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Fraud Requires Extra Vigilance to Protect Benefit Plans

Posted by Medavie Blue Cross on March 17, 2022

Fraud Requires Extra Vigilance to Protect Benefit Plans

Posted by Medavie Blue Cross on March 17, 2022

Technology is an indispensable tool for doing business in our modern digital economy. However, when COVID-19 measures forced companies to shift their operations from the secure walls of their office buildings to the remote at-home offices of their employees, criminal elements exacerbated a trend we were seeing in increasingly sophisticated, widespread benefit fraud, resulting in record-setting losses for Canadian businesses.

In 2021, losses reported to the Canadian Anti-Fraud Centre reached an all-time high, with nearly $380 million being lost to scams and fraud — an increase of 130% compared to 2020. Given that fewer than 5% of victims file a fraud report with the CAFC, that’s a mere fraction of the total.

Top 5 Scams and Frauds

Based on reports to the CAFC, the top five most reported scams and fraud in 2021 were extortion, phishing, merchandise scams, service scams and vendor fraud.

Behind the numbers are real impacts on businesses and consumers. Defrauding health and dental benefits alone can drain critical resources from plans and raise costs, which can lead to an increase in premiums, a decrease in coverage and, in some cases, can jeopardize the stability of an organization.

Fraud Prevention Month

That’s why insurers like Medavie Blue Cross, join with the CAFC, the Royal Canadian Mounted Police and the Competition Bureau, in raising awareness about ways plan sponsors and members can protect their benefits from fraud during Fraud Prevention Month in March. The goal of the annual campaign is to help Canadians “recognize, reject and report scammers trying to rob them of their hard-earned money.”

We believe benefit fraud mitigation is essential to improving plan sustainability and protecting the health and wellbeing of plan members.

Fraud Red Flags

One of the best ways to mitigate fraud is to prevent it from happening in the first place. Here are some of the signs businesses should watch for in monitoring their plans for fraudulent activity:

  • 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

Fighting Fraud Together

Businesses can reduce opportunities for fraud by putting reasonable controls onto their benefit plans. Among the preventative steps we recommend businesses take to keep their plans safe from fraud are:

  • Ask to have reasonable and customary prices structured into the plan
  • Attach dollar and frequency maximums to each benefit
  • Conduct regular monitoring of plan costs and utilization
  • Ask questions when something seems wrong or doesn’t make sense

Medavie Blue Cross is an industry leader in fraud risk management with state-of-the-art, non-intrusive prevention and detection capabilities to protect the integrity and the sustainability of the benefit plans we insure and manage. Our comprehensive fraud risk management program, CrossCheck, is focused on the proactive detection and response to attempts to defraud client benefit plans. CrossCheck takes a holistic, approach to the mitigation of benefits fraud and abuse, incorporating preventative, detective, investigative and enforcement controls and processes organization wide.

New National Initiative

To complement our program, Medavie Blue Cross is taking part in a national benefits industry initiative to pool claims data and use advanced artificial intelligence tools to enhance the detection and investigation of benefits fraud.

Every insurer in Canada has their own internal analytics to detect fraud within their book of business. This new initiative, led by Canadian Life and Health Insurance Association (CLHIA), will deploy advanced AI to analyze industry-wide anonymized claim data.

In announcing the initiative, CLHIA President and CEO Stephen Frank said the technology “will give insurers the edge they need to identify patterns and connect the dots across a huge pool of claims data over time, leading to more investigations and prosecutions.” The initiative is expected expand in scope in the coming years to include even more industry data.

Canadian insurers paid out nearly $27 billion in supplementary health claims in 2020. However, they and employers lose millions of dollars each year to fraudulent group health benefits claims ― costs that are felt by everyone and put the sustainability of group benefits plans at risk.

That means insurers, plan sponsors and members alike have a vested stake and responsibility to recognize, reject and report health benefit fraud.

Knowledge is Power

Explore our Insights page for more expert advice on fraud prevention including:

Learn more about our fraud prevention program and the ways we protect plans.