2. POLICIES WITH A SHORT DURATION (LESS THAN A YEAR OLD)
    There is a line of thought which believes that most fraud occurs in the first year or two of the
    policy as the perpetrator cannot wait to get his/her hands on the money and does not want
    to “spend” too much (in premiums) in anticipation of his “reward” (the policy proceeds).


    3. IF PREMIUM PAYER IS ALSO THE BENEFICIARY
    This is usually a fairly good indicator, in addition to this; this person is also usually related to
    the insured, which is often an older member of the family. It usually starts off with the
    premiums being paid cash, with a change in the policy to premiums being paid by debit

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    order. Often, it is found that no insurable interest exists between the owner and the insured
    (i.e. no loss will be incurred by the owner if the insured dies).


    4. CERTAIN OCCUPATIONS ARE MORE “SUSPECT” THAN OTHERS (SAY vs. SEE)
    This is often an indicator of fraud, for example bus owners who claim that they never
    actually drive the buses, or managing directors of a panel beating business who claim that
    they do no manual/physical work.


    5. MISREPRESENTATION OF INSURED’S EARNINGS
    This is usually done so that the insured will qualify for higher cover and is often only
    discovered at claims stage (Although possible in theory, it not likely that this type of fraud
    will happen in Healthcare, due to the current provision that healthcare providers may not
    community rate or rate by income group).


Some examples of indicators of fraud by MEMBERS OF STAFF at CLAIMS STAGE of a
policy would be:


    1. MANUAL CHEQUE REQUISITIONS – FRAUDULENT SIGNATURES
    This usually occurs where a manual cheque requisition system exists in the claims division
    of an office and a member of staff issuing the cheque forges the signature of the authorizing
    manager.


    2. COULD CHANGE BANKING DETAILS FROM CLIENTS TO THEIR OWN.
    This occurs where a member of staff works on a system into which they are entitled to input
    banking details, and where they substitute their personal banking details for that of the client
    whose policy is paying out.


    3. REIMBURSMENT PAYMENTS
    This type of policy makes regular income payments into the client’s bank account and again,
    members of staff may be tempted to insert their personal banking details instead of those of
    the client.


Some more examples on how people cheat.

     Cash for claims: A doctor puts in a false claim for a consultation and gives the member
      cash.
     Member/provider/ staff collusion: staff members feed information and override the
      checks and balances, working with members and a doctor with a practice number.
     Dentists also charge for crowns when they are doing gold or diamond inlays.
     Members submit false claims.
     Optometrists bill for spectacles but dispense designer sunglasses
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Unit Standard No.12321                                                                    Page 17

     Pharmacists switch generics for a branded prescription but charge for the branded
      name.

Fraud by members of a medical scheme;

       Belonging to two medical schemes
       Obtaining services for unregistered dependents
       Falsifying medical accounts

Fraud by Medical Practitioners;

       Claiming for services not rendered
       Claiming for services that don’t qualify for benefits, e.g. sunglasses as prescription
        glasses.
       Offering, or receiving kickbacks and bribes
       Up coding (billing for more expensive items or services than actually provided).
       Using the incorrect provider number to submit claims.
       Selling or sharing patients medical aid details
       Waiving co payments
       Duplicating claims
       Over servicing, e.g. always sending patients for complete laboratory profiles when only a
        single test is necessary to establish diagnosis (this is usually done when getting
        kickbacks).


The case of the kitchen pots


One of the more outlandish fraud cases worked as follows: Members of a medical aid scheme
wished to buy pots costing R6 000 to R7 000 a set. After the agent selling the pots approached
a scheme member, the member would pay the deposit for the set. The agent would then collude
with a doctor, who would pay the installments to the company selling the pots. The doctor would
then claim the price of the pots - and a little extra for himself - from the medical aid scheme,
claiming to have performed procedures on the medical scheme member. - Source: Bafana
Nkosi, Bonitas




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2.6 TASK

    Required to do?

    Identify 10 different parties who could commit fraud in your organisation.
    Don’t name names but rather identify the areas of responsibility that lend
    themselves towards this type of activity. Then rate the risk of the event
    happening on a low, medium or high scale.

No      Area of Responsibility                       Risk
                                                     Low           Medium   High
1

2

3

4

5

6

7

8

9

10



Completed By:                 Signed:                      Date:
Assessed By:                  Signed:                      Date:
Moderated By:                 Signed:                      Date:
Comments




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Unit Standard No.12321                                                                 Page 19

2.7 TASK

    Required to do?

    Taking the above task (2.6) into account as well as the information supplied
    to you in the ADDITIONAL INFROMATION SECTION – TITLED: Glossary or
    different types of healthcare fraud, list ten possible indicators of fraudulent
    activities and how you could identify these in your company (or in practice).




No      Fraudulent Activity         Indicator        Area of          How do you
                                                     Business         identify these
                                                                      activities?
1


2


3


4


5


6


7


8


9


10



Completed By:                 Signed:                      Date:
Assessed By:                  Signed:                      Date:
Moderated By:                 Signed:                      Date:
Comments




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Unit Standard No.12321                                                                       Page 20

2.8 How to Spot Health Fraud by Paula Kurtzweil




Read through the following article for your own interest. Try and apply any information,
which may be relevant to your case, to any of the exercises that follow.

You don't have to look far to find a health product that's totally bogus--or a consumer who's
totally unsuspecting. Promotions for fraudulent products show up daily in newspaper and
magazine ads and TV "infomercials." They accompany products sold in stores, on the Internet,
and through mail-order catalogs. They're passed along by word-of-mouth.

And consumers respond, spending billions of dollars a year on fraudulent health products,
according to Stephen Barrett, M.D., head of Quackwatch Inc., a nonprofit corporation that
combats health fraud. Hoping to find a cure for what ails them, improve their well-being, or just
look better, consumers often fall victim to products and devices that do nothing more than cheat
them out of their money, steer them away from useful, proven treatments, and possibly do more
bodily harm than good.

"There's a lot of money to be made," says Bob Gatling, director of the program operations staff
in the Food and Drug Administration's Center for Devices and Radiological Health. "People want
to believe there's something that can cure them."
FDA describes health fraud as "articles of unproven effectiveness that are promoted to improve
health, well being or appearance." The articles can be drugs, devices, foods, or cosmetics for
human or animal use.

FDA shares federal oversight of health fraud products with the Federal Trade Commission. FDA
regulates safety, manufacturing and product labeling, including claims in labeling, such as
package inserts and accompanying literature. FTC regulates advertising of these products.

Because of limited resources, says Joel Aronson, team leader for the nontraditional drug
compliance team in FDA's Center for Drug Evaluation and Research, the agency's regulation of
health fraud products is based on a priority system that depends on whether a fraudulent
product poses a direct or indirect risk.

When the use of a fraudulent product results in injuries or adverse reactions, it's a direct risk.
When the product itself does not cause harm but its use may keep someone away from proven,
sometimes essential, medical treatment, the risk is indirect. For example, a fraudulent product
touted as a cure for diabetes might lead someone to delay or discontinue insulin injections or
other proven treatments.

While FDA remains vigilant against health fraud, many fraudulent products may escape
regulatory scrutiny, maintaining their hold in the marketplace for some time to lure increasing
numbers of consumers into their web of deceit.

