How Europe Detects Medical Fraud and Denies Unnecessary Procedures: What can we Learn?

A deep dive into the financials of the countries most held up as models and what they are doing right and wrong

Introduction

Normally, we discuss healthcare and health insurance in this space and today is no different.  It has come to my attention that critics of Sentia’s Healthcare Finance System have targeted fraud and medical necessity as faults.  

First, here is a 50,000 foot view of how our system saves money.  Sentia, as the coverage company, provides the Electronic Medical Records Management System (EMR) to the practice and hospital.  We integrate coverage into the EMR using a societally agreed upon reference based price.  We suggest 150% of Medicare, one procedure, one price for everyone.  That allows us to pay for procedures performed in real time.  That also cuts over half from the price of healthcare and eliminates Epic, Cerner and all the big insurers at one stroke.

Our detractors say that fraud will run rampant and doctors will perform medically unnecessary procedures until we are bankrupt.  Let’s take a look at how the “model” countries of Denmark, The Netherlands, Sweden and Finland address fraud and waste in their respective systems.  

Detecting Fraud

In this section we are going to give a high level overview of how the target countries detect and mitigate fraud.

Denmark

In Denmark, the Udbetaling Danmark (UDK) uses these methods to detect and mitigate fraud

• Data Aggregation: extensive collection and merging of personal data from various public databases, including information on taxes, residency, employment, travel history, and family structure.
• Algorithmic Detection: AI and machine learning models (reportedly up to 60) to analyze aggregated data and flag individuals or providers for further investigation.
• Pattern and Anomaly Detection: The algorithms look for abnormal behavior or patterns in claims, such as unusual billing practices or discrepancies between a person's recorded activities/status and their claims, that might indicate fraud.
• Collaboration and Audits: Traditional methods, such as regular internal and external audits of patient records and billing processes, are also part of the strategy. The Danish Medicines Agency and the Danish Patient Safety Authority are also involved in the oversight of healthcare professionals and organizations.
• Whistleblower Mechanisms: The Danish Medicines Agency provides a dedicated, independent, and confidential channel for individuals to report concerns about potential breaches or serious wrongdoings, with options for anonymous reporting.

I am fairly certain that the Data Aggregation laws would not go over in the United States, and that the AI will be proven more trouble than it is worth.  

The Netherlands

The Netherlands Dutch Healthcare Authority (NZa) Uses several methods to detect and prevent fraud

• Data Mining & AI:

• Pattern Analysis: Systems analyze vast amounts of claims data to find unusual patterns, such as a doctor billing for treatments never performed or excessive, unnecessary treatments.
• Provider Scoring: Algorithms score providers based on practice patterns, highlighting outliers that suggest potential fraud for further investigation.
• Sequence Mining: Detecting sequences of services that don't align with normal practice, like a provider referring patients to another for kickbacks (self-referral schemes).

• Regulatory & Systemic Checks:

• NMVO (Dutch Medicines Verification Organisation): Tracks medicine packaging to prevent falsification and illegal distribution.
• Central Information System (CIS): Health insurers (like HollandZorg) use this database to assess risk and document suspicious activity by providers or insured individuals.

• Reporting & Audits:

• Citizen Reporting: Individuals can report suspected fraud (e.g., fake treatments, insurer issues) to the Dutch Healthcare Authority (NZa) website.
• Internal Audits: Healthcare organizations conduct regular audits and train staff to spot red flags.

Sweden

The Swedish Social Insurance Agency (Försäkringskassan) and Health and Social Care Inspectorate (Inspektionen för vård och omsorg, IVO) are responsible for overseeing and fraud detection and they use these tools to accomplish those tasks

• Collaboration and Information Sharing: Information sharing between different governmental organizations, including the county governments, the Swedish Social Insurance Agency, and the police (Ekobrottsmyndigheten, the Economic Crime Authority).
• Audits and Manual Reviews: Regular internal and external audits of billing records, claims data, and patient records are conducted to identify discrepancies or inconsistencies.
• Whistleblower Systems: The EU Whistleblowing Directive has led to the implementation of internal and external reporting channels where individuals can report suspected unlawful acts or misconduct, often anonymously.

