Posted on Feb 20, 2013 by Sergio Ulloa
The first of Now Health International's (NHI) twice-yearly premium adjustments was made on February 1 and saw relatively average increases of about 5% and 6% across most of the countries that the insurance company operates in.
However, there were a few countries, including Bahrain, Oman, Qatar and The United Arab Emirates, that saw increases as high as 8%. The second round of increases will take place in August, and, if medical inflation rates continue on a similar trajectory, the total annual increase for NHI's premiums could reach up to 16%. This is a much higher figure than last year, which saw average rates of increases at about 10% and is also a much higher figure than the previous global rate of inflation for medical costs, also at 10%.
There are few signs indicating that inflation rates will begin to decline in the region, as Middle Eastern
countries continue to rebuild and rebound from the lingering effects of the economic crisis of 2009 and 2010. One reason for the significantly higher premium costs occurring in these countries is related to the widespread fraud that exists in the region.
While many consider insurance fraud a victim-less crime, the costs resulting from insurance fraud are inevitably passed on to the customer. Even though there are few cases of fraud among customers and/or facilities, insurance companies suffer substantial losses in this area. In 2009, the Saudi Arabian Newspaper Al-Hayat reported that companies' losses from fraudulent claims reached about $320 Million US Dollars.
Insurance fraud can occur by both insurance customers and the facilities where customers seek treatment. As of January 2010, the Abu Dhabi Health Authority (HAAD) has taken 39 doctors and patients to court due to their involvement in fraud and scams. Medical facility insurance fraud typically falls into 1 of the following main types of fraud:
Up Coding -
This is when a facility will charge more for a treatment than the cost of what was actually performed. For example, a patient goes to a facility for a regular check-up, but the facility charges for a more serious and more expensive procedure.
This refers to the excessive charging of a certain aspect of a surgical procedure and is an additional fee that would have otherwise been included in the cost of the surgery.
Duplicate Billing -
This occurs when a facility will bill an insurance company twice for the same treatment while giving a second name or different circumstance to attempt to make the claim undetected and gain reimbursement.
Over utilisation -
When the insurance company will provide more treatments than what is medically necessary so that the patient has to stay at the hospital longer or purchase drugs that are not needed.
- This occurs when the facility will charge an insurance company for a treatment or procedure that didn't actually occur.
It is not just the facilities that try to take advantage of the system though, as patients and customers are also able to commit insurance fraud. There are two common categories for patient fraud, which include using a fake card or claiming for a treatment that would usually not have been included on their policy. Fake cards can be easily produced, but it is more common for insured members to give their insurance card to others to use. Additionally, many customers are not completely honest with their medical history, resulting in the claim of a procedure or treatment that the insurance company would have otherwise not covered.
Despite the high levels of fraud, this is not the only reason why premiums continue to see such significant increases in the region. The Middle East is continuously rebounding from the financial crisis and is seeing an increasing number of foreigners relocating to the region as well as an increase in high net-worth locals. These are both contributing factors to the increasing demand for adequate and modern healthcare facilities, which in turn, means high costs.