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Category: Health Benefits Fraud

March is Fraud Prevention Month

Posted on by Immix Group

By Lindsay Byrka | BA, BEd, CFP
Vice President, Immix Group: An Employee Benefits Company

 

Everyone has experienced that phone call, text or email making some claim that is inevitably aimed at getting you to click a link or provide information to give fraudsters access to your sensitive information. It’s rampant, and there are stories on the news every day about extremely crafty schemes that leave people defrauded, with less money in their bank account and often feeling embarrassed and angry that they fell into the trap.

Fraud hits every industry, and those out to defraud people go to great lengths to concoct sophisticated and effective ploys. While employee benefits program fraud doesn’t make the news as often as the distressing stories of seniors urgently buying gift cards, it’s also rampant and just as criminal an act.

In fact, CLHIA (Canadian Life and Health Insurance Association) states fraud to cost hundreds of millions of dollars per year in losses. Other organizations estimate the number to be in the billions of dollars. Sun Life Financial alone, used their advance anti-fraud tools to detect over $150M since their program launched in 2014. That is a LOT of money that could be going towards paying legitimate claims!

 

Fraud takes all forms

As we’ve written in the past , fraud takes all forms and it occurs at every level of the claiming chain. Plan members, plan administrators, and supplier offices -for example, your dental office- all participate in fraud, sometimes unknowingly!

Technology, while making it much easier to submit claims, also makes it much easier to submit fraudulent claims. Fortunately, it also makes it easier for insurance carriers to put in place systems to help prevent or detect fraud. Part of this process is de-listing service providers, which is essentially saying ‘we will not pay claims for items or services purchased through this particular provider.’

 

Why do some claim submissions have so many rules and requirements?

As a plan member or plan administrator, you may have come across seemingly arbitrary, finicky rules and regulations when it comes to claims submission requirements.

A common example is with claims for orthotics; when you are attempting to make an honest claim, it can sometimes feel like you have to jump through hoops (doctors note, a certain type of doctor only, pre-authorizations, and a certain method of submitting the claim). It can be very frustrating. It may feel like the insurance carrier implicitly distrusts you, when you’re just trying to be reimbursed for something that is legitimately and honestly required by you and covered under your insurance.

But these rules exist for a reason, and the main reason is fraud prevention, which also means cost containment.
When we advise plan administrators and members that the extra rules and procedures are to prevent fraudulent claims from sliding through, they’re often very surprised to learn that this is a very rampant and costly problem.

Countless times in explaining why the rules are in place, I have had members say “but I would never do that!” And it’s true, most people do not fraudulently claim under their benefits program.

 

Fraud can be subtle

Most people would not do something as obvious as creating a false receipt on their home computer. But fraud takes a more subtle form; a classic example is getting expensive sunglasses (without any prescription lens) and submitting them as an eye glass claim to obtain reimbursement. Vision Care providers can be complicit in this activity, providing receipts that falsely state the item purchased to be prescription eyewear.

Another example is submitting your receipt to more than one insurance carrier for reimbursement (for example, to your own plan, and to your spouse’s plan). There is a certain level of self-reporting and honesty that is required when someone is insured under two plans. While most people act honestly, and understand that they should only be reimbursed up to what they paid, others take advantage of the honour system that may be in place: this is fraud.

 

Why does this really matter? Don’t insurance carriers make huge profits?

Many people have the impression that insurance companies are making huge profits, and that the few hundred dollars they received for a not-fully-legitimate claim could not possibly have a financial impact. But the fact is that these dollars add up, and as we’ve stated, the amounts are staggering. While there is a certain segment that is conducted in a systemic way by organized groups, another segment is simply people acting as individuals.

But it does matter, and not just because it cuts into the insurance carrier profits. In actuality, for Canadian insurance carriers providing group benefits, the profits are typically quite small (as a percentage) on a benefits program. Often, just a small single digit of the premiums paid by the plan sponsor is actually profit.

 

But does it actually affect my specific benefit program?

For a typical small or midsize business, every year the insurance carrier compares the premiums that were paid to the claims that were paid back to the employees. The cost of the program for the year ahead is directly tied to this ratio.

