Results and Cross-Cutting Issues
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misutilization or fraud can take multiple forms, including misrepresentation (ineligible members and/or dependents), claims submitted by nonexistent hospitals or for services not rendered, providing (or billing) higher-level services than required, or balance billing of patients. Insurers report other types of fraud such as outpatient to inpatient conversion and the inclusion of false names in smart cards (ICICI Lombard 2010). In some cases, however, hospitals may select the incorrect package due to lack of familiarity with or capacity to navigate the claims process. In general, schemes require control systems along three domains: constant vigil on claims data, reviews of preauthorization requests, and physical verification of beneficiaries undergoing treatment. They also need to make use of grievance and feedback systems for patients and providers. Some schemes have implemented sound vigilance measures along these lines with varying degrees of sophistication. Others appear to be in reaction mode, responding to press reports or random beneficiary complaints. Few schemes systematically or proactively implement frauddetection measures. A somewhat extreme example of fraudulent practices was detected by RSBY in Dangs (Gujarat) where hospitals logged fraudulent claims for several months before being detected and disempaneled by the contracted insurers (Palacios 2011). This is not a recent phenomenon and has happened in other schemes without an insurer as an intermediary. For example, in 2003, CGHS found irregularities in the bills submitted by hospitals and chemists in a few cities. In both cases, disciplinary action was taken against these providers including recovery and suspension. This experience demonstrates the importance of good oversight by the governing agency, which can be supported through systems developed by intermediaries such as insurers. Nevertheless, the governing agency is ultimately accountable for detecting fraud as well as taking prompt disciplinary action against fraudulent practices. Prompt disciplinary action is important as a deterrent to future fraudulent behaviors. Some public authorities and academics have called for replacing insurers with government agencies to handle enrolment, claims settlement, and underwriting functions. Such calls raise questions about government agencies’ and insurers’ incentives to control fraud. In theory, insurers have a strong incentive to minimize fraud because such measures, if successful, would reduce the quantum of claim payments. However, as mentioned earlier, the short-term nature of their contract may reduce their incentive to invest in fraud control. Nevertheless, it is uncertain