Many insurance providers and third-party administrators have established in-house investigation teams, tools, frameworks and approaches to help combat cases of group insurance fraud. While these resources have grown in complexity and effectiveness over the past decade, plan sponsors can help by being a partner in this fight.
Benefits fraud comes in several forms, including fraudulent claims for health services and disability fraud targeting both employer-sponsored disability insurance and workers’ compensation benefits. In most cases, these schemes include some or all of the following characteristics:
- claims for services not actually rendered;
- providers performing services outside of their scope of practice or licensing (e.g., there have recently been cases of practitioners giving Botox injections with materials sourced from other countries);
- unlicensed individuals performing insurable services;
- the provision of treatment over and above what is needed by the insured patient; and
- kickbacks or illegal referral payments.
There are countless variations on these schemes in the health insurance world. For example, one employee was caught manufacturing claims for himself and his spouse. Once he realized that he could print fake receipts, he began to do this on a regular basis, until he was eventually caught by a vigilant claims adjudicator who noticed similar patterns among claims submitted to different providers. Careful examination showed that these claims were all prepared by the same person and were all fraudulent. Further examination found that the employee was working to maximize his return by coordinating benefits across multiple insurers.
In other instances, employees have been caught manufacturing claims for a number of people in their company plan. With a few common tools—Photoshop, a scanner and a colour printer—these employees have been able to create facsimiles of legitimate claims that looked realistic enough to avoid the scrutiny of claims adjudicators who are processing hundreds of claims each day. The scheme’s ringleader will recruit several plan members to submit these false claims and then split the proceeds. Before long, a network like this working within a company can bilk the plan out of hundreds of thousands of dollars.
While many of these cases are handled outside of court through restitution arrangements that allow plan sponsors to recover some, if not all, of the losses, the disruption caused by this activity can have long-term implications for the affected organization. In one recent case, the plan sponsor and insurer worked together to identify the ringleaders and key participants. Arrangements were made through legal counsel for repayment of the funds.
One warning sign of fraud that benefits plan administrators should look for is changing claims patterns. An increase in a particular area of claims, or in claims originating from a particular clinic or specific healthcare provider, may be the result of a bona fide need. But in many cases, it’s an indicator that an in-depth fraud investigation should be conducted.
Act early
The best thing any plan sponsor can do to mitigate health benefits claims abuse is to take active steps to prevent it from occurring. An organization’s best defence against healthcare fraud is educating its plan members. Involve your members in the management of their health plan dollars. Ensure that all benefits recipients receive, and are familiar with, a description of the benefits policy. This will help to avoid confusion about the scope of coverage and reduce the likelihood of accidental misuse.
Encourage plan members to verify the accuracy of all explanation of benefits statements for any health treatments they receive. Instruct members to immediately report any discrepancies between the service or products they received and what was billed.
Enlist employees and encourage them to be vigilant against people misusing their plan dollars. Set up a way to report suspected fraud activity. Most insurance companies use some type of anonymous tip-reporting mechanism, usually by phone or online. Plan sponsors should make the presence of these services known and encourage members to use them when appropriate.
Another effective prevention mechanism is to share the cost burden with your plan members by introducing co-pays and deductibles. These can induce plan members to take more responsibility for the cost and frequency of their claims submissions. Many plan sponsors have taken to capping benefits in certain areas, such as orthotics and medical stockings, to control costs amid rising claims. Most benefits managers recommend against unlimited benefits of any kind, since they are costly and very difficult to retract once paid.
Plan sponsors should ensure that they select a plan administrator that adheres to the latest standards and best practices in fraud prevention. When interviewing prospective administrators, ask about their anti-fraud policies and the kinds of resources they have dedicated to fraud containment and risk management. The chosen administrator should be accountable for maintaining and improving these standards through continuous upgrades to critical systems and staff.
Plan sponsors should do their utmost to create an anti-fraud culture within the organization. Have clear policies and guidelines on appropriate utilization of benefits, and take steps to raise employee awareness about the cost of the problem. Explain how fraud can negatively affect plan members, their benefits and, possibly, their employment status. If you have concerns about your plan design and/or risk exposure to healthcare fraud, be sure to contact your benefits administrator.
Joel Alleyne is executive director with the Canadian Health Care Anti-fraud Association. ed@chcaa.org
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