If those claims are inflated even by a small percentage due to fraudulent claims, it can have a notable impact on the program’s renewal pricing.  In short, illegitimate claims take available money away from legitimate claims. When programs become more and more expensive, guess what tends to happen? Benefits are reduced or removed, to help control the cost.

 

Is this actually a big deal?

The CLHIA’s stance on this is ‘fraud=fraud.’ It is fraud, it is a crime, and there could be actual legal consequences to this action. There is excellent information through CLHIA’s Fraud=Fraud campaign. The site outlines what actions constitute fraud, the consequences, and what you can do. https://fraudisfraud.ca/

With previous cases of benefits fraud, including the Toronto Transit Commission case where Manulife was scammed for millions in false claims, people have been fired and criminally charged. In that specific case, over 200 employees were fired and 10 faced criminal charges.  

In a case of similar scale also in Toronto, 150 staff members either resigned or were fired due to their involvement in an approximately $4-5M benefits scam. In this instance, it was highly organized with the staff involved spanning multiple job categories.

In this case, one involved person stated to the press that they had been paying more into the plan than they were receiving in legitimate claims, so they therefore felt justified in their actions.  This is a common reason that is uncovered in these types of cases. However, like other benefits we gain in shared society (roads, schools, police, fire departments), some people benefit more than others in certain areas, and group healthcare is no different. Trying to make it ‘fair’ by defrauding your benefits program is a criminal act.

 

What you can do to help prevent fraud

Despite education of plan members, plan administrators, and sophisticated technology to detecting fraud, fraudsters persist. Here are a few quick tips on how to avoid and detect fraud:

  •  Check your claims history in your online portal or app; are all the claims yours?
    Ensure you are submitting to your own carrier first, then to your spouse’s plan (should you have both in place)
  •  If you receive the offer from a provider to provide you a receipt for something that is no
  • t what you actually purchased, you should decline (of course!) but also report the provider. Many carriers offer whistleblower lines to do so.
  •  If you learn of fraud through your own company, advise your HR department.

Lastly, if you’re a plan administrator and you suspect your program claims are not all legitimate, we can help you to review the claims. As benefits advisors, we have access to tools and resources that can help determine if claiming patterns are normal, or if something unusual is occurring.

As always, involving an experienced benefits advisor to review your program is the best way to ensure you are making the most of your benefits dollars

The experts at the Immix Group can be reached at 604-688-5559 or online at info@immixgroup.ca. Or reach out directly to Lindsay at lindsay@immigroup.ca

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O  604-688-5262 

E lindsay@immixgroup.ca
W www.immixgroup.ca

March is Fraud Prevention Month – and you can help!

Posted on by Immix Group

Benefits fraud is a topic that just keeps trending. There’s good reason for that. Fraud is a huge problem within the world of benefits. It impacts everyone – and it hurts everyone.

Benefits fraud is insidious. It takes all forms. Plan members, plan sponsors and service providers: All have been complicit in acts of fraud.

The financial impact is significant. While estimates range, industry experts’ best guess is that two to 10% of healthcare dollars – that’s up to $12 billion per year – are lost to fraud. This is money that could pay for a lot of legitimate, much-needed expenses!

Two of the most common complaints we hear from employees are about:
1) the cost of their benefits
2) what their plan doesn’t cover.

The irony is that, the more a plan covers, the more it costs. And, when fraud sucks away valuable healthcare dollars, it directly impacts the quality of the coverage that can be provided to members.

The bottom line is this. A benefits program needs to be financially viable – and benefits fraud is a massive drain on the precious resource of healthcare dollars.

 

What you can do as a plan member to fight fraud

  1. Double check each of your claims, especially if you did not personally submit the claim. You can check your claims history online. With most carriers, you can check right from a mobile application.

  2. Make sure that each claim is genuinely your claim. A common way providers commit fraud is by submitting a claim on your behalf for a service that was never performed, or for a claim in excess of what was provided.

  3. No question direct claiming is convenient, but… Direct claiming means the provider offices have access to your benefits program details. While we like to trust our dentists, physio clinics and optometrists, the unpleasant reality is that some of these providers are the very ones committing the frauds. Keep your benefits information confidential to the greatest extent possible. Never sign blank claim forms.