How can you avoid being scammed by a worthless product? Though health fraud marketers
have become more sophisticated about selling their products, Aronson says, these charlatans
often use the same old phrases and gimmicks to gain consumers' attention--and trust. You can
protect yourself by learning some of their techniques.

The following products typify three fraudulent products whose claims prompted FDA to issue
warning letters to the products' marketers, notifying them that their products violated federal law.
Two of the products also were added to FDA's import alert list of unapproved new drugs


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promoted in the United States. Products under import alert are barred from entry onto the U.S.
market.

Take a look at these products' promotions. They are rife with the kind of red flags to look out for
when deciding whether to try a health product unknown to you.
Paula Kurtzweil is a member of FDA's public affairs staff.




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2.9 Tip-Offs to Rip-Offs
Product No. 1: Pure emu oil

                         FDA determined that a pure emu oil product
                         marketed to treat or cure a wide range of
                         diseases was an unapproved drug. Its
                         marketer had never submitted to FDA data to
                         support the product's safe and effective use.
One Product Does It All
" ... Extremely beneficial in the treatment of rheumatism, arthritis ... infections ... prostate
problems, ulcers ... cancer, heart trouble, hardening of the arteries, diabetes and more. ...
" "Completely eliminating the gangrene ..."... antibiotic, pain reliever ... ."

Be suspicious of products that claim to cure a wide range of unrelated diseases--particularly
serious diseases, such as cancer and diabetes. No product can treat every disease and
condition, and for many serious diseases, there are no cures, only therapies to help manage
them.

Cancer, AIDS, diabetes, and other serious diseases are big draws as people with these
diseases are often desperate for a cure, and are willing to try just about anything.

Personal Testimonials

"Alzheimer's Disease!!! My husband has Alzheimer. On September 2, 1998 he began
eating 1 teaspoon full of ... Pure Emu Oil each day. ... Now (in just 22 days) he mowed the
grass, cleaned out the garage, weeded the flowerbeds, and we take our morning walk
again. It hasn't helped his memory much yet, but he is more like himself again!!!"

Personal testimonies can tip you off to health fraud because they are difficult to prove. “Often”,
says Reynaldo Rodriguez, a compliance officer and health fraud coordinator for FDA's Dallas
district office, “testimonials are personal case histories that have been passed on from person to
person. Or, the testimony can be completely made up.”

"This is the weakest form of scientific validity," Rodriguez says. "It's just compounded hearsay."

Some patients' favorable experiences with a fraudulent product may be due more to a remission
in their disease, or from earlier or concurrent use of approved medical treatments, rather than
the use of the fraudulent product itself.

Quick Fixes

"... eliminates skin cancer in days! ..."

Be wary of talk that suggests a product can bring quick relief or provide a quick cure, especially
if the disease or condition is serious. Even with proven treatments, few diseases can be treated
quickly. Note that the words, "in days", can really refer to any length of time. Fraudulent
promoters like to use ambiguous language, like this, to make it easier to finagle their way out of
any legal action that may result.




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Product No. 2: Over-the-counter transdermal weight-loss patch

                          FDA issued a warning letter to the marketer of
                          the weight-loss product described here as it
                          did not have an approved new drug
                          application. Because of the newness of the
                          dosage form--skin-delivery systems--FDA
                          requires evidence of effectiveness, in the form
                          of a new drug application, before the product
                          can be marketed legally.

'Natural'

"Healthy, simple and natural-way to help you lose and control your weight."

Don't be fooled by the term "natural." It's often used in health fraud as an attention-grabber; it
suggests a product is safer than conventional treatments. But the term doesn't necessarily
equate to safety because some plants--for example, poisonous mushrooms--can kill when
ingested. “And among legitimate drug products”, says Shelly Maifarth, a compliance officer and
health fraud coordinator for FDA's Denver district office, “60 percent of over-the-counter drugs
and 25 percent of prescription drugs are based on natural ingredients”.

And, any product--synthetic or natural,potent enough to work like a drug, is going to be potent
enough to cause side effects.


Time-Tested or New-Found Treatment

"This revolutionary innovation is formulated by using proven principles of natural health
based upon 200 years of medical science."

Usually it's one or the other, but this claim manages to suggest it's both a breakthrough and a
decades-old remedy.

Claims of an "innovation," "miracle cure," "exclusive product," "new discovery" or "magical" are
highly suspect. If a product was a cure for a serious disease, it would be widely reported in the
media and regularly prescribed by health professionals--not hidden in an obscure magazine or
newspaper ad, late-night television show, or Website promotion, where the marketers are of
unknown, questionable or nonscientific backgrounds.

The same applies to products purported to be "ancient remedies" or based on "folklore" or
"tradition." These claims suggest that these products' longevity proves they are safe and
effective. But some herbs, reportedly used in ancient times for medicinal purposes, carry risks
only recently identified.

Satisfaction Guaranteed

"... Guarantee: If after 30 days ... you have not lost at least 4 pounds each week, ... your
uncashed check will be returned to you....”

Here's another red flag: money-back guarantees, no questions asked.




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Good luck getting your money back. Marketers of fraudulent products rarely stay in the same
place for long. Because customers won't be able to find them, the marketers can afford to be
generous with their guarantees.




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Unit Standard No.12321                                                                      Page 25




Product No. 3: Unapproved weight-loss product marketed as an alternative to a
prescription drug combination

                         FDA issued an import alert for a Canadian-
                         made weight-loss product whose claims
                         compared the product with two prescription
                         weight-loss drugs taken off the market after
                         FDA determined they posed a health hazard.

Promises of Easy Weight Loss
"Finally, rapid weight loss without dieting!"

For most people, there is only one-way to lose weight: Eat less food (or fewer high-calorie
foods) and increase activity. Note the ambiguity of the term "rapid." A reasonable and healthy
weight loss is about 1 to 2 pounds a week.

Paranoid Accusations

"Drug companies make it nearly impossible for doctors to resist prescribing their
expensive pills for what ails you ...." "It seems these billion dollar drug giants all have
one relentless competitor in common they all constantly fear--natural remedies."

These claims suggest that health-care providers and legitimate manufacturers are in cahoots
with each other, promoting only the drug companies' and medical device manufacturers'
products for financial gain. The claims also suggest that the medical profession and legitim ate
drug and device makers strive to suppress unorthodox products because they threaten their
financial standing.

"This [accusation] is an easy way to get consumers' attention," says Marjorie Powell, assistant
general counsel for the Pharmaceutical Research and Manufacturers of America. "But I would
ask the marketers of such claims, 'Where's the evidence?' It would seem to me that in this
country, outside of a regulatory agency it would be difficult to stop someone from making a
claim."

Think about this, too: Would the vast number of people in the health-care field block treatments
that could help millions of sick, suffering patients, many of whom could be family and friends? "It
flies in the face of logic," Barrett says on his Quackwatch Website.
Meaningless Medical Jargon

"... Hunger Stimulation Point (HSP) ..." "... thermogenesis, which converts stored fats into
soluble lipids ..." "One of the many natural ingredients is inolitol hexanicontinate."

Terms and scientific explanations such as these may sound impressive and may have an
element of truth to them, but the public "has no way of discerning fact from fiction," Aronson
says. “Fanciful terms,” he says, “generally cover up a lack of scientific proof”.

“Sometimes, the terms or explanations are lifted from a study published in a reputable scientific
journal, even though the study was on another subject altogether” says Martin Katz, a
compliance officer and health fraud coordinator for FDA's Florida district office.

