THE RESILIENCE TO FRAUD OF MEDICAL SCHEMES IN SOUTH AFRICA

Transcription

1 THE RESILIENCE TO FRAUD OF MEDICAL SCHEMES IN SOUTH AFRICA Presentation to the Board of Healthcare Funders of Southern Africa August 2013 Jim Gee Director of Counter Fraud Services, BDO LLP Visiting Professor and Chair of the Centre for Counter Fraud Studies at University of Portsmouth, UK Copyright August 13 BDO LLP. All rights reserved.

2 JIM GEE Director of Counter-Fraud Services at BDO LLP Visiting Professor and Chair of the Centre for Counter Fraud Studies at University of Portsmouth

3 WHAT WILL BE COVERED Background The modern approach : focussing on fraud as a business cost like any other Measurement is essential to management Fraud loss measurement: measuring the cost of fraud Fraud resilience: a measure of protection against fraud The Self-Assessment Fraud Resilience (SAFR) tool The Resilience to Fraud of Medical Schemes in South Africa - Our research on HFMU members - Our findings and our report - Our recommendations Questions

4 BACKGROUND 28 years a Counter Fraud Specialist Advisor to UK Parliamentary Select Committee Chief Executive of the UK NHS Counter Fraud Service Senior Civil Servant at Department of Health Director-General of the European Healthcare Fraud and Corruption Network countries Senior advisor to the UK Attorney-General, 3 Secretaries of State and 5 Ministers Has advised the Chinese and New Zealand Governments on healthcare fraud Has worked with companies in the UK as well as more than 35 other countries, most recently Zambia, Indonesia and Cameroon

5 A NEW APPROACH OLD STYLE APPROACH pay and chase pick & choose Considered enough to merely do something - anything! Focused on activities (e.g. investigations) Perceptions based on anecdotal information or cases which have come to light Cannot quantify effects or track benefits to the organization MODERN APPROACH Proactive and comprehensive Identifies and applies exactly the right solution Focused on outcomes (e.g. reduced losses) Statistically sound and legally founded method of measuring fraud Seeks to pre-empt fraud not just react to it Quantifies the reduction in fraud losses and tracks tangible financial benefits

6 MEASURE TO MANAGE Reliable data lies at the heart of good decision making In the case of fraud there are two key metrics: 1. How well protected is my organisation against fraud? (How fraud resilience is it?) 2. How much does fraud cost my organisation? If you don t know where you are well or badly protected how can you make improvements? If you don t know how much fraud costs how can you make the right level of investment in counter fraud work?

7 FRAUD LOSS MEASUREMENT The last 15 years In the UK NHS from 1998 US Improper Payments Information Act 2002 European Healthcare Fraud and Corruption Declaration 2005 The UK Government Fraud Review 2006 US Improper Payments Elimination and Recovery Act 2010 The Financial Cost of Healthcare Fraud Report 2009, 2011 (and soon 2013) The first guide to fraud loss measurement (2010) The Short Guide to Fraud Loss Measurement

8 WHAT THE DATA SHOWS 2011 research (to be updated very shortly) Excluding any figures based on detected or reported fraud or guesstimates or surveys of opinion The Financial Cost of Healthcare Fraud Report loss analysis exercises in 33 organisations in 6 countries covering 14 different types of healthcare expenditure with a total value of over US$1.6 trillion (15.7 trillion Rand) Lowest measured loss = 3% Highest measured loss = 15.5% Global average loss = 7.29% Reductions of 40% in 12 months achieved

9 HOW CAN THIS BE ACHIEVED? PROBLEM STRATEGY PRE-EMPTIVE STRUCTURE ANTI FRAUD CULTURE DETERRENCE PREVENTION An organisation which is resilient to fraud has all of this in place DETECTION INVESTIGATION SANCTIONS REDRESS ACTION DELIVERY REACTIVE

10 THE IMPORTANCE OF FRAUD RESILIENCE The better protected an organisation is the less it will lose to fraud Fraud resilience is a Government accepted measure rooted in the CIPFA Managing the Risk of Fraud standards and developed by BDO and the Centre for Counter Fraud Studies at University of Portsmouth 29 different factors; a maximum rating of 50 points; has been applied to organisations representing more than 1/5 th of UK GDP We work with the Centre for Counter Fraud Studies at University of Portsmouth. We manage the largest database in the world concerning fraud resilience with data relating to over 700 organisations We provide a helicopter view of how well an organisation is protected against fraud, so weaknesses can be identified and removed and the cost of fraud reduced.