  4. If you do get audited on a claim, don’t be offended! Auditing is an important part of ensuring claims’ accuracy.

  5. Lastly, don’t “accidentally” commit fraud! Maybe you think you’re just getting a good deal. For example, you have the chance to get sunglasses instead of prescription glasses through your benefits plan. Think again. Not only will this inaccurate reporting impact the financial viability of your program; it will be fraud. You could be charged with a crime you never intended to commit.

 

Real-life stories of fraud

We recently learned of a plan member who noticed that his Vision Care benefit (\$200 per person every two years) was used up for all five members of his family. Knowing his family members had not all made claims, he looked into this – and discovered the provider had submitted false claims to the insurance company.

The provider was paid $1,000 ($200 x five family members) by “claiming” for eyeglasses, contact lenses and eye exams that the family had never purchased!

How did this happen? The provider had the plan information on hand based on a previous visit by one of the children for an eye exam.

Because of this fraud by the provider, the benefits program incurred \$1,000 in claims – adversely affecting the cost to the employer and ultimately the employee. Furthermore, this benefit then appeared to be ‘used up’ for the member and his family. If they had needed to make a real Vision Care claim, it would have been rejected.

 

Here’s another true story.

We learned of an employee in a dental office who was entitled to free dental services. Despite this, she submitted claims for herself, utilizing her employer’s access to the direct claiming system, under her partner’s benefit program. The system accepted the claims (the insurance coverage was valid), not knowing the member had never paid for any of the services.

Her defence? “I am covered for a benefit I don’t need…so therefore should be able to receive a payment back to make up for the cost of our premiums.”

Nope. You committed fraud.

 

Help us and help consumers. Report fraud!

Through their online and mobile applications, insurers provide tools to show how much you’ve claimed, along with the details of your claims. These tools are not just for your convenience. They help ensure the accuracy of the claims going through under your name.

The following is essential: If you notice something strange, something off, something not quite right in your claim records – report it at once to your HR, or directly to the insurance carrier.

 

Further reading

Canadian Life and Health Insurance Association (CLHIA) tips:
https://www.clhia.ca/domino/html/clhia/CLHIA_LP4W_LND_Webstation.nsf/0/10D0B370160E723B85257F03005BD980?OpenDocument

Pacific Blue Cross (PBC) Whistleblower hotline: 
http://www.confidenceline.net/pacific-blue-cross/

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O  604-688-5262 

E lindsay@immixgroup.ca
W www.immixgroup.ca

Health benefits fraud: How it happens – and how your business can avoid it

Posted on by Immix Group

 

You provide health benefits to attract, reward and retain good employees. And it works. The majority of your employees recognize and appreciate the health, dental and other benefits they enjoy at your company. They live up to your expectations. They work hard.

But even at the best companies, health benefits are fertile grounds for fraudsters. Yes, you have wonderful employees overall. However, health benefits fraud could be happening at your business. According to the Canadian Health Care Anti-Fraud Association, fraudulent claims cost the industry anywhere from $1.2 to $6 billion every year.

Canada’s private sector spends about $60 billion annually on health benefits. Estimates of fraudulent claims and billings range from two to 10% of that total. Ultimately, employers bear most of the cost of fraud, either by unknowingly reimbursing employees for these claims, or through the subsequent increased premiums caused by high claims.

In July 2015, national headlines blared about health benefits fraud. Stories detailed how both health providers and Toronto Transit Commission (TTC) employees had colluded to defraud the TTC benefits plan of \$4 million through false claims made to a medical supply store. Since the fraud’s exposure, three people have been charged with fraud and money-laundering offences, 12 have been fired and another 600 are under investigation.

The TTC is a large organization, with over 13,000 employees. But benefits fraud also hits hard at smaller companies. For example, Sun Life Financial, a leading benefits provider, estimates that a company with 100 employees typically spends between \$300,000 and \$400,000 on a benefits plan. If 10% of the claims are fraudulent, that could represent a $40,000-per-year cost to the company.

 

Types of benefits fraud

Not every occurrence that wrongfully costs a benefits plan stems from fraud. Fraud is the intentional submission of false or misleading information for the purpose of financial gain. Abuse occurs when those covered by a health plan – or those providing services to plan members – exploit the plan by overusing plan services, resulting in excessive billings. Abuse can also occur when people provide and bill for treatments for which there is no proven medical need.