And chances are, few people will check the original published study.

"Most people who are taken in by health fraud will grasp at anything," he says. "They're not
going to do the research. They're looking for a miracle."
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Truth or Dare

The underlying rule when deciding whether a product is authentic or not is to ask yourself:
"Does it sound too good to be true?" If it does, it probably isn't true.

If you're still not sure, check it out: "Look into it--before you put it in your body or on your skin,"
says Reynaldo Rodriguez,.

To check a product out, FDA health fraud coordinators suggest:

Talk to a doctor or another health professional. "If it's an unproven or little-known treatment,
always get a second opinion from a medical specialist," Rodriguez says.

Talk to family members and friends. Legitimate medical practitioners should not discourage you
from discussing medical treatments with others. Be wary of treatments offered by people who
tell you to avoid talking to others because "it's a secret treatment or cure."

Joining Forces to Fight Fraud

Health fraud isn't confined to the United States only. It's worldwide, and to help combat it in
North America, the United States has joined with Canada and Mexico to share knowledge and
coordinate enforcement activities related to fraudulent health products, services and devices.

In announcing their decision in December 1998 to adopt the Joint Strategies Agreement, the
countries agreed to:
     share information on current trends in health fraud
     cooperate in detecting health fraud along borders
     share information about significant investigations in their country
     consider each others' requests to investigate domestic activities and coordinate related
        enforcement activities
     develop and distribute joint consumer and business education messages about health
        fraud.




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2.10 TASK – Extra Reading

 Required to do?

 Read the following article, for interest, and see if you can use the information in any of
 your task

Articles, essays, and other information pertaining to the fraud of Attention Deficit
Hyperactivity Disorder (ADHD)--Compiled by Dr. Fred Baughman


Fred A. Baughman Jr., MD has been an adult & child neurologist, in private practice, for 35
years. Making "disease" (real diseases--epilepsy, brain tumor, multiple sclerosis, etc.) or "no
disease" (emotional, psychological, psychiatric) diagnoses daily, he has discovered and
described real, bona fide diseases.

It is this particular medical and scientific background that has led him to view the "epidemic" of
one particular "disease"--Attention Deficit Hyperactivity Disorder (ADHD)--with increasing alarm.
Dr. Baughman describes this himself. Referring to psychiatry, he says:

"They made a list of the most common symptoms of emotional discomfiture of children; those
which bother teachers and parents most, and in a stroke that could not be more devoid of
science or Hippocratic motive--termed them a 'disease.' Twenty five years of research, not
deserving of the term 'research,' has failed to validate ADD/ADHD as a disease. Tragically--the
"epidemic" having grown from 500 thousand in 1985 to between 5 and 7 million today--this
remains the state of the 'science' of ADHD."

In addition to scientific articles that have appeared in leading national and international medical
journals, Dr. Baughman has testified for victimized parents and children in ADHD/Ritalin legal
cases, writes for the print media and appears on talk radio shows, always making the point that
ADHD is fraudulent--a creation of the psychiatric-pharmaceutical cartel, without which they
would have nothing to prescribe their dangerous, addictive, Schedule II, stimulants for--namely,
Ritalin (methylphenindate), Dexedrine (dextro-amphetamine), Adderall (mixed dextro- and levo-
amphetamine) and, Gradumet, and Desoxyn (both of which are methamphetamine, 'speed,'
'ice').

The entire country, including all 5-7 million with the ADHD diagnosis today, have been deceived
and victimized; deprived of their informed consent rights and drugged--for profit! It must be
stopped. Now!




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2.11 TASK – Extra Reading.

 Required to do?

 Read through the article below and see if you can use the information in any of
 your tasks.

2.11.1 ARTICLE – Misuse of Prescription Drugs
Source: US National Institute on Drug Abuse (NIDA)

Addiction to prescription drugs occurs when these drugs are not taken as prescribed, or the
drugs are taken in excess or for long periods of time. Addiction is not always as a result of
patients using medications incorrectly, but can also occur as a result of doctors prescribing the
same medication for too long.

Although many prescription drugs can be abused or misused, there are three classes of
prescription drugs that are most commonly abused:

     Opioids which are most often prescribed to treat pain
     CNS depressants which are used to treat anxiety and sleep disorders
     Stimulants, which are prescribed to treat the sleep disorder narcolepsy, attention-deficit
      hyperactivity disorder (ADHD), and obesity.

Opioids
Examples of opioids include morphine and codeine.

Chronic use of opioids can result in tolerance for the drugs, which means that higher doses
must be taken to achieve the same initial effects. Long-term use can lead to physical
dependence and addiction - the body adapts to the presence of the drug, and withdrawal
symptoms occur if use is reduced or stopped.

Symptoms of withdrawal include restlessness, muscle and bone pain, insomnia, diarrhoea,
vomiting, cold flushes with goose bumps ("cold turkey"), and involuntary leg movements. Taking
a large single dose of an opioid could even cause severe respiratory depression that can lead to
death.

Although morphine can only be obtained with a doctor's prescription, codeine can be found in
many over-the-counter cough syrups and combination painkillers.

CNS depressants
Examples of CNS depressants include:

Barbiturates: Medications used to treat anxiety, tension, and sleep disorders

Benzodiazepines: Medications used to treat anxiety, acute stress reactions, and panic attacks.

Continued use of CNS depressants can lead to physical dependence and withdrawal symptoms
when use is reduced or stopped. Because CNS depressants work by slowing the brain's
activity, when an individual stops taking them, the brain's activity can rebound and race out of
control, possibly leading to seizures and other harmful consequences.

Stimulants
Examples of stimulants include dextroamphetamine and methylphenidate.



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The consequences of stimulant abuse can be dangerous. Although their use may not lead to
physical dependence and risk of withdrawal, stimulants can be addictive in that individuals
begin to use them compulsively. Taking high doses of some stimulants repeatedly over a short
time can lead to feelings of hostility or paranoia.

Additionally, taking high doses of a stimulant may result in dangerously high body temperatures
and an irregular heartbeat. There is also the potential for cardiovascular failure or lethal
seizures.

Who is at risk?
Although the abuse of prescription drugs seems to be most common among the elderly, it does
occur in children as young as 12 years old.

Elderly people are more at risk because they use prescription medications approximately three
times as frequently as the general population and have been found to have the poorest rates of
compliance with directions for taking a medication. In addition, research suggests that elderly
patients may be prescribed inappropriately high doses of medications and for longer periods
than are younger adults. Older people should be prescribed lower doses of medications,
because the body's ability to metabolise medications decreases with age.

In terms of gender, studies suggest that women are more likely than men to be prescribed an
abusable prescription drug, particularly narcotics and anti-anxiety drugs -- in some cases 48
percent more likely.

Women and men who use prescription opioids are equally likely to become addicted, however,
among women and men who use either a sedative, anti-anxiety drug, or hypnotic, women are
almost two times more likely to become addicted.

Treating prescription drug addiction
Although different treatments are necessary for different addictions, and each person will
respond differently to these treatments, the most effective treatment for all prescription drug
addiction is usually a combination of behavioural and pharmacological treatment.

Behavioural treatment teaches people how to function without drugs, handle cravings, avoid
drugs and situations that could lead to drug use, prevent relapse, and handle relapse should it
occur. Behavioural treatments can take many forms such as individual counseling, group or
family counseling, contingency management, and cognitive-behavioural therapy.

