Ask our Expert: How can plan sponsors prevent fraud?
A Q&A with Mike Lijeskic, Director of Internal Audit, Head of Internal Audit and Fraud, Medavie
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Editor’s Note: Here are some pro tips that advisors can share with their clients to protect health benefit plans from fraud and abuse.
What is health insurance fraud?
Health insurance fraud is the intentional act of submitting false, deceiving or misleading information for the purpose of financial gain. This can take many forms, from backdating a disability claim to submitting a fictitious or inflated medical or dental claim.
What are common types of fraud?
The types of fraud that occur most often are:
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 and/or corporate benefit
Improper handling or reporting of cash, equipment or property
What is the difference between benefit fraud and abuse?
Abuse is the exploitation of a plan – either intentional or unintentional. This includes receiving services that are not part of a therapeutic treatment for illness or injury, or excessive use of benefits.
Fraud is an intentional deceptive act to obtain a financial gain. Examples include double billing, or charging more than once for the same service, and using the coverage of a dependent for a service that they are receiving. Fraud is a crime that must be proven in a court of law.
Why should advisors, plan sponsors and members be concerned about fraud?
Health insurance fraud is a serious crime that hurts everyone. Fraud drains critical resources from benefit plans and raises costs. This can lead to an increase in premiums, a decrease in coverage and, in cases of large-scale fraud, even a reduction in staff.
How much does fraud cost benefit plans?
Fraud is inherently about deception, designed to go undetected, so the reality is we do not have hard numbers in Canada.
Consider, however, that insurers paid out $98 billion in benefits to Canadians last year, including $36 billion in health benefits for prescription drugs and for extended health providers like dentists and physiotherapists. Even one per cent of that amount is too much!
Why don’t we take fraud more seriously?
A survey by the Canadian Life and Health Insurance Association (CLHIA) found that many Canadians don’t understand that they are committing fraud when they submit false or misleading information about their health benefits. For others, we found a perception that insurers are acceptable targets of fraud and abuse.
What trends are you seeing in the fraud landscape?
Fraud is becoming more widespread and sophisticated. The health insurance industry is increasingly seeing evidence of organized crime or unscrupulous service providers getting involved and reassuring plan members that what they’re doing is normal or that they’re entitled to the money.
The increasingly complex nature of fraud demands that we have to continuously strengthen our investigative practices to counter the trends.
What is Medavie Blue Cross’ position on benefit fraud?
We are committed to protecting the integrity of our benefit plans for our policyholders and members by monitoring for and resolving any abusive or fraudulent activity.
We believe benefit fraud mitigation is essential in improving plan sustainability and in protecting the health and wellbeing of plan members.
How does Medavie Blue Cross protect plans from fraud?
CrossCheck is our unique and comprehensive approach to fraud risk management. CrossCheck applies a holistic approach to the mitigation of benefits fraud and abuse, incorporating preventative, detective, investigative and enforcement level controls and processes throughout our organization.
Who is directly responsible for fraud risk management at Medavie Blue Cross?
Part of holistic benefit fraud risk management is the acknowledgement that everyone plays a role. From the time of establishing the benefit plan design, all the way through to claims adjudication, and to eventual monitoring, fraud risk management remains a corporate initiative from beginning to end.
To help satisfy this, we have teams of forensic experts (certified fraud examiners, accountants, data analysts and other professionals) who are trained and dedicated to detecting fraud and abuse, supported by a network of query analysts, medical and dental consultants, and legal advisors.
What are the main goals?
Our company profiles for abuse, investigates tips, and conducts audits to:
detect claim irregularities
increase awareness of insurance fraud and abuse
In some cases, we may also recommend:
Escalating the matter to law enforcement agencies when the evidence supports the potential for a successful prosecution, or;
Lodging a formal complaint with the provider’s regulatory body or association when the evidence supports the likelihood of disciplinary action.
It is important to note that the objective of claims monitoring and investigation is not to question the efficacy of treatments, but rather to confirm that service reimbursements were valid and appropriately rendered.
How is Medavie Blue Cross leveraging technology to fight fraud?
We use a state-of-the-art fraud investigation profiling system, which applies risk-based predictive analytics to enhance our integrated pre-and-post-payment monitoring capabilities and isolate anomalies for further investigation.
What are signs of fraud that plan sponsors can watch for?
In monitoring claims and analyzing data, we look for trends, irregularities or outliers that suggest fraudulent activity. All stakeholders can be on the lookout for red flags like:
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
What can a plan sponsor do to minimize their exposure to potential fraud?
Plan sponsors can reduce opportunities for fraud by putting reasonable controls onto their benefit plans, such as:
Reasonable and customary prices
Dollar and frequency maximums
What should a plan sponsor’s anti-fraud plan look like?
When it comes to fighting against fraud, knowledge is power and vigilance is the best defence. An effective anti-fraud plan should include:
Investments in network security systems
Employee training on fraud detection
Strong business security practices
Clear payment procedures
Limited number of employees authorized to make payments
Well-organized accounting systems to help detect unusual activity
What can plan sponsors do to engage their members in preventing fraud?
Plan sponsors can use their education programs and communication channels to empower members to recognize, reject and report fraud. We recommend all stakeholders:
Watch a recording of our Insights webinar on Busting Myths about Insurance Fraud to learn more about our efforts to protect benefit plans from fraud and abuse
Visit the fraud prevention page on our corporate website to learn more about our process and the role they can play in fighting benefit plan fraud and abuse
Visit CLHIA’s Fraud=Fraud website to learn about the impacts and consequences of benefit plan fraud and abuse.