No question that outright fraud is the most important threat to benefits programs. There are three main types of fraud that you should be aware of:

    • Provider fraud: A health care service provider exploits the plan by, for example, submitting false claims for procedures they never performed for a plan member. Usually the plan member knows nothing about the fraud until it is discovered by the benefits advisor, the plan sponsor or by the underwriter. 

    • Plan-member fraud. Some plan members exploit their plans by fabricating claims and producing false receipts. They may also add fake dependents to their plan, or make claims through both their own plan and a spouse’s plan without proper co-ordination of benefits. 

    • Collusion between providers and plan members. Sometimes healthcare providers and plan members work together to exploit the plan, splitting their fraudulent gains. Usually these collusions involve obtaining receipts for insurable expenses when there actually was no expense. For example, a plan member and an optical store employee might create a Vision Care billing for expensive prescription lenses when the member only bought a pair of uninsured designer sunglasses. In other cases, the collusion might be to inflate the cost or scope of a procedure, or otherwise falsify treatment details to increase the reimbursements received from the health plan.

 

Fraud’s other consequences

As noted earlier, the obvious consequences of fraud are rising premiums and the reluctance of employers to continue offering generous plans in the face of rising costs. But there are also serious consequences for those committing the fraud or abusing the system.

Fraudsters run the risk of being convicted of a criminal offence, which will permanently affect their lives. Even if they spend no time in jail they will face fines. They may be required to pay back the money they have effectively embezzled. They will likely be fired. Meanwhile, service providers committing fraud run the added risk of being driven out of business as their reputations disintegrate.

Innocent benefits-plan members then face the possibility of diminishing benefits and higher deductibles as plan providers seek to recover their costs.

 

How to stop benefits fraud

First, you should know that plan providers use random audits. They have sophisticated systems in place to detect suspicious or irregular claiming patterns. For instance, on detecting an unusual spike in claims for leg braces, Sun Life determined that a particular facility was fraudulently providing receipts.

Employers & insurers can help diminish fraud by taking a few precautionary steps:

  • Ensure that reasonable limits and maximum are in place.
  • Use deductibles and co-pay features to ensure members are financially engaged, which reduces their incentive to abuse or defraud their benefits plan.
  • Assess claims against the coverage the plan was designed to provide.
  • Verify the eligibility of plan members and their dependents.
  •  Verify that services charged for are in-line with best practices.
  • Communicate with regulatory bodies and specialists to understand treatment protocol and costs.
  • Validate provider credentials.
  • Educate plan members in the role they play in controlling costs, and the legal ramifications of fraudulent claims.
  • Encourage members to carefully review their receipts, and to ask questions of their providers.
  • Encourage employees to keep their claiming information and coverage confidential.
  • Engage employees in an anti-fraud culture.

Benefits plans are an ideal way to incentivize and retain employees. At the same time, preventing fraud is in everybody’s interest.

 

Want to read more about benefits fraud? Check these sources:


Canadian Life and Health Assurance Association: https://www.clhia.ca/antifraud

Manulife Financial Fraud Prevention: https://www.manulife.ca/wps/wcm/connect/76dc2e3b-749f-464f-ac81-e1de86f91192/preventinge.pdf?MOD=AJPERES&CACHEID=76dc2e3b-749f-464f-ac81-e1de86f91192

CBC: TTC fires 12 in connection with benefits scam, 600 more being investigated: 
http://www.cbc.ca/news/canada/toronto/ttc-city-fraud-1.3466473

Sun Life:https://www.sunlife.ca/static/canada/sunlifeCA/Products%20and%20services/Group%20Benefits/Fraud/Plan%20Member%20Anti%20Fraud%20Tips.pdf

http://www.sunlife.ca/static/canada/Sponsor/About%20Group%20Benefits/Focus%20Update/2015/512/SponsorFraud%20IntelligentResponse%20June%202015%20ENGLISH.pdf

  

Lindsay Byrka

Lindsay Byrka BA, BEd, CFP

Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O  604-688-5262 

E lindsay@immixgroup.ca
W www.immixgroup.ca

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