Pharmacological treatment uses medication to counter the effects of the drug on the brain and
on the behaviour that it creates. It is also used to relieve the symptoms of withdrawal, treat an
overdose, or to help overcome drug cravings.

Preventing prescription drug abuse
Ensuring that medications are taken as prescribed is the best way to prevent abuse and
addiction of prescription drugs. Health care professionals, pharmacists and patients themselves
can all play a role in preventing and detecting prescription drug abuse.

Health care professionals
Prescribe medically needed medications appropriately
Act immediately where any rapid increases in the amount of a medication is needed or frequent
requests for refills before the quantity prescribed should have been used as this may indicate
the development of tolerance

Identify prescription drug abuse when it exists and help the patient recognise the problem, set
goals for recovery, and seek appropriate treatment when necessary.

Pharmacists
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Provide clear information and advice about how to take a medication appropriately
Advise about any side effects the medication may have, and any possible drug interactions

Identify prescription fraud or diversion by looking for false or altered prescription forms.

Patients
Ensure your reason for your visit is clearly understood by providing a complete medical history
and description of the reason for the visit to ensure that your condition is treated appropriately

Follow directions for use for all medications as directed by your pharmacist and doctor
Be aware of any possible side effects and potential interactions with other drugs by reading all
information provided by the pharmacist

Do not increase or decrease doses or abruptly stop taking a prescription without consulting a
health care professional first

Never use another person's prescription.




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2.12 TASK – Extra Reading

 Required to do?

 Read through the below article as background information




Pathology laboratory kickback culprits warned
Managed Health Care                           (Source unknown)

The Board of Healthcare Funders (BHF) has set a three-month deadline for the resolution of the
controversy about alleged kickbacks by pathology laboratories to doctors.

Chief executive Dr Aslam Dasoo says that if within that time the board is not satisfied that all
such practices have been exposed and stopped, it will consider recommending to members that
they stop reimbursing these practices. "We may also say that there will be no tariff negotiations
for the next two years and that tariffs remain at the present level.

"Implementation of the new tariff system will be driven entirely by the needs of medical scheme
members, no longer by the needs of doctors, private hospitals or pharmaceutical companies."

Dr Dasoo emphasises: "It is incorrect to say that doing business in health care is the same as
doing business in motor car parts or tyres. The rules of accountability are very different.

"This kind of grubby, behind-the-scenes kickback approach has created a crisis of credibility for
the medical profession unlike anything since the Steve Biko scandal. The sad part of it is that a
minority of the medical profession has tainted the rest.

"Our view is that we should accept that private health care providers are primarily business
concerns who are in business to make an income. We believe they have the right to make a
legitimate income, but, because of the nature of the sector of the business they engage in, they
must be transparent. Business practices have got to be very ethical."

Dr Dasoo says all major stakeholders should work to resolve the kickback issue. "A core of
leadership within the medical profession has taken a responsible view and have been fighting
against this for some time. We want to bolster their position.

"A number of medical practitioners have been aghast at what they have heard. I share their
dismay. I think they realise just how much damage these few people have done to the entire
reputation of the medical profession. These people must be exposed and subjected to . . . the
law, such as it is. The regulatory authorities need to join with us in specifically targeting
legislation to address this."

Dr Lex Visser, chairman of the National Association of Independent Practitioners' Associations
(NAIPA), says reports on payments by certain pathology firms to individual providers as
inducement to support a particular firm "have not produced one shred of evidence that a single
unnecessary test was carried out, because of such an arrangement.

"NAIPA is well aware of the fact that, as in any other profession, there are doctors who practice
unethically and that fraud and abuse indeed does occur. However, it equally decries unverified
statements, which serve to sully the reputation of the profession as a whole."

Visser says the Health Professions Council of South Africa is examining the question of
kickback and related arrangements. "NAIPA is confident the guidance that will be afforded by
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the ethical guidelines, handed down by this body, will address this very complex question in a
satisfactory manner."
Netcare executive director Reg Magennis says service quality of pathology groups under
scrutiny is not in question. "The matter for comment relates only to the incentive to generate
unnecessary services. This incentive is no different to the incentive generated by the fee-for-
service system as a whole.

"Medical schemes and their representative body, the Board of Health Funders, have entrenched
this form of reimbursement for most health care services. It is well documented that this
internationally recognised form of reimbursement does not encourage cost conscious behaviour
at best, and incentivises unnecessary service provision at worst."

Magennis says the Board of Health Funders has been aware of the exposed kickback and other
similar practices elsewhere in the delivery system. "An entire movement known as the managed
care movement derives income from services that are aimed at challenging the appropriateness
of clinical decisions based on standards of best practice."

Magennis says Netcare and many provider groups have in the past few years participated in
several initiatives aimed at altering the reimbursement system to eliminate its pitfalls and
weaknesses.

Nigel Sinclair Thomson, MD of Meridian Health Care, says paying financial incentives to
customers to generate loyalty is not unique to the medical field. "While not condoning the abuse
of financial incentives in the medical profession, I believe most medical professionals want to
provide their patients with good care. One has to be careful not to overreact in one's attempts to
eradicate the problem."




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2.13 RESEARCH TASK (AC 1.4)

 Required to do?

 You are required to collect and add to your portfolio of evidence ten case studies involving at
 least three different parties where fraud has been perpetrated. Try and use your own company’s
 resources for this purpose and keep each case study to a maximum of three pages.

 We are aware that you may run into confidentiality problems here, so please change names and
 dates for the purpose of this exercise.

 Completed By:                           Signed:                Date:
 Assessed By:                            Signed:                Date:
 Moderated By:                           Signed:                Date:
 Comments




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2.14 Time to reflect
Take ten minutes away from all disturbances and reflect on what you have leant. Make a
bulleted point summary on the main facts covered in the module. Also, indicate to
yourself, if you need to examine anything in your own workplace.

NOTES




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MODULE 2: Demonstrate knowledge and understanding of legal
aspects relating fraud in Healthcare Benefits Administration.
        LEARNING OUTCOMES

    1. Legislation governing fraud is identified as it applies in Healthcare Benefits
       Administration.

    2. The legal recourse available to Healthcare Benefits Administrators in cases of fraud is
       identified with authentic examples of each.

    3. The consequences of committing fraud are explained for at least three different parties.

    4. The impact of fraud is explained in relation to the healthcare system.




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Unit Standard No.12321                                                                        Page 36



2.15 LEGISLATION GOVERNING FRAUD AS IT APPLIES IN MEDICAL
     SCHEME INSURANCE

The act of fraud is a criminal offence and South Africa has many types of legisl ation governing
fraud.



      LAW OF EVIDENCE
      LOA CODES OF CONDUCT
      MEDICAL SCHEMES ACT
      FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT
      LAW OF CONTRACT
      POLICY HOLDER PROTECTION RULES
      CRIMINAL LAW AND CRIMINAL PROCEDURE
      CIVIL PROCEDURES ACT
      COMPUTER EVIDENCE ACT


2.15.1 FRAUD – A CIVIL OR CRIMINAL CASE?

It is important to bear in mind that in the case of fraud, there may be a criminal case, as well as /
or civil proceedings to protect different interests.


In CRIMINAL CASES, in order to protect the interests of the community, the State prosecutes
the accused that commits the crime. This can either lead to a conviction or an acquittal of the
accused. The whole point of criminal action is to uphold moral values, law and order, and to
protect private, as well as, state interests.