11 WHAT FRAUD RESILIENCE INVOLVES Five main areas: 1. the extent to which an organisation understands the nature and cost of fraud to it as a business problem 2. the extent to which it has an effective strategy in place which is tailored to address this problem 3. the extent to which organisations maintain a counter fraud structure which can implement this strategy successfully 4. the extent to which the structure efficiently undertakes a range of pre-emptive and reactive action 5. the extent to which results are properly measured, identified and delivered 29 different factors

12 THE SELF-ASSESSMENT FRAUD RESILIENCE TOOL Originally developed with the UK Government and the University of Portsmouth Provided free for BHF HFMU members Based on the world s largest fraud resilience database Takes 10 minutes to complete Rates medical schemes (out of a maximum of 50) Ranks them by percentile against all the other organisations in the database Provides an indicative figure for the cost of fraud

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14 A helicopter view of your organisation

15 OUR RESEARCH Our research considered how well members of the Healthcare Forensic Management Unit (HFMU), a division of the Board of Healthcare Funders of Southern Africa (BHF), protect themselves against fraud 17 medical schemes completed the Self-Assessment Fraud Resilience (SAFR) tool as requested by the HFMU Each organisation answered 29 questions about the effectiveness of their arrangements to counter fraud We have published a report today containing our findings

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17 OUR OVERALL FINDINGS Overall fraud resilience rating Fraud resilience rating BHF members Public sector Private sector Charity sector UK NHS

18 BEST AND WORST Medical schemes performed best in the following areas: 100% of medical schemes have arrangements in place to ensure that suspected cases of fraud or corruption are reported promptly to the appropriate person for further investigation 94.1% ensure that reports about work to counter fraud and corruption are discussed at Board level 94.1% have a formal or informal policy setting out how they try to detect possible fraud

19 BEST AND WORST Medical schemes performed worst in the following areas: Only 29.4% of medical schemes use estimates of losses to make informed judgements about levels of budgetary investment in their work countering fraud and corruption Only 29.4% ensure that those working to counter fraud and corruption have received specialist professional training and accreditation for their role Only 47.1% have arrangements in place to evaluate the extent to which a real anti-fraud and corruption culture exists or is developing throughout their organisation Only just over half (52.9%) regularly review the effectiveness of their counter fraud work against agreed performance indicators

20 OUR DETAILED FINDINGS

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26 OUR DETAILED FINDINGS

27 OUR RECOMMENDATIONS Recommendation 1 : Professional training That the BHF HFMU should explore the development and provision of professional training for those undertaking counter fraud work within its member medical schemes. In doing this it should take account of best practice in other countries.

28 OUR RECOMMENDATIONS Recommendation 2 : Fraud loss measurement That the BHF HFMU should seek to obtain more information about the cost of fraud within its member medical schemes and should consider whether a suitable member organisation can be identified to undertake a pilot fraud loss measurement exercise.

29 OUR RECOMMENDATIONS Recommendation 3 : Enhancing fraud resilience That the BHF HMFU should (a) repeat the fraud resilience research across its member organisations each year to track progress and (b) consider if cost-effective arrangements can be put in place to make available detailed fraud resilience reviews for its member organisations.

30 CONCLUSION The report provides new information which was not previously available about where medical schemes are well or badly protected against fraud The analysis provides a map of the medical scheme fraud landscape in South Africa and should inform the work of responsible organisations BHF HFMU members have achieved a respectable score There is still much progress to be made as the BHF HFMU seeks to help its members to be properly protected against fraud and to avoid the unnecessary cost which it represents The information provided in this report should contribute to an Agenda for progress in the years to come Page 30

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