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How Medavie Blue Cross is protecting benefit plans from fraud


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Editor’s Note: We interviewed Chad White, Director Corporate Security, Medavie Blue Cross on how fraudsters and cybercriminals are exploiting the COVID-19 pandemic to prey on vulnerable Canadians. The result is a two-part series outlining how we are protecting health benefit plans from fraud and cybercrime at all times. We lead off our series with this Q&A on fraud mitigation.

Q. The COVID-19 pandemic has been described as the perfect storm for fraud. How so?

Fraudsters are always looking for ways to take advantage of a crisis. COVID-19 lockdown measures and stay-at-home orders have accelerated digital transactions, putting Canadian consumers at greater at risk of fraudulent activity and exposing businesses to the same. As a result, we have two wars going on at the same time: the war against the coronavirus and the war against fraud.


Digital Fraud Rises

The rate of digital fraud attempts against Canadian businesses is up 26% when comparing pre-pandemic to pandemic levels.

Source: TransUnion


Q. Who are the fraudsters targeting?

Any crisis or event that raises fear and anxiety also creates ideal conditions to commit crimes. The pandemic has produced a fertile breeding ground for the criminal element in our society. From bogus fundraising efforts to fake COVID-19 testing kits, fraudsters have been quick to adapt their methods and find new ways to cheat vulnerable Canadians out of their money.


COVID-19 Fraud Impact

The impact of fraud so far this year (as of May 31, 2021):

Canadian reports of fraud: 34,253 (71,062 in 2020)

Canadian victims of fraud: 24,082 (42,163 in 2020)

Lost to fraud: $87.8 M ($106 M in 2020)

Source: Canadian Anti-Fraud Centre


Q. How has this impacted the health insurance industry?

The pandemic has exacerbated an existing trend. Before the onset of COVID-19, our industry was increasingly seeing evidence of sophisticated and widespread fraud. This involved organized crime, with unscrupulous service providers participating, reassuring plan members that what they’re doing is normal or that they’re entitled to the money.

Q. Why should plan sponsors and members be concerned?

There’s a perception that health insurance fraud is a victimless crime. Far from it. Benefits fraud has consequences that go far beyond paying a higher personal premium. It can create the need for undesirable plan design changes, limit or restrict member access to certain benefits, even reduce the overall sustainability of the benefits plan.

Q. What are the main types of health insurance fraud being committed?

Health benefit fraud occurs when an individual, service provider or other party submits false or misleading information to receive payment of an insurance claim. This can take many forms, from backdating a disability claim to submitting a fictitious or inflated medical or dental claim. Benefit fraud and abuse includes, but is not limited to:

  • Knowingly omitting, misusing or falsifying information
  • Hacking, phishing or breaching security to steal intellectual property and/or proprietary client and corporate information
  • Engaging in bid-rigging schemes or bribes for personal or corporate benefit
  • Improper handling or reporting of cash, equipment or property

Medavie Blue Cross is actively engaged in mitigating all of these.

How is Medavie Blue Cross mitigating fraud?

Medavie Blue Cross is an industry leader in fraud risk management. We have state-of-the-art prevention and detection capabilities to protect the integrity and the sustainability of the benefit plans we insure and manage.

We do this through a comprehensive fraud risk management program we call CrossCheck. CrossCheck takes a holistic approach to protecting against benefits fraud and abuse, incorporating preventative, detective, investigative and enforcement controls and processes across our organization. Our priority is to monitor, detect and resolve any abuse or fraudulent activity on behalf of plan sponsors and members.

How is Medavie Blue Cross responding to the rise in fraudulent activity?

We are constantly enhancing and fine-tuning our fraud mitigation program so that we can proactively respond to the increasingly complex nature of health insurance fraud.

This is not new. Benefit fraud mitigation has been, and always will be, essential in improving plan sustainability and protecting the health and wellbeing of plan members.

This means continually validating claims and monitoring for misuse. It means making strategic investments in fraud mitigation to build and strengthen our fraud prevention, detection, investigation and enforcement capabilities. An example is the acquisition of an improved fraud investigation profiling system, which uses predictive analytics to allow us to scan, cross-reference and report indicators of claim fraud and abuse in greater volume and in a fraction of the time it took before we made the upgrade.

What can plan sponsors do to protect their health benefits from fraud and abuse?

Fraud mitigation doesn’t live off the desk of internal audit. Everyone has a vested stake and shared responsibility in recognizing, preventing and reporting health benefit fraud and abuse.

Plan sponsors can reduce opportunities for fraud by putting reasonable controls onto their benefit plans. This may include:

  • Reasonable and customary prices
  • Dollar and frequency maximums

The best way to mitigate fraud is to prevent it from happening in the first place. This can be achieved through education and communication.

Plan sponsors can raise awareness among their members about what benefits fraud looks like, encourage them to be vigilant and speak up when they encounter it.

What are the warning signs for benefit fraud and abuse?

There are common red flags for fraudulent activity. They include:

  • A history of frequent or high-value claims
  • High utilization/switching among similar categories of benefits
  • Invoices with modified dates or amounts
  • Families claiming similar supplies or services
  • Large number of plan members in one group using the same healthcare provider
  • Provider questions surrounding plan benefit limits
  • Plan members who consult several providers or purchase drugs at numerous pharmacies

How can plan members report fraud?

We have a confidential and secure fraud and ethics reporting service called ConfidenceLine. This tips line allows people to report suspicious activity anonymously through a website or by calling a toll-free line that is staffed 24/7 by trained agents.

If members and sponsors want to learn more about reporting fraud to Medavie Blue Cross and our process for investigating fraud, I encourage them to read more through our website.

Want to sharpen your fraud fighting skills?

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