In a CIVIL PROCEEDING, the State is not the party who institutes the proceedings, but rather,
another individual or company, in this case the Medical Scheme. In civil cases, the Plaintiff
(Medical Scheme) sues the Defendant (fraudster) for breach of contract or an injustice (Delict)
that the Defendant committed against the Plaintiff. The whole point of instituting action against
such a Defendant would be to recoup losses the Plaintiff sustained as a result of the Fraud.


To get a conviction by the court, the four elements of fraud must be proven reasonably, as
discussed earlier. However, criminal prosecutions are different in that the case must be proven
“without a doubt”. A civil case is easier to try.


The crime of FRAUD consists of the following elements:


    1. An act, (i.e. the making of a misrepresentation or distortion of the truth)
    2. A causal link between the making of the misrepresentation and the prejudice
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     3. Unlawfulness
     4. Prejudice or potential prejudice
     5. Intention


Let us look at each of the above elements in more detail:


1.      There must be an Act (of misrepresentation) or a distortion of the truth. Usually the
misrepresentation would take the form of a spoken or written word, but it is also possible that it
can take the form of conduct (silence).


2.      There has to be a causal link between the making of the misrepresentation and the
prejudice. In order to establish this, the misrepresentation must have a consequence, that is, a
prejudice or potential prejudice. The person to whom the misrepresentation is made is not
necessarily the person who has been prejudiced. Even if a third person, the state, or the
community is prejudiced, this is sufficient to establish a causal link. In this instance, the
perpetrator would use the person who is deceived as a means to prejudice a third person.


3.      There must be an element of Unlawfulness. Here the onus is on the State to prove
unlawfulness beyond a reasonable doubt.             The test for unlawfulness is the objective
reasonableness test (also known as the boni mores test, or the test of the legal conviction of
society).


4.      Prejudice or potential prejudice must exist. The act of misrepresentation in cases of
fraud must have a consequence or consequences (viz. prejudice or potential prejudice)


        There are two types of prejudice, which come into play here: that of PROPRIETORY
        PREJUDICE and NON PROPRIETORY PREJUDICE.


        With Proprietary prejudice, the person acts on the grounds of a misrepresentation, and
        then suffers economic loss, which he would not have suffered had he not acted on the
        misrepresentation. For example, a client invests in a single premium endowment policy
        on the basis of a misrepresentation by the advisor that the maturity value is guaranteed,
        when in fact it is not. The client will suffer Proprietary loss upon maturity, which he
        would not have suffered, had he not acted on the misrepresentation and taken out the
        policy.




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5.      There must be an intention to misrepresent. For fraud the element of culpability is
INTENT, or the Intention to defraud. The intention of the perpetrator must be directed at the Act
of misrepresentation (that the perpetrator wants to cause a specific consequence of prejudice).
It must also be directed at the element of unlawfulness of the act (i.e. the perpetrator must have
an awareness of the unlawfulness of his act.)




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    2.16 Research Task - Legal Recourse (AC 2.2)
    The term “Legal Recourse” means that the party who has been offended by the actions of
    another party, in some criminal or civil way, has a route to follow, using the law of South Africa,
    in order to get restitution.


1         You are required?

     To examine the legal recourse available to the healthcare benefit administrator in
     cases of fraud. Provide authentic examples and where possible state the
     legislation applicable.



     2 Example 1




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 3 Example 2




 4 Example 3




Completed By:            Signed   Date

Assessed BY              Signed   Date
:
Moderated By             Signed   Date

Comments




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Unit Standard No.12321                                                                            Page 41

2.17 Task – The cost of Fraud

 Required to do?

 Read through the article below and make a summary of the impact and cost of fraud in
 Medical Scheme Insurance.



Medical aid fraud swallows up R2bn
Kickbacks affect the quality of care, writes Adele Shevel - Location:
Sunday 29 Jun 2003. Business news
A shocking R2-billion in medical aid contributions is lost to fraud every year, contributing to spiraling
medical costs and damaging the financial status of medical schemes - and that could be only the tip
of the iceberg.
Medical aid officials canvassed by the Sunday Times say between 5% and 25% of the R40-billion
collected from contributors every year is lost to fraud.

This means that as much as R10-billion might be lost to white-collar crime if kickbacks and over-
servicing - when doctors see patients unnecessarily - are included in the fraud definition.

Bafana Nkosi, principal executive officer of Bonitas, South Africa's second-largest open medical
scheme, estimates that 10% of claims payouts are fraud-based.

Bonitas collects contributions of about R3.8-billion a year, so this equates to around R380-million.

Marius Smit, manager of forensic services at Discovery Health, says between 10% and 25% of
claims submitted are fraudulent or otherwise abusive, including unnecessary over-servicing and
kickbacks.

"If you can cut down on fraud and abuse, there may be more money to pay more," says Smit.

Equally worrying, he says kickbacks and rebates are affecting the quality of care.

Treatment is determined not by what is best for you but by where the provider can receive the
biggest kickback or rebate.

Gary Taylor, managing director at Medscheme's group services division, does not place fraud higher
than 5% in the industry.

But he says: "You don't know what you don't know."

Medscheme recovered R35-million from doctors last year alone and paid this money back to the
schemes it administers.

Meanwhile, it paid out R12-billion in claims.

Taylor does not define over servicing, as fraud although he maintains there is a blurred line between
fraud and unnecessary expenses. He says Medscheme pursues civil, criminal and professional
routes to counter fraud.

The large administrators have poured millions into hi-tech systems and investigations to counter
fraud.

Medscheme and Discovery Health each has around 20 people working in an investigative capacity.
They both have hotlines for people to phone in with tip-offs and, in some instances, give financial
incentives to do so.


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Herc Hoffman, chief executive manager of Multimed administrators, says the industry does not
currently pool resources to combat fraud - and that it needs to do so.




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Summary

Problem                              Financial Impact / Cost




    Completed By:           Signed   Date

    Assessed BY             Signed   Date
    :
    Moderated By            Signed   Date

    Comments




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In South Africa the law does not only provide for activities that are considered to be illegal, but
also provides for activities that are considered undesirable. Read through the following
publication for the Medical Schemes council.

2.18 Medical Schemes Act – Amendments and Declarations
                         COUNCIL FOR MEDICAL SCHEMES
                 MEDICAL SCHEMES ACT, 1998 (ACT No. 131 of 1998)
             NOTICE OF INTENTION TO PUBLISH UNDESIRABLE BUSINESS
             PRACTICE DECLARATION IN TERMS OF SECTION 61(2) OF THE
                 MEDICAL SCHEMES ACT, 1998 (ACT No. 131 of 1998)

In terms of section 61(2) of the Medical Schemes Act, 131 of 1998, the Registrar of Medical
Schemes hereby publishes his intention to make the following undesirable business
practice declaration. Written representations are invited in respect of the proposed
declaration, to reach the Registrar of Medical Schemes no later than 21 days after
publication of this notice.

Representations should be addressed to:
The Registrar of Medical Schemes (Attention: Stephen Harrison),
Block E, Hatfields,
1267 Pretorius Street,
Hatfield,
Pretoria,
or e-mail: s.harrison@medicalschemes.com.

