Financial fraud in the private health insurance sector in Australia: Perspectives from the industry

Abstract

Purpose

The purpose of this article is to explore financial fraud in the private health insurance sector in Australia. Fraud in this sector has commonalities to other countries with similar health systems but in Australia it has garnered some unique characteristics. This article sheds light on these features, especially the fraught relationship between the private health funds and the public health insurance agency, Medicare and the problematic impact of the Privacy Act on fraud detection and financial recovery.

Design/methodology/approach

A qualitative methodological approach was used, and interviews were conducted with fraud managers from Australia’s largest private health insurance funds and experts in fields connected to health fraud detection.

Findings

All funds reported a need for more technological resources and higher staffing levels to manage fraud. Inadequate resourcing has the predictable outcome of a low detection and recovery rate. The fund managers had differing approaches to recovery action and this ranged from police action, the use of debt recovery agencies, to derecognition from the health fund. As for present and future harm to the industry, the funds found on-line claiming platforms a major threat to the integrity of their insurance system. In addition, they all viewed the Privacy Act as an impediment to managing fraud against their organizations and they desired that there be greater information sharing between themselves and Medicare.

Originality/value

This paper contributes to the knowledge of financial fraud in the private health insurance sector in Australia.

Citation

Flynn, K. (2015), "Financial fraud in the private health insurance sector in Australia: Perspectives from the industry", Journal of Financial Crime, Vol. 23 No. 1, pp. 143-158. https://doi.org/10.1108/JFC-06-2014-0032