An independent investigation has cleared Mediclinic of wrongdoing following claims that the healthcare group manipulated patient bills for financial gain but identified opportunities where the company could improve its billing practices.

This comes after a comprehensive independent forensic investigation conducted by ENSafrica, one of South Africa’s leading legal and forensic practices, into anonymous allegations made regarding billing irregularities at Mediclinic.

In August last year, News24 reported that a whistleblower, claiming to be a former Mediclinic manager, said Mediclinic manipulated patient bills to benefit the hospital group.

The whistleblower claimed that when a patient died in a hospital emergency room, Mediclinic case managers were sometimes expected to change their accounts to reflect an ICU death instead.

This is because the fixed fees associated with emergency room deaths are lower than ICU death fees.

The whistleblower also alleged that the clinical coding of patients’ accounts was manipulated for medical scheme claims.

Medical schemes often use an alternative reimbursement model (ARM) with hospitals, where they pay a fixed amount for specific medical care or treat a particular disease.

The alternative to an ARM would be the medical scheme paying for each service rendered. 

Medical schemes often prefer ARMs, which may discourage hospitals from providing unnecessary services.

However, when Mediclinic faced a loss under an ARM, some employees would allegedly manipulate the coding of the cases to save the company money.

For example, Mediclinic could primarily use hip and knee replacements for ARMs. Within this system, a set fee is charged for the procedure regardless of hospital stay duration or complications.

This approach, therefore, transfers the risk to the hospital – they earn a substantial fee per operation, and if a patient is discharged quickly with few complications, they win.

However, extended patient stays due to complications incur costs that the hospital must cover.

Mediclinic employees would then manipulate the coding on patient accounts to reflect a different diagnosis or procedure to prevent losses from ARM cases.

This could involve excluding complicated cases from ARM agreements or inflating the costs of simpler cases.

Employees would also monitor the hospital’s daily profit and loss reports to add high-cost coding when losses grew too large, News24 reported.

No evidence of intentional manipulation

Mediclinic said it is “encouraged by the forensic investigation’s conclusions that there is no intentional practice of manipulating billing or coding at a hospital or group level and that there has been no evidence reflecting a culture of victimisation”.

Mediclinic appointed ENSafrica following the whistleblower’s accusations to conduct a comprehensive independent forensic investigation. 

The hospital group said it provided ENSafrica with unfettered access to investigate and determine whether there was any substance to the allegations made against the named Mediclinic hospitals.

In addition, ENSafrica randomly selected a further six hospitals to test for billing irregularities. 

“As a result, the scope of the investigation was comprehensive and included interviews with Mediclinic staff and a review of more than 120,000 emails and documents,” the hospital group said.

ENSafrica’s investigation concluded that –

• Mediclinic is an ethical organisation with sound controls and governance in the billing environment
• There is no evidence of an intentional practice of manipulating billing or coding
• There are neither incentives nor direct financial benefits which could encourage Mediclinic and its staff to undertake account manipulation.

“Since the beginning of the forensic investigation, Mediclinic has been fully committed to taking the investigation’s results seriously,” the company said. 

“It is noteworthy that no systemic issues were found by ENSafrica and where areas for improvement were identified, they are being addressed.”

Head of ENSafrica’s forensics practice, Steven Powell, said the law firm was very satisfied with the level of access Mediclinic provided to allow the firm to conduct a thorough investigation into the anonymous allegations.

“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,” he said. 

“This is supported by the existence of multiple checks and balances on billing practices. We concluded that Mediclinic is an ethical organisation which has a commitment to good governance as well as continuous improvement.”

Mediclinic Southern Africa CEO Greg van Wyk said, “We welcome the results of ENSafrica’s independent forensic investigation.”

“Our systems and culture have been rigorously tested throughout this process. The report is clear that the investigation found no evidence of systemic concerns, and we are reassured by the outcome.”

He said Mediclinic has good systems and controls in place to enable sound and ethical business practices. 

“I would like to thank ENSafrica for their thorough investigation as well as our staff who have provided the forensic investigators with their time and necessary access to relevant documentation and data.”