DRAFT DECLARATION
The Registrar of Medical Schemes, with the concurrence of the Council for Medical
Schemes and the Minister of Health, hereby exercises the powers conferred on him by
section 61(1) of the Medical Schemes Act, 131 of 1998, to make the following declaration.

It shall be an undesirable business practice –

    a. for a medical scheme to differentiate the quantum of commissions offered to brokers
       for the introduction of members to the scheme based upon the anticipated claims
       experience, age, health status or employment status of the members being
       introduced;

    b. for a medical scheme to pay less commission to brokers for the introduction of
       individual members than the per capita amount payable in respect of introduction of
       members who form part of a group;

    c. for a medical scheme, a broker or any other person who renders contractual,
       administrative or intermediary services in respect of a medical scheme to provide
       any monetary or other incentive or disincentive to a broker or an employer to
       discourage older or less healthy persons from becoming members of a particular
       medical scheme or to encourage the admission of younger or more healthy
       members to a medical scheme in preference to older or less healthy members;

    d. in circumstances where an employer offers its employees a choice of more than one
       medical scheme to which they may belong, for a medical scheme, a broker or any
       other person who renders contractual, administrative or intermediary services in
       respect of a medical scheme in any way to –


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    i.      coerce or unduly influence any employee to leave or join any one of such
            medical schemes;
    ii.     promote the separation between such medical schemes of pensioner members
            from active employees;

    e. for a medical scheme, a broker or any other person who renders contractual,
       administrative or intermediary services in respect of a medical scheme to offer any
       inducement or in any other way to attempt to persuade, coerce, or otherwise
       influence the splitting of employer groups between medical schemes on any arbitrary
       grounds, including but not limited to anticipated claims experience, age, health
       status or employment status;

    f. for a medical scheme to selectively apply waiting periods according to the
       anticipated claims experience, age or health status of prospective members.

The specificity of any one of the above paragraphs should not be construed in any way to
derogate from the generality of any of the other paragraphs of this declaration.

T P Masobe
REGISTRAR OF MEDICAL SCHEMES




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2.19 Task – Offences and Penalties

 Required to do?

 According to the Medical Schemes Act 131of 1998, in Sections 66 –68, the South African
 government makes reference to a number of offences and penalties which could occur and
 or may be imposed on and scheme or an individual. Make a summary of those offences that
 are listed as well as look in the act for reference to misrepresentation on an application form
 and how this is dealt with.

 Note: The Act has been provided to you in the additional information section.




 Completed By:                  Signed                          Date

 Assessed BY                    Signed                          Date
 :
 Moderated By                   Signed                          Date

 Comments



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  2.20 Time to reflect
  Take ten minutes away from all disturbances and reflect on what you have leant. Make a
  bulleted point summary on the main facts. Also indicate to yourself if you need to
  examine anything in your own workplace.

NOTES




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Unit Standard No.12321                                                                  Page 48




3 MODULE 3: Demonstrate knowledge and understanding of internal
  processes around the investigation of fraud in Healthcare Benefits
  Administration.
        LEARNING OUTCOMES

    1. The internal policy relating to fraud is described for a particular Healthcare Benefits
       Administrator, or case study.

    2. The procedure followed if fraud is suspected is explained with reference to a particular
       Healthcare Benefits Administrator, or case study.

    3. The process followed in order to gather evidence and present a case is described with
       reference to a particular Healthcare Benefits Administrator, or case study.

    4. Tools that are available for information management are described with reference to a
       particular Healthcare Benefits Administrator, or case study.




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     3.1 GENERIC ANTI-FRAUD PLAN OUTLINE
     In South Africa, Corporate governance is quickly becoming an important part of our commercial
     and public activities. One of the recommendations of good corporate governance is to have an
     authentic fraud policy for your organisation. Consider the task below.


The following generic anti fraud plan outline has been supplied for reference purposes only and does
not purport or are complete or specifically correct for any particular company or organisation.



     Pursuant to (insert relevant statutory information), (“XXX”) Company submits the
     following Anti-Fraud

     Plan and/or Special Investigative Unit description.

     This plan sets forth specific instructions to detect, investigate and report insurance fraud,
     including, but not limited to internal fraud, all lines claim fraud, premium fraud, health care fraud,
     PIP fraud, viatical fraud, insolvency fraud, application and underwriting fraud.

     Description of X X X Company

     Description of relationship between X X X Company and investigative third-party Vendor

     The components of XXX Anti-fraud plan are as follows:

     I. Detection and Investigation of Insurance Fraud – for viatical companies Include procedures
     for resolving material inconsistencies between Medical records and insurance applications
     II. Education and Training
     III. Reporting Insurance Fraud
     IIII. Description or Chart of Organizational Arrangement of Personnel

     PROCEDURES FOR DETECTION AND INVESTIGATION OF INSURANCE FRAUD

     Detection

     Describe procedures/red flags for detection. Are claims adjusters aware of “red flags” for
     possible insurance fraud? What are the “red flags”, by coverage line, if possible?
     Are viatical sales agents, brokers and settlement providers, and underwriters aware of “red
     flags” that could indicate a “material inconsistency” between medical records and insurance
     applications? What are the red flags?

     a. XXX Company receives fraud and/or suspicious claim referrals from the following sources:
     LIST SOURCES, examples: Hotline for Reporting Suspected Fraud Acts
     b. Insurance Fraud Detection and Tracking Technology

     (1) Describe technology tools currently used
     (2) Database or System used
     (3) How will technology tools help fight fraud?

     B. Investigation
     1. Referring Claims to the SIU

     How is this accomplished? Is claims staff and other staff/agents sufficiently trained to recognize
     possible fraudulent acts? Do they know “red flags” of suspicious claims? (See above)

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2. Investigative Process
Describe procedures within each of the following sections
(a) Initial handling of the referral
(b) Evaluating the referral
(c) Planning the investigation
(d) Conducting the investigation
(e) Closing the investigation

I. EDUCATION AND TRAINING

A. Employee Education/Training
Describe how the company conducts fraud awareness training, etc, including tools, manuals.

B. SIU Investigator Education/Training
Describe backgrounds of SIU team; description of orientation of investigators to follow these
anti-fraud procedures; and on-going training, including manuals, seminars, continuing
education, etc.

I. REPORTING INSURANCE FRAUD

A. Describe procedures for the mandatory reporting of suspected acts of insurance fraud to the
XXX Division of Insurance Fraud, pursuant to relevant law.

B. Can the company track the cost of insurance fraud? Document the
losses, savings, recoveries on suspected acts of insurance fraud

IV. WRITTEN DESCRIPTION OR CHART OUTLINING ORGANIZATION
ARRANGEMENT OF PERSONNEL

Provide a written description or chart outlining the organizational arrangement of the insurer’s
anti-fraud and SIU personnel who are responsible for the investigation and reporting of possible
fraudulent insurance acts

Additional information may be included in the anti-fraud plan. Examples could include
memberships in anti-fraud organizations, anti-fraud consumer/employee hotlines, and computer
tracking database system for input and record keeping purposes.




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    3.2 Research Task – Internal Fraud Policy (AC 3.1)
    “Every country and company that deals with other peoples money has a policy concerning
    fraud”.


5       Required to do?
    Take a look at the generic fraud policy provided to you in the additional notes to this unit
    standard, and together with your own company (or a case study) internal fraud policy,
    examine the similarities and differences. Make special notes about legislation that is
    specific to your industry.