Finland

The Ministry of Social Affairs and Health detects medical fraud through a multi-layered approach

• Data Analytics & AI: Specialised investigators use provider scoring and machine learning to analyze vast healthcare datasets, identifying outlier practices, unusual billing patterns, and potential schemes before they become widespread.
• Internal Audits & Staff Training: Healthcare providers conduct regular internal audits of patient records and claims, while comprehensive staff training educates personnel on spotting red flags and reporting suspicious activities.
• Whistleblowing & Reporting: Healthcare professionals are encouraged to report observed misconduct, with studies showing a significant portion do report wrongdoing, contributing to internal and external investigations.
• Consumer & Market Surveillance (Fimea/TUKES): The Finnish Medicines Agency (Fimea) and Tukes (Finnish Safety and Chemicals Agency) monitor potentially risky health products and marketing claims (e.g., on social media), acting on consumer reports about unsafe practices or misleading health claims.
• Provider & Patient Monitoring: Systems check for suspicious activities like providers impersonating others or unusual billing, while also monitoring patient records for unauthorized access or identity theft.

Detecting Fraud Conclusions

It appears that these “model” European countries all basically do all the same things

• Information sharing
• Audits
• Whistleblowers
• Data Analytics and AI

Information sharing particularly in the case of Denmark. and collating income, familial relationships and lifestyle into a fraud determination would be strictly forbidden here in the US.  All of the rest of these things are what Sentia already does.  We put the emphasis on Data Science, they call it analytics, and we won’t be using AI after catching AI flat making up data in an analysis we did several months ago, but our approach seems to be about the same as theirs.  The difference is that we have the audit reports designed and built and run with a single mouse click.  We don’t need legions of accountants or analysts, we can look at the bottom line on a report and determine if there is a problem and the solution to the problem is simply a little further up the page.  This is accomplished by running a Profit and Loss (P&L) on any employee, piece of equipment, room, consumable(s), department or the entire enterprise.  This is all one report, since they are all the same, all we have to do is change the source of the data.

Determining Medical Necessity

The other thing we have been asked about is Medical Necessity.  One MD, who works for BUCAH, stated that at least 10% of the procedures he received claims for were not necessary.  He could only state one case, anecdotally, where the surgeon said “sometimes they get better if you open them up.” I may agree with the BUCAH MD on that one, but the one out of however many he has adjudicated is not 10%.  Let’s take a look at how these same “model” countries determine medical necessity.

Denmark

In Denmark, medical necessity is determined primarily by the treating healthcare professional (GP or specialist), who assesses if treatment is needed for acute illness, accidents, pregnancy, or chronic conditions that can't wait, following national laws that broadly define care as “all necessary” but leave specifics to regions and professionals, focusing on evidence-based, effective, and cost-conscious care within the universal public system.

• Key Principles & Decision-Makers:

• Professional Judgment: The treating doctor or healthcare provider makes the core decision on whether a specific treatment is medically necessary for the patient at that time.
• "Medically Necessary": For temporary visitors (EHIC holders), this means treatment that cannot wait until they return home (e.g., acute illness, childbirth, or essential management of chronic conditions like dialysis).
• Gatekeeper Role: General Practitioners (GPs) act as gatekeepers, referring patients to specialists or hospitals when necessary.
• Regional Autonomy: The Danish Regions (the healthcare authorities) manage hospital services, deciding on levels of care and new treatments within national guidelines, ensuring care is evidence-based and efficient.

• How It Works in Practice:

• Initial Contact: A patient sees their GP or goes to an emergency room for a health issue.
• Assessment: The professional assesses the patient's condition against Danish healthcare standards.
• Referral: For specialized care, a GP referral to a public hospital is usually required, though emergencies bypass this.
• Prioritization: For treatments or medicines, Denmark uses a system balancing professional expertise, cost-effectiveness, speed, and patient need (severity of illness), ensuring equitable access.

In essence, Denmark relies on clinical expertise within a regulated, universal system to define what's necessary, ensuring residents and eligible visitors get essential care without undue delays or unnecessary procedures, prioritizing clinical need over purely elective treatments.

The Netherlands

In the Netherlands, medical necessity is largely determined by the General Practitioner (GP) acting as gatekeeper, deciding if a referral to a specialist or specific care is needed, while the Care Assessment Agency (CIZ) handles long-term care assessments for intensive needs. The system emphasizes primary care entry and a referral system, with insurers covering necessary care within the mandatory basic package, though costs are shared via deductibles and co-payments, and care is geared towards existing conditions rather than broad preventative screening.

