Extensive investigations by law firm ENSafrica and medical scheme administrator Discovery Health have cleared private hospital group Mediclinic of billing fraud at its Southern Africa subsidiary. Mediclinic is owned by JSE-listed Remgro, and owns hospitals in Southern Africa, Switzerland and Middle East.
Mediclinic appointed law firm ENSafrica in August 2023 to conduct a forensic investigation into anonymous claims of billing irregularities at six hospitals in Gauteng and Western Cape. The whistle-blower claimed the ICD-10 codes on patients’ bills were manipulated to inflate the claims submitted to medical schemes.
These allegations were first raised internally more than a decade ago and went public in 2023 after the whistle-blower wrote to more than 50 medical scheme principal officers about the matter, prompting Mediclinic and several medical administrators including Discovery Health and Momentum Health Solutions to launch investigations into the matter.
Mediclinic announced Wednesday that ENSafrica’s forensic investigation, which included staff interviews and a review of more than 120,000 emails and documents from six hospitals named by the whistle-blower and six randomly selected by ENSafrica, concluded there was no intentional manipulation of billing or coding at either hospital or group level. Nor did it find evidence of incentives or direct financial benefits which could encourage Mediclinic and its staff to manipulate patients’ accounts.
Contrary to the whistle-blower’s claim that some emergency room patients had been fraudulently billed as more costly intensive care unit patients, critically ill patients were transferred from emergency rooms to higher levels of care in line with protocols agreed to with medical schemes, said ENSafrica investigator Stephen Powell.
Concerns about billing practices had been reported to Mediclinic’s ethics line in 2011 and 2012 shortly after the company switched its billing to an alternative reimbursement mechanism (ARM) that uses fixed fees for procedures instead of the traditional fee-for-service model.
“When ARM was first introduced, there were errors in interpretation and people struggled to adapt,” said Powell.
“The processes we investigated are complex and we found no evidence of an intentional practice of manipulating billing or coding at a group or hospital level. This is supported by the existence of multiple checks and balances on billing practices,” he said.
Mediclinic Southern Africa CEO Greg van Wyk said while the investigation found some mistakes and billing errors, they were “minuscule” relative to the scale of the group’s operations. “We see about 500,000 patients per annum. From time to time there are mistakes, but some of these errors are to our detriment, and we engage with funders on a regular basis,” he said. In a matter not directly related to the whistle-blower’s allegations, the ENSafrica probe identified one person who had failed to follow Mediclinic’s billing procedures, who had been subjected to disciplinary proceedings, he said.
Discovery Health CEO Ron Whelan said the company’s forensics unit had conducted a thorough investigation into the allegations raised by the anonymous whistle-blower. This included a detailed claims analysis of more than 930,000 Mediclinic hospital admissions, dating back to 2015 and including all Mediclinic hospitals, not only the six hospitals identified by the whistle-blower.
An in-depth audit of case files and hospital records was also conducted to verify and validate the outcomes from the claims analysis. Discovery Health is one of SA's biggest medical scheme administrators providing services to Discovery Health Medical Scheme and more than a dozen smaller, restricted schemes.
Momentum Health Solutions executive head of marketing Damian McHugh said the administrator was close to finalising its investigation. Mediclinic and ENSafrica enabled Momentum to access to files and hospitals and Momentum had compared the information from Mediclinic to claims from other hospital groups.
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