Student Dissertation

Agency : Health Insurance, Fraudulent Claims, India, Healthcare Industry

Objective : • To understand the dynamics of Fraudulent claims in Health Insurance sector • To do a preliminary assessment of current status of fraudulent claims • To evaluate the role of fraudulent claims in increase of health insurance premiums.

Background : Health insurance is a form of insurance that pays for medical expenses. If you are covered under health insurance, you pay some amount of premium every year to an insurance company and if you have an accident or if you have to undergo an operation or a surgery, the insurance company will pay for the medical expenses. With health insurance providing a world of benefits to people, fraudulent claims are on the rise. Frauds can be committed by anybody. It can be committed by a policyholder, a health insurance company or even its employees. Frauds committed by a policyholder could consist of members that are not eligible, concealment of age, concealment of pre-existing diseases, failure to report any vital information, providing false information regarding self or any other family member, failure in disclosing previously settled or rejected claims, frauds in physician’s prescriptions, false documents, false bills, exaggerated claims, etc.

Methodology : Type of study: Cross sectional Descriptive study Location of Study: Bangalore Study Population: Claim investigators and underwriters of TPA and Health insurance companies in Bangalore area in addition to secondary data. Sample: List of insurance companies/ TPAs generated by applying Simple Random Sampling Claim investigators and underwriters can be selected from the identified insurance companies/ TPAs by Systemic Random Sampling Method. Sample size: Estimated sample of 20 claims investigators and 5 underwriters. Data collection: Basic for the study was secondary data, along with secondary data a research has been conducted through semi structured questionnaire. The key observations in secondary data are given below

Findings : The trend of health Insurance premium which is being raised ten times from 2003-04 to 2011-12 and the claims ratio being constant with the national average of 15 percent fraudulent claims leading to loss of 500-700 crores of Rupees. These losses have to be borne by the insurer by the increased amount of Insurance premium. Investigators opinioned among the cases received about 15 percent from preauthorization and 15 percent cases from claims have gone for investigation with the suspicious case of fraudulency. The opinion of investigators that policy holders are more involved in initiation of fraudulent claims than providers. 60 percent of investigators felt that insurers are aware of these cases The opinion of investigators shows OPD and surgical management cases are more prone for fraudulency. As there is less control over OPD cases it is very much difficult to monitor and control such frauds. Data collected from Investigating Officers shows the number of cases handled, investigations done and the cases found to be fraudulent and also cases approved in doubt since past 1 year. There were 574 fraudulent cases found among 21956 cases when they conducted 6210 investigations. Few cases were approved in case of doubt and lack of proof to show fraudulent. Impact of Fraudulent claims on policy holders and Insurers: Policy Holders: • Claim related delays • Increased premiums • Harassment in processing of payouts, free look cancellations, mis-selling, spurious calls • Loss of trust in the industry Insurers: • Increased costs • Decline in competitive advantage • Erosion of profit margin • reputation loss • jeopardized customer relations • loss of business • regulatory issues

Recommendations : Health insurance industry is growing and being chanted about like the new mantra, but, still India is facing a huge loss in this sector because of the everyday increasing fraud claims. Fraudulent health insurance claim actually is a claim generated to cover or deform information which is designed to provide health care benefits. It seems that the educated people are more involved in fraudulent claims that the uneducated as per the opinion of Investigating officers., They also felt that fraudulent cases are more from stand alone hospitals and tier 1 cities. OPD cases and surgical cases have shown majority in fraudulent claims. Yearly growth rate of Healthcare inflation is 8 to 12 percent and fraudulent claims holds average of 15 percent in India. Investigators also felt that the fraud claim ratio is growing day by day. They have given suggestions to control the fraud through anti fraud squad, technological improvement in investigation, education of policy holders and proper training to employees.