Healthcare insurance and fraud trends

Michael Frank
ITIC Global 2019

Michael Frank shared his insights at ITIC Global 2019 into the healthcare insurance fraud landscape around the world

Michael Frank, Founder and President of Aquarius Capital, began his presentation with a brief overview of the history of healthcare in the US, with specific reference to healthcare laws that have been passed, as well as the health insurance ‘food chain’. He listed some of the more common healthcare provider fraud schemes, including billing for services not rendered, misrepresenting claims information, incorrect reporting of diagnoses, and procedural corruption. Michael revealed that, in his studies, it had become clear that fraud was greater in countries that had a higher healthcare GDP. Michael also noted that, with insurers moving towards more quickly resolving claims, there was a larger window for fraud, and that though healthcare inflation sat between eight and 12 per cent, price inflation in healthcare had only really increased by one or two per cent a year. Therefore, he reasoned, the remaining six to 10 per cent was likely coming from fraud.

Michael cited an increase in the number of large claims; as per the Tokio Marine HCC announcement that was released in April this year, there was a 28.3 per cent average annual growth rate of claimants in excess of $1 million.

Divulging his own experience of fraud in the healthcare system, Michael noted that the implantable device industry is a huge player in fraudulent healthcare claims. He spoke about his two-hour hip replacement procedure, which required him to stay in the hospital for under 24 hours. Within the hospital in-network bill, he pointed out that he had been billed at 47 times the cost of the service that the hospital had paid for his care, essentially having been required to pay for 11 hips. 

Michael recommended that health insurance be redesigned to ensure that technology can be increasingly implemented to help monitor the care that individuals receive; and said that tracking member utilisation of healthcare services would help detect anomalies in data and, as such, help prevent fraud.