Fraud and abuse pose a silent threat to healthcare sustainability

Medical schemes define fraud as deliberate misrepresentation – whether it's billing for services never rendered, upcoding procedures, or collusion between providers and members. Abuse, while sometimes less clear-cut, refers to practices that take unfair advantage of scheme rules, driving costs higher without delivering genuine value to patients.

In South Africa, where healthcare costs already strain household budgets and system resources, these practices are particularly damaging. Fraud not only harms the finances of medical schemes but also undermines affordability, reduces the scope for benefit enhancements, and erodes trust between members and their schemes.

Understanding the impact

Globally, it is estimated that up to 15% of healthcare claims may be tainted by fraud, waste, or abuse. In South Africa, this translates into billions of rand lost each year, as evidenced by the 2023 estimate that the healthcare sector had lost R30bn to fraud, waste, and abuse. The consequences are felt directly by members, who face rising contributions, reduced benefits, or both.

Encouragingly, Medshield's proactive approach is proving effective. In 2024, forensic reviews and claim interventions delivered nearly R16m in measurable savings, with a return on investment of over 250%. It demonstrates that careful, targeted investment in fraud prevention not only pays for itself but multiplies the value of every rand spent.

Fraud in healthcare is often sophisticated, but specific patterns recur:

• Phantom billing – charging for services never provided.
  
• Upcoding – claiming for more complex or costly services than those delivered.
  
• Service inflation – conducting and billing for unnecessary tests or procedures.
  
• Identity fraud – impersonating members to submit illegitimate claims.

In 2024, South Africa experienced a 337% increase in impersonation fraud, with syndicates targeting both healthcare and banking sectors. Cases investigated included providers misrepresenting patient records or even hiring impostors to treat patients under another practitioner's name. These examples illustrate the inventive and damaging tactics employed by fraudsters.

Medshield's multi-layered response

Recent industry case studies highlight how fraud can manifest in diverse ways. In one instance, phantom claims were submitted for services that never occurred but were identified and stopped before they could escalate into significant losses. In another case, hospital billing practices were reviewed when catheterisation laboratory procedures were incorrectly paired with major theatre charges, leading to corrective action and stronger controls. These examples illustrate how vigilant oversight not only prevents financial leakage but also safeguards the integrity of healthcare systems.

At Medshield, fraud prevention is not simply an administrative task. It is a strategic imperative grounded in protecting member value. Our approach spans several layers:

• Technology-enabled detection – artificial intelligence and predictive analytics scan claims in real time for irregular patterns or anomalies.

• Targeted audits – both random and focused audits are performed, particularly in high-risk areas such as specialised procedures or hospital billing.

• Provider accountability – collaborations with professional bodies have led to constructive resolutions where billing irregularities were identified, creating a positive ripple effect across entire networks.

• Frontline vigilance – claims assessors and customer-facing teams receive specialist training to identify potential fraud before funds are disbursed.

• Collaboration – Medshield participates in industry-wide forums and public–private partnerships that enable data-sharing and collective action. Our forensic partners were even recognised globally in 2024 by the Association of Certified Fraud Examiners (ACFE), reflecting the calibre of expertise applied to protecting our members.

Fraud prevention is not without its challenges. Fraudsters continually evolve their tactics, and emerging technologies such as artificial intelligence now pose risks in the form of synthetic identities and deepfakes. Meanwhile, schemes must strike a balance between robust oversight and a smooth, member-friendly claims process.

Yet the opportunities are equally compelling. By expanding collaborative initiatives, strengthening data-sharing platforms, and adopting more advanced analytics, medical schemes can set new standards for fraud prevention.

A shared responsibility

Fraud prevention is most effective when everyone is part of the solution. Members are encouraged to review their claims, understand what services they should expect, and use anonymous reporting channels if they spot suspicious behaviour. On the provider side, most practitioners act with integrity, but isolated cases of abuse can harm the entire system. By combining audits with constructive engagement, Medshield promotes accountability without casting suspicion on the profession as a whole. The goal is not only to prevent abuse but also to encourage ethical practices that benefit all stakeholders.

Underlying all of these measures is Medshield's zero-tolerance stance on fraud, waste, abuse, and corruption. This commitment is reinforced by training, codes of conduct, and whistleblower hotlines that empower employees, providers, and members to report suspicious behaviour safely and anonymously. Medshield also demonstrated its industry leadership by signing the Fraud, Waste & Abuse Industry Charter in 2019, pledging – alongside regulators and sector stakeholders – to eliminate wasteful practices, improve transparency, and support a more sustainable funding model for healthcare.

Ultimately, fighting fraud is about more than money; it is about fairness. Every fraudulent claim undermines the solidarity principle that defines medical schemes: members pool resources so that those in need can access care. At Medshield, our responsibility is to safeguard this principle.

By investing in robust detection systems, building partnerships, and fostering awareness among members and providers, we ensure that the Scheme remains sustainable, affordable, and trusted. Fraud may be complex, but with vigilance and collective commitment, it can be contained. Protecting our healthcare system from abuse today ensures that tomorrow's members inherit a stronger, more resilient scheme.