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A Plan Sponsors’ How-to Guide to Fighting Benefits Fraud

By Chad White, Director Corporate Security, Medavie

Benefits fraud is a real crime with real consequences. Canada’s insurers paid $40.8 billion in supplementary health claims in 2021. Consider that if only one percent of that were fraudulent, millions of dollars from insurance plans and employers would be lost each year.

The costs of fraud are felt not just by insurers but by employers and their employees as well, potentially resulting in higher plan costs and reduced benefits. Fraud puts plan sustainability at risk, costs people their jobs and can unnecessarily hurt the reputation of an entire health profession when it is found out.

Medavie Blue Cross is committed to protecting the integrity of our benefit plans for our policyholders and members by monitoring and resolving any abusive or fraudulent activity. We believe benefit fraud mitigation is essential in improving plan sustainability and protecting plan members' wellbeing.

Our fraud risk management program

CrossCheck is our unique and comprehensive approach to fraud risk management, incorporating preventative, detective, investigative and enforcement level controls and processes throughout our organization. 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.

In monitoring claims and analyzing data, we look for trends, irregularities or outliers that suggest fraudulent activity. Plan sponsors and members can play an important role by recognizing and reporting activity they believe may be fraudulent.

Watch for warning signs

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
  • A 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

Put anti-fraud measures in place

Plan sponsors can reduce opportunities for fraud by putting reasonable controls on their benefit plans, such as:

  • Reasonable and customary prices
  • Dollar and frequency maximums

Key elements of an effective plan

When it comes to fighting against fraud, knowledge is power, and vigilance is the best defense. An effective anti-fraud plan should include the following:

  • 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

To protect the benefit plans we insure and manage from fraud, we are participating in an industry-wide, multi-year initiative using advanced artificial intelligence and data pooling to analyze anonymized claim records. Led by the Canadian Life and Health Insurance Association (CLHIA), the program will identify patterns across millions of records from group plan insurers to enhance the effectiveness of benefits fraud investigations across the industry.

Fraudsters are getting more sophisticated. This technology will give insurers like Medavie Blue Cross the edge to connect the dots across a massive pool of claims data over time, leading to more investigations and prosecutions. Similar practices have been adopted in the P&C insurance and banking industries resulting in positive outcomes in detecting fraud.

To learn how you and your organization can help insurers fight benefit fraud and keep your plans safe from fraudulent activity, visit the Fraud = Fraud and the Medavie Blue Cross websites. Fraud = Fraud is a public awareness and education campaign sponsored by insurers such as Medavie Blue Cross to help plan sponsors and members better understand benefits fraud and what they can do to prevent this crime. Additional educational resources are available through a new microsite set up as part of the anti-fraud initiative.

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