Key Determinants of Medical Necessity:

• General Practitioner (GP) Referral:

• Your GP is the first point of contact for most non-emergency care.
• They decide if a specialist consultation, hospital treatment, or specific therapy is truly necessary and provide the referral.

• Care Assessment Agency (CIZ):

• For intensive, long-term care (like nursing homes, home care under specific laws), the CIZ assesses the level and type of care needed.
• They determine eligibility for care under the Long-Term Care Act (Wlz), not individual insurers.

• Health Insurer Policies:

• Your basic insurance (Zvw) covers medically necessary care, but you pay an annual deductible and potentially co-payments.
• Insurers manage costs but must accept everyone for basic care, with the government subsidizing high-risk individuals.

• Dutch Health Care System Philosophy:

• It's a solidarity-based system, meaning everyone contributes for universal access to essential care.
• The focus is more reactive: treating existing illness rather than extensive preventative care for the generally healthy.

In Practice:

• For sudden illness/accident: "Medically necessary" often means treatment that can't wait until you go home (for visitors) or need immediate attention (for residents).
• For chronic conditions/specialist care: A GP's referral is usually required for specialist access, indicating necessity.
• For intensive/long-term needs: The CIZ makes the formal assessment.

Essentially, necessity is judged by clinical need, filtered through the GP gatekeeper for general care and specialized agencies for long-term support, all within a framework of mandatory basic insurance.

Sweden

Sweden's healthcare system determines medical necessity based on a set of national ethical principles and clinical guidelines that prioritize patients with the greatest need while ensuring equitable access. Decisions are made by healthcare professionals based on these established criteria, with oversight from national agencies.

Key Principles:

The Swedish healthcare system operates on three primary ethical principles for priority setting:

• The Principle of Human Dignity: This principle asserts that all human beings have an equal entitlement to dignity and the same rights, regardless of their status in the community.
• The Principle of Need and Solidarity: This is the core of determining medical necessity. It mandates that those in the greatest need are given precedence in medical care, and access should not be influenced by socio-economic factors such as income, sex, age, or nationality.
• The Principle of Cost-Effectiveness: When choosing between different treatment options, there should be a reasonable relationship between the costs and the effects, measured in terms of health outcomes and quality of life.

Decision-Making Process:

The process of determining medical necessity and access to care is decentralized and multi-layered:

• Clinical Judgment: Physicians and other healthcare professionals make the initial clinical decisions regarding the required care, guided by national therapeutic guidelines and evidence-based knowledge provided by bodies like the Public Health Agency.
• Gatekeeping: Primary care is the first point of contact. A referral from a general practitioner (GP) is generally needed to see a specialist, and this acts as a form of gatekeeping to manage the flow of patients and resources.
• National Oversight: Agencies such as the Swedish Council on Technology Assessment in Health Care (SBU) evaluate new treatments from medical, economic, ethical, and social points of view. The Dental and Pharmaceutical Benefits Agency (TLV) decides which drugs and medical devices should be included in the national benefit scheme based on their value.
• Guarantees and Waiting Times: The healthcare guarantee system ensures that patients have a medical assessment within a set number of days and no more than 90 days for an operation or treatment once the need for care has been determined.

Overall, the system aims for transparent decision-making that is guided by a strong ethical framework emphasizing equity and prioritizing the most urgent medical needs.

Finland

In Finland, medical necessity is determined by healthcare professionals based on need, your residence status (permanent vs. temporary), and your entitlement documents (like the European Health Insurance Card (EHIC)), focusing on treatment to safely return home or comprehensive care if you're a resident, with nurses often triaging urgency and doctors assessing specific care needs, guided by national laws and Council for Choices in Healthcare Finland's (COHERE’s) recommendations for service choices.

Key Factors in Determining Necessity

• Residence Status:

• Permanent Residents: Have full access to public healthcare services.
• Temporary Residents (EU/EEA/UK/Aus): Entitled to "medically necessary" treatment, meaning care needed to safely return home (e.g., sudden illness, pregnancy, chronic conditions needing regular treatment like dialysis).
• Other Visitors: Generally only receive urgent care.

• Entitlement Documents:

• Your European Health Insurance Card (EHIC) or equivalent proves your right to treatment.
• Having a Finnish municipality of residence (registered with DVV) grants extensive rights.