    Generic Policy                                  Internal Company Policy
    Similarities




    Differences




                                       Common Legislation




    Completed By:                     Signed                          Date

    Assessed BY                       Signed                          Date
    :
    Moderated By                      Signed                          Date

    Comments




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3.3 Task - Tools Available
Information technology has taken over the administration of modern administrative systems,
thus allowing us to gather large amounts of data. However, the gathering of data is an useless
exercise if we are not prepared to develop tools to analyse these data sets.

3.4 Research Task - Interview

    You are required to design and conduct and interview with your information technology
    department, examining what tools are available in respect to the following.

          Data Mining
          Over payment and underpayment of claims
          Double payment of claims
          Change controls, in respect to banking details or other personal details
          Preferred supplier payments
          EDI claims and exception reports – the handling there of (Claims processing
           department may give you more info on this.)

    Once you have conducted your interview and gathered the relevant data, you are required
    to compile a one-page report on the tools available for your organisation

.




Completed By:                    Signed                        Date

Assessed BY                      Signed                        Date
:
Moderated By                     Signed                        Date

Comments




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3.5 Research Task – Fraud Procedure and Process (AC 3.2 and 3.3)
If a fraud has been committed (or is suspected) against your company (or a case study), you as
the investigating person will be required to follow a procedure of identifying this fraud, followed
by a process of gathering evidence in order to present the case.

 Required to do?

 To compile a presentation (may be presented orally or in a written statement) to your head of
 department, detailing the process you would normally follow and then the process of gathering
 the evidence in respect to this (suspected) fraud.

 HINT
 Take a good look at your internal company policy document or if you do not have such a
 document, take a look at the generic one supplied in the additional notes to this unit
 standard. You are also required to examine the Law of Evidence and make sure that you
 are operating within the bounds of South Africa’s Law.


 Assessment Check List
                                                                         Presented
                                                           Presented                                  Needs
 No                      Assessment Criteria                            in a written   Competent
                                                             Orally                                   Work
                                                                           format
 1     Company procedure document is identified.
 2     Learner can demonstrate knowledge of the
       procedure.
 3     Learner is able to demonstrate practical
       application of the procedure
 4     Learner is aware of the process followed to
       gather evidence and can show knowledge of
       the process in a logical and sequential manner.
 5     Learner can demonstrate knowledge of the
       Law of Evidence
 6     Learner is able to prepare the case for
       presentation in the required company format (If
       using a case study, presentation must be
       logical and presentable).
 7     Learner can demonstrate integration of the
       company process and any legal requirements.
 8     Learner is able to communicate the
       presentation in such a way as to convince his /
       her head of department that the case has merit
       or is not worth following.

 Completed By:                      Signed                       Date

 Assessed BY                        Signed                       Date
 :
 Moderated By                       Signed                       Date

 Comments




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 3.6 Time to reflect
 Take ten minutes away from all disturbances and reflect on what you have leant. Make a
 bulleted point summary on the main facts of this module. Also, indicate to yourself if you
 need to examine anything in your own workplace.


NOTES




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Unit Standard No.12321                                                                   Page 55



4 MODULE 4: Analyse trends and the impact of fraud in a Healthcare
  Benefits Administration environment.
LEARNING OUTCOMES

    1. A case study of a data set is compiled and trends in the data are identified to provide a
       benchmark against which to measure suspicious incidences in own work situation.

    2. Data is analysed to establish trends in statistics generated by a Healthcare Benefits
       Administrator.

    3. A recommendation for possible corrective measures is made based on an identified
       trend or suspicious incidence.

    4. The potential impact if fraud is not identified and managed is described for a particular
       case study.




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4.1 Research Task - The analysis of trends and the impact of fraud
    (AC 4.1- 4.3)

 Required to do?
      1.         Compile or extract a set of data from your database and identify trends in the data,
                 which could provide a benchmark against which to measure suspicious incidences.
                 Should you not be able to do this, examine the data set following this exercise and
                 use it for the purposes of this task.
      2.         Using this same set of data examine it for any statistics that it could provide. Look at
                 items such as number of lines per script, over prescribing or double prescribing.
      3.         Provide a recommendation for possible corrective measures based on the above-
                 identified trend.
      4.         Make reference to a particular case study you have obtained in your workplace.

 NB: This exercise requires you to research a particular treatment protocol for diabetes.
 Please refer to your managed care department for information.

 Note:
 Your facilitator may provide you with raw data sets standard. Should you not be able to
 extract a live set from your own database, please feel free to use these.

 Further more there is no correct answer to this task as every data set is going to be
 different and therefore from an assessment point of view, you will be assessed according
 to your ability to extract, analyse and recommend corrective actions.


                                                                 Type of evidence
 No                        Assessment Criteria                                      Competent   Needs Work
                                                                    presented
 1     Learner is able to extract, or is able to
       demonstrate knowledge, on how to extract a
       set of data from a live database. Learner
       should be able to specify the data set and what
       he or she is looking to achieve through the
       extraction process.
 2     Once the learner has extracted the data set, he
       or she, is able to provide the necessary
       benchmark trends and is able to use a tool to
       extract or identify these trends.
 3     Learner is able to demonstrate the procedure
       on how to gather the relevant statistics
       required.
 4     Learner is able to compile a report or document
       that demonstrates his understanding in
       attention to detail.
 5     Learner is able to compile a report that
       provides recommendations for possible
       corrective measures based on the above
       identified trends or suspicious incidences.
 Completed By:                        Signed:                        Date:

 Assessed By:                         Signed:                        Date:
 :
 Moderated By:                        Signed:                        Date:

 Comments:




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Data Set – As extracted from XYZ data records of A medical Scheme

On suspicion of a member defrauding the medical scheme, you have extracted the following set
of data from your database. You are required to carefully consider the following.

Some information about your scheme,

       Average number of claims per beneficiary per year = 2.5
       Average value of a claim = R300.00
       Average lines per claim = 4.

You also mentioned that the spouse of this member is a chronic user for Hypertension and
Diabetes (Insulin Dependent). The age of your principal member is 45 years and your
dependent is 36 years.

On further investigation, by checking with Dr. Zeus (who is listed as the house doctor), you
discover that the spouse is only taking insulin twice a day and that on average uses about 45
units per injection. Approx 1350 units of insulin is prescribed per month

Medication and its uses.

Diabetes – Humalog Insulin – Short lasting.
Cholesterol - Lipitor 20 mg
Hypertension – Zesteril, Zestoritic, Plendil.




