Ask our Expert — How can plan sponsors prevent health insurance fraud?
A Q&A with Chad White, Director, Corporate Security, Medavie
Posted by Medavie Blue Cross on March 14, 2024
Ask our Expert — How can plan sponsors prevent health insurance fraud?
A Q&A with Chad White, Director, Corporate Security, Medavie
Posted by Medavie Blue Cross on March 14, 2024
To recognize Fraud Prevention Month, we sat down with Medavie’s Director of Corporate Security, Chad White, to learn how our organization protects benefit plans from abusive or fraudulent activity and how plan sponsors and members can play an important role.
What are the most common types of health insurance fraud?
Health insurance fraud occurs when an individual, service provider or other party submits false or misleading information to receive payment of an insurance claim. This can take many forms, from backdating a disability claim to submitting a fictitious or inflated medical claim.
At Medavie, we proactively combat various forms of fraudulent activities, which include:
- 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 accepting bribes for personal or corporate gain
- Improper handling or reporting of cash, equipment or property
Unfortunately, the health insurance industry is witnessing increased evidence of organized crime and unscrupulous service providers who convince plan members that their activities are legitimate or that they are entitled to money.
Why should plan sponsors and members be concerned about health insurance fraud?
There’s a perception that health insurance fraud is a victimless crime, far from it. Benefits fraud has consequences that go far beyond paying a higher personal premium. It can create the need for undesirable plan changes, limit or restrict member access to certain benefits and even reduce the overall sustainability of the benefit plan.
How much does health insurance fraud cost benefit plans?
Fraud is inherently about deception and is designed to go undetected, so we don’t have hard numbers on the cost. However, if you consider that Canada’s life and health insurers paid out a record $114 billion in benefits in 2022, even losing one percent of that amount to fraud is significant!
Why should plan sponsors and members be concerned about health insurance fraud?
There’s a perception that health insurance fraud is a victimless crime, far from it. Benefits fraud has consequences that go far beyond paying a higher personal premium. It can create the need for undesirable plan changes, limit or restrict member access to certain benefits and even reduce the overall sustainability of the benefit plan.
How much does health insurance fraud cost benefit plans?
Fraud is inherently about deception and is designed to go undetected, so we don’t have hard numbers on the cost. However, if you consider that Canada’s life and health insurers paid out a record $114 billion in benefits in 2022, even losing one percent of that amount to fraud is significant!
How does Medavie Blue Cross protect plans from fraud?
We have a unique and comprehensive fraud risk mitigation program that we manage internally called CrossCheck. This program takes a wholistic approach to fraud, employing a wide range of tools and processes. We also have teams of highly skilled forensic experts (certified fraud examiners, accountants, data analysts and cybersecurity professionals) who are trained and dedicated to detecting fraud and ensuring ethical conduct in all our transactions. These teams investigate tips, coordinate mail audits and conduct onsite audits.
What are the advantages of managing fraud internally?
While other organizations may outsource to a third party, we maintain our capabilities in-house to better protect our benefit plans. Our teams’ deep knowledge of our benefit plans and systems, combined with control over our data and technology, enable us to be adaptable and respond faster to suspicious irregularities. If we see a pattern or identify a new variant of fraud, we do not have to wait and can make that change within hours or minutes.
How is Medavie Blue Cross leveraging technology to fight fraud?
To tackle the complex and widespread issue of fraud, we constantly enhance our investigative methods. Our advanced fraud investigation system utilizes cutting-edge predictive analytics to improve pre-and post-payment monitoring, pinpointing anomalies for further investigation.
We use tools that employ Managed Machine Learning and Artificial Intelligence, which, combined with statistical modeling tools, allow us to analyze large groups of transactions, not just a sample. This tool has “robots” that search and analyze transactions for irregularities and patterns, signaling possible errors or fraud, and surpassing human capabilities in speed and precision.
How is Medavie Blue Cross leveraging technology to fight fraud?
To tackle the complex and widespread issue of fraud, we constantly enhance our investigative methods. Our advanced fraud investigation system utilizes cutting-edge predictive analytics to improve pre-and post-payment monitoring, pinpointing anomalies for further investigation.
We use tools that employ Managed Machine Learning and Artificial Intelligence, which, combined with statistical modeling tools, allow us to analyze large groups of transactions, not just a sample. This tool has “robots” that search and analyze transactions for irregularities and patterns, signaling possible errors or fraud, and surpassing human capabilities in speed and precision.
How is artificial intelligence (AI) being leveraged to fight fraud?
AI, Data Analytics, and Machine Learning expand our in-house capabilities and empower us to identify specific patterns within large datasets. This includes statistical modelling software to determine claiming patterns. Claiming patterns falling outside of normal expectations may be subject to further scrutiny depending on the nature of the anomaly. If the pattern turns out to be fraudulent, we can quickly embed that pattern into our detection software to identify whether other instances exist.
What are signs of fraud that plan sponsors can watch for?
In monitoring data, we look for trends or irregularities that suggest fraudulent activity. Similarly, 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
As a steward of their benefit plans, sponsors will be advised when we detect member activities that require action.
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 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 can plan sponsors do to engage their members in preventing fraud?
When it comes to fighting against fraud, knowledge is power and vigilance is the best defence. Plan sponsors can use education programs and communication channels to empower members to do their part to recognize, reject and report fraud. Here are some resources.
- Medavie Blue Cross Fraud Prevention webpage - Learn more about our internal processes and their role in fighting benefit plan fraud and abuse.
- Canadian Life and Health Insurance Association’s Fraud=Fraud website - Learn about the consequences of benefit plan fraud and tips to improve members’ fraud-fighting skills.
Medavie Blue Cross is a premier all-in-one carrier that provides health, dental, travel, life and disability benefits and administers federal and provincial government-sponsored health programs. Together with Medavie Health Services, we are part of Medavie, a health solutions partner committed to improving the wellbeing of Canadians. We are in the...