• Healthcare Professional Assessment:

• Initial Contact: You'll usually visit a local health center, where a nurse assesses urgency and determines if a doctor's visit is needed.
• Doctor's Role: A doctor assesses the specific treatment required, whether it's primary, specialized, or emergency care, and confirms its necessity.

• Service Choices & Guidelines:

• COHERE Finland (Council for Choices in Healthcare): Provides recommendations on service choices, excluding procedures with unreasonable risks, limited effects, or high costs.
• Legislation: Treatment is based on Finnish national laws, ensuring it's aligned with standards for residents when applicable.

How it Works in Practice

• For Sudden Illness (Temporary Stay): You get urgent care, or treatment for sudden issues like pregnancy/childbirth, allowing you to continue your stay safely.
• For Chronic Conditions (Temporary Stay): You can receive regular treatment (e.g., dialysis) if arranged in advance with providers, based on a doctor's assessment.
• Referrals: You generally see a GP first; they provide referrals to specialists if needed.

In essence, Finland balances universal access for residents with essential care for temporary visitors, guided by legal frameworks and professional medical judgment.

Determining Medical Necessity Conclusions

Again, appearances show that the determination of medical necessity is done the same way across these “model” countries

• The patient must be a resident, either permanent or temporary
• The general practitioner is the arbiter of medical necessity.
• Oversight is indicated in all of these examples, but since the general practitioner (GP) is the main arbiter, we assume that the oversight committee is only to arbitrate a determination of “not medically necessary” by that GP

This also aligns with Sentia’s assertion that if the doc says you need it, then you get it.  We believe and agree with these countries that the doctor should be the main arbiter of necessity.  We further believe that adjudicating every case, big American insurance style, is a waste of effort and will increase the cost and complexity instead of decreasing costs by denying payment.

That means it is far cheaper to let a couple slip than to have insurance pay doctors to judge every case and justify their continued employment with denials.

Conclusions

We have shown our critics that we don’t need medical adjudication at all, if the doc says you need it, then you get it.  We have shown that our fraud prevention systems are better than the model countries’ systems by dint of being automated with a one-click report.  

In fact, with our fraud detection and our determination of necessity being similar to these “model” nations, and our automation of the entire health insurance industry, we should be far lower in cost than any of these “model” systems.

To summarize, here is how the target European systems combat fraud compared with what Sentia does:

• Information sharing
  Sentia doesn’t want or need “information sharing” as a clear violation of HIPAA and the 9th amendment and we simply don’t want or need it
• Audits
  Sentia has one click P&L reports on any number of aspects of the enterprise; finding and fixing not only fraud and graft, but “cash leaks” and inefficient processes
• Whistleblowers
  Sentia offers rewards for information leading to the arrest and conviction of known perpetrators of fraud
• Data Science (Data Analytics and AI)
  Sentia uses advanced statistics and data science to detect fraud.  After catching AI simply fabricating data for one of our reports, we don’t use it anymore.  However all our fraud detection reports are automated into a one-click execution.  We keep a data scientist on board to craft new ways to detect fraud.

Here is how Sentia avoids unnecessary procedures compared to the target countries.  

• The patient must be a resident, either permanent or temporary
  The patient must be covered and in good standing with his or her payments
• The general practitioner is the arbiter of medical necessity.
  If the doc says you need it, you get it, generally.  See fraud above.
• Oversight is indicated in all of these examples, but since the general practitioner (GP) is the main arbiter, we assume that the oversight committee is only to arbitrate a determination of “not medically necessary” by that GP.
  We will hire an independent arbiter to hear the case of the patient denied a procedure by her or his practitioner.  We suspect that nobody needs a second appendectomy, and that the doctor knows best.

Further, the other two planks in our platform, incentivized health and wellness and an ERP style hospital and practice management system, that eliminates workflows, the US should be on the order of about half the cost of these big, nationalized, regulated systems.  Remember that government and regulation costs money and rarely to never makes things simple or easy.  

We already have the best doctors and the best equipment; we just need to implement the above detailed framework to give them all the tools necessary for success.

We have this system in complete and deployed now, fully functioning at sentiahealth.com.

Contact us here or on our site and we will be happy to provide a demonstration of the fully functional prototype.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. This system includes the automation of the health insurance industry completely.  We have designed and are currently building the ERP style PM system.  Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.

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