Private Health Insurance: Claims Leakage & Fraud Forum Hon Dr Michael Armitage 29th August 2007 Australian Health Insurance Association

AUSTRALIA 21 million population 10.5 million with PHI 37 health funds 788 public hospitals 293 private hospitals 265 day hospitals 2.5 million private admissions . Overview Australian health system

Instead, the private hospital sector has seen more and more activity as a direct result of the rebate. Overall insured admissions have been progressively rising, from a low of 1.5 million episodes to more than 2.3 million in 2005.

Private Health Insurance: Eases pressure on public system Costs Government less Allows choice Community rated (Sicko!) Despite the facts – the Myths remain!

WRONG! PHI – The Myths Private Health Insurers don’t understand: Members, especially younger Australians Providers/Hospitals Manufacturers Doctors Government/ Regulators WRONG!

PHI – The Myths Members ‘PHI is too expensive’ ‘Premiums keep rising’ ‘PHI just pays for the elective plastic surgery for the wealthy’

Private Health Insurance Not Just for the Rich More than 1 million people with private health insurance live in households with incomes less than $26,000 per annum. More than 2.4 million people with private health insurance cover resided in households that had gross annual incomes below $48,000. Almost half of the overall insured population (4.3 million people) resided in households with gross annual income less than $70,000. All data is sourced from the ABS National Health Survey 2005 and cross tabulated with the Private Health Insurance Administration Council.

PHI: Quality, Costs PHI contributed $8.9 billion 2006/07 (+6.9%) PHI payments for allied health services $2.3 billion (+6.3%) $1 billion for medical practitioners PHI hospital benefits $6.6 billion (+7.1%) 2.6 million treatments in private & public hospitals

Quality & Improved Outcomes Advocate on behalf of 10.5 million members Call for the safest, highest quality health care on behalf of consumers Clinical Effectiveness Clinical Guidelines Clinical Testing Informed Financial Consent

Clinical Effectiveness Drug-Eluting Stents Medical opinion questioning advantage of drug eluting stents over bare metal stents TGA: review of clinical & post market data Drugs vs Stents Studies questioning necessity and safety of stents against improved cholesterol fighting drugs. Chronic Heart Failure Monash study found rate of evidence based management for Congestive Heart Failure low across Australia Metropolitan: 4.6% Rural and regional: 3.9% medical opinion questioning advantage of drug eluting stents over bare metal stents

Clinical Testing Hundreds of patients are undergoing revision surgery for hip and knee joint replacements each year because of failure of new types of prostheses Of the just over 100 new components reviewed by NJRR, none has performed better than previously approved prostheses Establish National Clinical Registries, using the National Joint Replacement Registry as a model, to collect, analyse and report on clinical procedures and outcomes and produce clinical guidelines for prostheses selection Call for clinical testing of new prostheses before they are listed on the Australian Register of Therapeutic Goods

Clinical Guidelines AHIA continue calls for independent body to authorise clinical guidelines – patients want to know their treatments are the most appropriate for their illness Hospital Infection Rates too high (MRSA) New Australian study shows only 35% patients diagnosed with curable rectal cancer are referred for radiotherapy – Clinical Oncology Society says 100% should be referred to prevent recurrence. (Asia Pacific Journal of Clinical Oncology).

Informed Financial Consent The incidence of privately insured patients receiving unexpected gaps remained far too high. Marginal improvement in recent years Government commissioned survey conducted by IPSOS in late 2006 found: that patients receiving a surprise gap payment fell from 21 percent in 2004 to 16 per cent in 2006); that around 900,000 private hospital patients were not told of their fees prior to treatment.

Informed Financial Consent 2nd Consumer survey on IFC in July 2007 Surveyed 10,000 people with recent Private Hospital Admission and PHI fund claim Results should be available in the near future. IFC target of 95% Private Health Insurance Industry understands that there will be occasions when it is impossible to obtain Informed Financial Consent, but these instances should be the exception to the rule.

Conclusion PHI well managed; low profit industry. More and more focus on quality outcomes for members Benefits all Australians

Fraud & Security Committee DOING GREAT WORK (REGULAR REPORT TO EXECUTIVES) Action Items: Implications of bringing modalities onto electronic claiming facilities such as HICAPS Results of hospital audits by health funds Providers under investigation – types of behavior prevalent and the measures that funds are applying to stop this behavior – generally the de-recognition policies, suspending the provider from HICAPS or any electronic claiming methods. Examining generic product design, recommend ways to build in features to prevent fraud Discussions and cooperation with external bodies such as Medicare Australia, Optometrists Association, Optical Dispensers Association

Fraud & Security Committee Committee working with industry to prevent fraud and inappropriate benefit payments, and to minimise the risk associated with unprofessional or inappropriate service delivery to Australians with private health insurance. That’s 10.5 million Australians – and it is important that they are not disadvantaged by the small minority who engage in inappropriate behaviour.

Hospital audits Chart to bill auditing – coder sent in and a statistically appropriate number of hospital charts are examined by an auditor trained in hospital coding. IFC Audits – assess the level of IFC performed by Doctors and the hospital. investigating appropriateness of CCU certificates and pursuing recoveries recovered. looking at DRG creep and statistically looking at miscoding and up-coding.

Health care providers: Suspected unlawful activity by health care providers could include: billing for services not provided up-coding of services (a higher payment is claimed) duplicate billing for the same service inappropriate service delivery that may put the privately insured consumer at risk financially

Health fund members/staff: Suspected unlawful activity for health fund members and health fund staff could include: falsified claims approving benefits relating to their own claims or those of fellow employees creating false services and member claims misappropriating health fund money or property

Code of Conduct - Process Discussion at Executive Fraud and Security Committee tasked with Code Industry consultation on Code content Executive ACCC examination Implementation issues: Privacy, Legal Advice Provider Recognition – must notify to avoid privacy issues – some funds have already done this Liaising with funds on next steps

Intent of the Code of Conduct Allow the sharing of information between health funds relating to provider, staff and members suspected of inappropriate behavior Funds MUST conduct full investigations before taking any action against the provider, staff member or member

Code aims to prevent: Fraud fraud is calculated and intentional very hard to prove small portion of total claims or losses that are recovered Inappropriate behavior represents the majority of investigations by health funds up-coding and miscoding by a provider provider swipes the card against another family member Optical: charging the fund for the deposit, rather than charging the fund when the glasses are received

Cooperative Opportunities Different experiences Different skills Different populations Similar fraudulent behaviour CSIRO, MEDICARE AUSTRALIA, AHIA BENEFITS TO ALL AUSTRALIANS

Fraud & Security Conference Four areas of focus – Hospital, Ancillary, Medical and Regulatory Software to detect and prevent inappropriate behavior What the claims enabling software is doing to stop inappropriate claims (eg HICAPS) Recoveries and prosecution of offenders Different methods to obtain evidence Types of methods used by offenders What the future holds  - electronic claiming and the potential for abuse

Challenge - future. AIM TO HALVE FRAUD BY 50% Code is voluntary and represents a “best practice” model This Forum will build on this significant achievement by examining the extent of fraud within the Australian system, and electronic systems for fraud control. CHALLENGE: Lessons learned from Forum & Code of Conduct AIM TO HALVE FRAUD BY 50%