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Data Set

           Claim Date    Prescribing Doctor   Medication          Value
           15/01/03      Dr. Zeus             Humalog Insulin     R3300.00
                                              Lipitor 20 mg
                                              Zestoritic 5mg
                                              Plendil 5 mg
                                              Needles 30
                                              Glucose measuring
                                              sticks 30
           23/01/03      Dr. Zeus             Humalog Insulin     R1500.00
                                              30 Needles
           14/02/03      Dr. Zeus             Humalog Insulin     R3300.00
                                              Lipitor 20 mg
                                              Zestoritic 5mg
                                              Plendil 5 mg
                                              Needles 30
                                              Glucose measuring
                                              sticks 30
           21/02/03      Dr Swindler          Zesteril 20mg       R450.00
           12/03/03      Dr. Zeus             Humalog Insulin     R3300.00
                                              Lipitor 20 mg
                                              Zestoritic 5mg
                                              Plendil 5 mg
                                              Needles 30
                                              Glucose measuring
                                              sticks 30
           25/03/03      Dr Spindle           Humalog Insulin     R1500.00
                                              30 Needles
           29/03/03      Dr Spindle           Face Wash           R462.25
                                              Revlon Make Up
           10/04/03      Dr. Zeus             Humalog Insulin     R3300.00
                                              Lipitor 20 mg
                                              Zestoritic 5mg
                                              Plendil 5 mg
                                              Needles 30
                                              Glucose measuring
                                              sticks 30
           15/04/03      Dr Snider            Pregnancy test      R65.00
           26/04/03      Dr Swindler          Humalog Insulin     R1500.00
                                              30 Needles
           8/05/03       Dr. Zeus             Humalog Insulin     R3300.00
                                              Lipitor 20 mg
                                              Zestoritic 5mg
                                              Plendil 5 mg
                                              Needles 30
                                              Glucose measuring
                                              sticks 30
           12/05/03      Dr Spindle           Band aids           R450.23
                                              Revlon makeup
           16/05/03      Dr Swindler          Humalog Insulin     R1500.00
                                              Needles 30
           25/05/03      Dr. Zeus             Panados – 50        R300.45
                                              Vick Medi night




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 Unit Standard No.12321                                                         Page 59

 4.2 Time to reflect
 Take ten minutes away from all disturbances and reflect on what you have leant. Make a
 bulleted point summary on the main facts. Also, indicate to yourself if you need to
 examine anything in your own workplace.


NOTES




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Unit Standard No.12321                                                                    Page 60

5 MODULE 5: Explain control mechanisms used to contain fraud in
  Healthcare Benefits Administration.
LEARNING OUTCOMES

    1. Possible control measures that could be used to manage fraud are listed for at least
       three parties.

    2. The risk if a Healthcare Benefits Administrator does not implement adequate control
       measures is explained with reference to the Healthcare Benefits Administrator, providers
       and members.

    3. The role of a quality control programme is described in terms of managing fraud.




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5.1 Control Measures
Fraud is one on of the most difficult things to spot and to combat. It is only through effective
systems, and strict adherence to these systems, that one becomes aware of what is going on.

In the following tables a number of areas have been identified along with the potential risks. A
procedure, or a system to combat the fraud has been included in the tables

Please note: that this list is by no means complete as every organisation is different and will
exposes itself in one or more areas. It is only to be used as a guideline.


                         The below tables are only suggestions. Whilst reading through them
                         make notes for yourself and / or add in anything that you can think of
                         which relates to your own work place.



 Risk Area               Potential Dangers    Solution / Procedures and Systems
                         Theft of equipment   Access Cards
                         Theft of personal    Logging of register
                         belongings           Restriction of facilities
                         Damage of
                         equipment

 Entrance of                                  All staff must be issued with access cards and
 staff                                        denied access to unauthorised areas e.g.
                                              storeroom, computer room.
 Access to                                    Staff should be restricted to that which is required
 Equipment                                    within their job description.
                                              All important and valuable equipment must be
                                              locked in a designated room with the necessary
                                              security and entranced should be restricted.
                                              All equipment being used must be logged on a
                                              register.


 Access for                                   All equipment being taken off the premises must be
 removal of                                   authorised by management and must be restricted
 assets                                       to designated staff member(s)
                                              All equipment leaving the building must be
                                              accompanied by a release note and must be
                                              checked by security.
 Personnel                                    All Staff should take extra care of their belonging by
 belongings                                   using their lock-up desks and by ensuring that
                                              offices are locked. In the event of theft,
                                              management should conduct a search.
                                              Management should also conduct spot check on a
                                              regular basis.




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 System                  Potential Danger     Solutions             Procedures                 Sys
 Access                                                                                        tem
                         Invalid/incorrect    User access
                         processing           Identification
                         Erasing of data      Batch control
                         Manipulation of      Validation
                         data                 Audit Trail
 User Access                                  Authorisation
                                              Restriction of programs
                                              All staff access must be compiled by supervisors
                                              and authorised by management.
                                              Access given to staff must be documented.
                                              Access control on system must be restricted to a
                                              designated staff member.
                                              The system has a built in user access and
                                              identification control to detect unauthorised use.
                                              All terminal must be loaded with software relevant
                                              only to staff’s functions and responsibility.
                                              Audit trail must record all transaction and must be
                                              easily accessible by management

                                              .
  Terminal                                    Computer should be loaded only with the relevant
 access                                       software.
                                              System detection for unauthorised use of terminals.
                                              Terminal to switch off when unauthorised entry is
                                              attempted
                                              .

 Banking                                     Segregation of duties
 details                                     Documentations
 Cheque                                      Authorisation
 Refunds                                     Rotation of duties
                                             Department on proper requisition must initiate all
 Bank detail
                                             cheque refunds.
 changes
                                             Designated person to authorise and forward to
                                             finance.
                                             Audit Trail
                                             All documents must be fully completed and submitted
                                             with a cancelled cheque. This must be authorised by
                                             the department responsible for change.
                                             A designated individual must make change.
                                             All changes must be properly documented and filed
                                             for future reference Audit trail
                                             System detection for unauthorised use of facility
                                             .




INSMAT final materials                                                                        31/10/03
Unit Standard No.12321                                                                    Page 63

5.2 Task

 Required to do?

 Within your own organizational structure, and taking a look at the matrix provided above, identify
 three possible control measures that could be used to manage fraud in your organisation. Make
 sure that your examples make reference a minimum of three parties that could be involved.




 Completed By:                  Signed                         Date

 Assessed BY                    Signed                         Date
 :
 Moderated By                   Signed                         Date

 Comments




INSMAT final materials                                                                    31/10/03
Unit Standard No.12321                                                                  Page 64

5.3 Task – Examining Risk
Required to do?

Using the information provided to you above, as well as and information gained within your own
organisation Draw a mind map that examines the risk of a Healthcare Benefits administrator that
does not implement adequate control measures. Please explain with reference to the Healthcare
Benefits Administrator, providers and members
The mind map diagram below is only a suggested structure. Add in other blocks as
required.




 Completed By:                  Signed:                       Date:

 Assessed By:                   Signed:                       Date:
 :
 Moderated By:                  Signed:                       Date:

 Comments:




INSMAT final materials                                                                  31/10/03
Unit Standard No.12321                                                                    Page 65

5.4 Task – Quality Control Programme (AC 5.3)
A quality control programme that controls fraud is perhaps the best way to prevent fraud in an
organisation.

 Required to do?

 Looking at the glossary of Quality Control terms (provided to you in the additional items section
 of this unit standard) write a short paragraph (10 Lines) on how a quality control programme
 could be used in your organisation to control, manage and prevent fraud.

 Pay special attention to the quality control programme of your own company, it you have one,
 and identify ways that it could made better.




 Completed By:                  Signed:                         Date:

 Assessed By:                   Signed:                         Date:
 :
 Moderated By:                  Signed:                         Date:

 Comments:




INSMAT final materials                                                                    31/10/03
   Unit Standard No.12321                                                            Page 66

   5.5 Time to reflect
   Take ten minutes away from all disturbances and reflect on what you have leant. Make a
   bulleted point summary on the main facts of this module. Also indicate to yourself if you
   need to examine anything in your own workplace.

NOTES




   INSMAT final materials                                                            31/10/03

								
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