Benefits fraud and insurance abuse are not victimless – they are real crimes with real consequences.
The Canadian Life and Health Insurance Association (CLHIA) estimates that the industry loses more than $600 million per year due to fraud and insurance abuse by employees or by health care providers submitting claims on behalf of employees. This is a staggering amount of money that is paid out to the detriment of plan sponsors, i.e., employers, and who are forced to balance benefit plan coverage and the rising cost of care to meet the needs of all their employees.
At Pacific Blue Cross, we are focused on prevention, detection and the elimination of fraud to keep your plan safe. As a local health benefits provider, we have a deep understanding of the communities that we serve, which helps us spot any odd patterns. When we find fraud, we focus on recovering the funds and reallocating that money back into the affected policy.
What is benefits fraud and insurance abuse?
Benefits fraud happens when a person or group deliberately deceives the claims process for financial or personal gain. This can mean submitting a false claim, falsifying receipts, sharing benefits with others or misrepresenting services. Fraud can look like:
- receiving spa treatments and claiming them as registered massage therapy
- receiving non-prescription sunglasses and claiming them as prescription
- receiving a service yourself but claiming it under a dependent on your plan
- being encouraged to include incorrect or misleading information on a claim submission
- being pressured by your health or dental care provider to get unnecessary products or procedures
- being offered cash or other incentives to submit misrepresented claims
Types of fraud
Understanding and identifying the types of fraud, and what actions are considered fraudulent, is an important step in reducing fraud.
- Member fraud: Committed by a plan member
This can be falsifying receipts, submitting a claim for a service not received, sharing benefits, misrepresenting services being claimed by substituting actual services or products received that are not covered for ones that are, or sharing your coverage or ID number.
- Provider fraud: Committed by a health care provider
This can look like submitting false claims, claiming for services more expensive than what was provided, providing incentives to plan members such as material items or gift cards, or misrepresenting services being claimed by substituting actual services or products received that are not covered for ones that are, or misrepresenting a service rendered by an ineligible practitioner/service by claiming under an eligible practitioner’s name/service.
- Collusion: Committed by a plan member and provider working together
This can look like false submissions (submitting claims for missed or cancelled appointments), claim inflation and switching the claimant. This can include offering incentives, like submitting a receipt for products or services not provided while receiving or offering in-store credit for products or services that are not covered by the benefit plan, as well as colluding to misrepresent a service rendered by an ineligible practitioner/service by claiming under an eligible practitioner’s name/service.
What is abuse?
Abuse may not be intentional fraud, but it still has consequences. Abuse involves the misuse or overuse of resources, like excessive treatment or products beyond what would be considered as reasonable or medically necessary. Ultimately, these types of claims are not eligible expenses and impact plan sustainability.
Benefits fraud can be committed by plan members, health care providers or through collusion. All acts of fraud are illegal, and they cost Canadians hundreds of millions of dollars each year. More than that, they threaten the sustainability of all benefits plans every day. Unfortunately, anyone can be impacted by fraud even if they’re not involved in fraudulent activities. It may seem like a victimless crime, but we all end up paying the cost of fraud.
- Increased premiums: Fraud increases plan costs for the employer – putting your own coverage at risk. You may end up needing to pay increased premiums or lose certain benefits to cover these higher costs.
- Inability to get insurance: Committing fraud could lead to the creation of inaccurate or false records, which could affect a plan member’s ability to get insurance.
- Reduction of benefits: When employers can no longer afford the additional costs brought on by benefits fraud and abuse, this results in the reduction or elimination of benefit plans.
Many people think that if they are caught committing benefits fraud, they may face higher premiums or only be required to return the money. However, the consequences can be far more serious, including a loss of or reduction in benefits, loss of job or a criminal record.
Claims Fraud and Abuse Approach
Our Strategy: The most powerful way to tackle benefits fraud is to eliminate any opportunities that allow it to happen in the first place. We recognize that fraud and insurance abuse is constantly evolving, so our strategic approach incorporates a proactive, continuous improvement structure to help us stay on top of new and emerging trends. We take a holistic enterprise-wide approach to tackle claims fraud and insurance abuse through:
- Prevention: Strong preventative systems and processes that avert fraud or abuse attempts in the first place.
- Detection: We utilize analytics to detect claiming patterns and anomalies, as well as a variety of reporting mechanisms to effectively detect potential fraud early and stop it in its tracks. We are local, allowing us to notice things that larger organizations might not, and we use effective detection processes that greatly increase the likelihood of fraud or abuse being uncovered early. We are also proud to be a participating insurer in the Data-Pooling Program led by CLHIA
- Investigation: We do professional investigative work that always develops a strong evidentiary case, leading to successful resolution.
- Resolution: Recovery of funds and allocating back to the affected plans, and action to escalate to regulatory and law enforcement to increase individual and general deterrence.
- Education: We believe educating our members and providers to recognize fraud and insurance abuse is a key component to our approach. Fraud affects us all, so let’s work together to prevent, detect and create awareness to eliminate fraud!
Report suspected fraud to the Pacific Blue Cross team directly or anonymously via our third-party Whistleblower Hotline:
- Pacific Blue Cross Claim Fraud and Abuse Investigations team: firstname.lastname@example.org