Stay on top of insurance and benefits news

How to Protect Your Startup From Group Benefits Fraud

March is a month that is rich with big-ticket activities. The annual NCAA March Madness basketball tournament kicks off, St. Patrick’s Day celebrations, and the start of spring (for us in the Northern Hemisphere.) But there’s another theme that flies under the radar that doesn’t get enough attention as it should – March is Fraud Prevention Month.

Fraud Prevention Month was designed as a way to encourage Canadians to get well informed about fraud and how they can protect themselves. The narrative is continuing to take flight so much so that Manulife created a pilot program designed to significantly reduce the risk of fraud against group benefits health plans by featuring trusted providers on their network list. This identifies providers as having high standards of professionalism, integrity and business practice.

According to the Canadian Health Care Anti-Fraud Association, fraudulent claims cost the industry between $1.2 billion to $6 billion every year. And with more cases of fraud grabbing headlines, it’s important to know what it is and how you can protect your startup from group benefits fraud.

You can’t let a few bad apples erode a benefits plan for everyone else.

What Are Some Common Misuses and Types of Fraud?  

The most common types of benefits fraud among plan members are submitting false claims for services they didn’t receive and increasing the number or dollar amount of services provided. This was the case when 12 TTC employees faced criminal charges for submitting false claims totalling $5 million to a health clinic where no product or service was obtained, or where receipt amounts were inflated.

Here are some common types of benefits fraud:

  • Kickbacks or illegal referrals. Atlas Copco was at the centre of a criminal trial in Sudbury, Ontario in which inflated or false invoices were provided to the insurance company totally $20 million in kickbacks.
  • Dishonesty: Providers could be performing services outside of their scope of practice or licensing.
  • Fraudulent claims for health services: For example, receiving running shoes and billing them as orthotics.
  • Disability fraud. Exaggerating or lying about a medical problem and receiving payments for it.
  • Claims for services that have not been rendered. For example, dentists could be submitting claims for fake root canals.

Recognizing Benefits Fraud: What are the Signs and Symptoms?

Insurance companies are now providing a list of different paramedical practitioners across the country that they no longer accept claims from, and are delisting providers on a regular basis. The big insurance companies now even have former police officers working for them to help mitigate these issues.

  • It is natural to see people using up their benefits at the end of the year, so it’s normal to see spikes occur in December. However, if you’re well into your plan and a significant spike continues month after month – then that’s a major red flag. For instance, the City of Toronto saw a spike in claims for erectile dysfunction drugs, which was four times more than other employers with benefits plans, raising serious concerns about fraud.
  • Tracking the different addresses that show up on claims is a method of finding out if there are discrepancies that need to be investigated.
  • You typically see a lot of abuse with paramedicals; so if there are changing claim patterns in a particular area, from a certain clinic or provider, it’s important to play an active role to see what these pattern changes mean.
  • It’s a major red flag if plan members can’t verify the accuracy of their benefits statements for any health treatments they receive. 

How a Broker Can Protect Your Company Internally

Brokers can help take a proactive approach in protecting fast-growing startups with their benefits coverage and to make sure that abuse or neglect doesn’t drive up their premiums. Here are four unique ways that an insurance broker can help startups curb benefits fraud.

  1. Running Quarterly Audits

Every quarter your broker will run a claims experience report that actually shows how the claims have been for your company as a whole, not just for an individual. This audit will show where all of your claims have been and then you can start to see some red flags arise if they are way above the anticipated numbers. A broker takes active steps to make sure health benefits claims abuse doesn’t get the chance to take shape.

  1. Asking for Clarification

In a small business, you can get a good idea if someone has been sick and are filing for legitimate claims, but advisors can dive a little deeper to validate all of this activity and find out what might have caused this surge by breaking it down into massage claims, physiotherapy, acupuncture, and medical and dental.

  1. Providing Education

Brokers will help employees understand that they can’t just place blind trust in their health-care service provider, which can lead to over-billing. A broker will ask for clarification to truly know what your plan is being billed for. They will also help make sure the members know what is involved in a health benefits policy so there isn’t any confusion.

  1. Health-Care Spending Accounts 

Health-care spending accounts are quickly emerging as a popular alternative to group plans as a cost-effective, convenient and flexible way to meet the different and changing needs of employees. You have full control over the cost of claims because employees can only claim to pre-determined limit and the amount is displayed at the bottom of each explanation of benefits.

While March is Fraud Prevention Month, it’s important to remain vigilant all year round. We can work together to prevent fraud and provide the best group benefits experience in the industry. Contact us today to learn more about how IPFS can help with fraud prevention for your startup.