A dentist bills for time in the chair rather than time spent on treatment. A medical facility where claims are submitted under a licensed therapist’s credentials, when services were provided by unlicensed providers. A pharmacist bills non-prescription items as prescription drugs. These are common examples of fraud.
Canada’s group benefits system processes hundreds of millions of claims each year across health, dental, pharmacy, vision, medical/paramedical, and disability coverage. Running alongside that legitimate activity is a parallel economy of fabricated receipts, inflated invoices, and co-ordinated schemes that cost employers hundreds of millions of dollars annually.
Understanding how the fraud works — by benefit type, by scheme, by actor — is the starting point for stopping it, said Shelley Frohlich, AVP of fraud risk management at Sun Life.
Fraud vs. abuse: An important distinction
Before cataloguing the schemes themselves, it is worth clarifying the difference between fraud and abuse — terms often used interchangeably but carrying different legal and practical weight.
“Benefits fraud includes any dishonest act or omission intended to deceive or mislead for personal or corporate gain. Abuse involves excessive treatment or products beyond what would be considered as reasonable or medically required,” Frohlich said. “An example of benefits fraud is when a plan member intentionally provides false information on a claim to obtain financial reimbursement for expenses that would not otherwise qualify for coverage. An example of abuse is when a health care provider performs unnecessary treatment on a plan member to maximize their billings.”
Both drive up costs. Both are problems. But fraud carries potential criminal consequences that abuse does not. Delisting has become common practice across the industry to mitigate against both provider fraud and abuse.
Dental: A high-value target
Dental benefits represent one of the largest segments of the group benefits landscape. According to the Canadian Life and Health Insurance Association, dental care accounted for $7.2 billion of the $26.6 billion in insurance benefits paid out in Canada in 2020.
Common dental fraud schemes identified by Frohlich include:
- billing for time-related procedures based on appointment length rather than actual treatment time;
- changing service dates on claims that were previously declined;
- using an eligible procedure code to obtain payment for a service that falls outside plan coverage;
- upcoding procedures to claim reimbursement for more complex work than was actually performed;
- unbundling claims by submitting several procedures separately to receive higher reimbursement; and
- billing for procedures that were never rendered.
Pharmacy: Testing the system
Pharmacy fraud tends to be more transactional in nature and often involves plan members rather than just providers.
Common patterns identified include pharmacies submitting claims for specialty drugs without having the approved certification and equipment and billing non-prescription items as prescription drugs.
Sun Life’s fraud detection system looks specifically for these patterns:
- anomalous pharmacy behaviours;
- doctor and pharmacy shopping for duplicate medications; and
- plan members who appear to be testing coverage limits through repeated claims.
Paramedical, medical equipment and vision: Subjective necessity
Paramedical services and medical equipment present a heightened risk due to the variability in provider billing practices and medical necessity. The nature of certain paramedical treatments, medical equipment and vision care products can increase vulnerability to misuse.
“Services may be rendered by unqualified or ineligible providers. To circumvent plan eligibility requirements, plan members may receive a receipt that’s in the name of a service provider who didn’t render the service,” Frohlich said.
Medical equipment fraud may occur when a provider issues a receipt for a higher-cost item than what was actually dispensed to the patient. This practice constitutes a misrepresentation of products supplied.
Vision care fraud, she said, often involves submitting claims for prescription eyewear when non-prescription items — designer sunglasses, for example — were actually purchased.
Collusion: When provider and plan member work together
The most serious and costly form of benefits fraud involves collusion: two or more parties working together to systematically defraud a plan. Collusion is difficult to investigate because there is mutual cooperation between involved parties with little to no incentive to expose the scheme.
“A example of collusion is when, a provider may work with a plan member to submit claims for services or products that were never actually delivered. The provider and plan member then split the reimbursement funds,” Frohlich said.
Plan sponsors can also become a target to collusion schemes when multiple employees collaborate with service providers or fabricate receipts between themselves to fraudulently submit under their benefits plan. The fraud can escalate through word of mouth, with additional employees joining the scheme.
Providers who recruit plan members into fraud and abuse schemes use a range of tactics, Frohlich said.
“Offering inappropriate incentives — free merchandise, gift cards, cash-back — to get the member to purchase medical items not required. Use-it-or-lose-it mentality. Minimizing the impact of benefits fraud to the plan member. Assisting the member in rationalizing the act as something other than fraud.”
Red flags for plan members
Frohlich outlined several warning signs that should prompt plan members and employers to take a closer look. Practitioners offering to waive the co-pay, or providing cosmetic services and offering to bill them as covered treatments, should raise alarms.
So should providers asking plan members to sign blank claim forms, or providing receipts that do not match the services received.
“High-value medical items — like orthotics or compression stockings — without a medical assessment, or offering incentives to use your benefits” are another warning sign, she said, as are receipts that lack specific details about the service or product, or receipts listing providers or clinic locations the plan member has not received services from.
