No NHS Fraud (Yet)

Paul Taylor

At the centre of Monday night’s Panorama programme on fraud in the NHS was an interview with Jim Gee, an expert on the financial cost of healthcare fraud. Gee showed the presenter a newly published report, of which he was the first author, and talked about its findings. He turned to a key page and the camera picked out a bar chart as the two discussed some of the figures it contained. The report was also given wide coverage in the print media this week. Stories were run in all the broadsheets and across the tabloids with many local papers picking up the story and giving it a local spin. The figure, highlighted in Panorama, that most journalists seized on was the estimate that fraud was costing the NHS around £7 billion a year, enough – the Express pointed out – to pay for 250,000 nurses.

Although many of the news stories link the report with academics at Portsmouth University, Gee is an employee of BDO, an accountancy firm whose anti-fraud services are prominently advertised within the report. In some ways it reads more like a marketing exercise than anything else: the introduction doesn’t start until page 5, the conclusion is reached by page 9 and there is room for plenty of pictures in between. The evidence on which it is based comes from a review of 92 exercises in fraud measurement undertaken in six countries between 1997 and 2011. No details are given of the individual exercises; there is no bibliography. The stated criteria used to select studies seem appropriately rigorous but the lack of detail about them is irritating. The reader is told that because some US agencies are now obliged to provide annual estimates of healthcare fraud, there is much more data on this topic from US than anywhere else, but not given any sense of the extent of the bias. The estimates of the financial cost of fraud in healthcare are said to vary from 0.6 per cent to 15.4 per cent of the total spend, with a mean of 6.99 per cent. It would be nice to know how these estimates vary across the six countries, whether the more robust estimates contribute more to the mean and how they vary around the mean. None of that information is provided. It was applying the ‘nearly 7 per cent’ average figure to the total NHS budget that led to the £7 billion estimate of NHS fraud and the horror stories across the media.

The most recent FBI report on financial crime includes a section on healthcare. It estimates that healthcare fraud is between 3 and 10 per cent of the total spend. The report lists some of the types of fraud: billing for services not rendered, duplicate claims, submitting separate bills for tests that are cheaper when done together, providing excessive or medically unnecessary services, kickbacks, upcoding of services, upcoding of items. Looking at the list, it would seem fairly obvious that the scope for financial crime is going to be much greater in the US healthcare system than in the NHS.

Take the example of upcoding. This is the practice of telling the reimbursement agency that you performed a more complex and therefore more expensive procedure than you actually have, or claiming for an electric wheelchair when the patient was provided with a manual one. There is the potential for upcoding in the NHS, since hospitals are reimbursed according to the codes that their staff assign to each episode of hospital care. There have been incidents of what looks like systematic miscoding, but they seem pretty rare. In 2011-12, the Audit Commission reviewed 33,373 episodes of care, equating to approximately £51 million of NHS expenditure. They found that the average net error was less than 1 per cent, and that under and overpayments balanced out, suggesting an almost complete absence of that kind of fraud.

It seems likely that, for the moment at least, NHS fraud will be at the lower end of the range given in the BDO report, nearer to 0.6 per cent than 15.4 per cent. We should not be too complacent however. The NHS is being opened up to commercial providers and real money will have to flow between organisations increasingly run for profit. The track record of some of the NHS’s new partners is not reassuring. United Health, for exampl,e a US company that happens also to be the former employer of NHS England’s new chief executive, in 2009 paid out $350 million to settle class actions with patients who had been underpaid because of a scam that involved fixing reimbursement rates for certain classes of medical procedures.


  • 30 March 2014 at 6:28am
    John Cowan says:
    Some of those "excessive or medically unnecessary services", as well as some of the upcoding, in the U.S. is (to my personal knowledge) a matter of medical ethics versus insurance-company prejudice. If the appropriate treatment will not be paid for and an excessive treatment will be, a doctor may administer the latter, or claim to do so, in order that the patient gets proper treatment rather than (as the insurance company would naturally prefer) no treatment.