The impact of fraud on benefit plans has screamed onto the income statements of employers, and in turn onto the paycheque of employees. Premiums are being driven up all across the country by employees and organizations who are running fraudulent claims through their private benefit plans. In this post I will focus on the Alberta market, and the common types of fraudulent claims we are seeing.
Medical equipment fraud has risen sharply over the past 3-5 years. This year alone we have witnessed this type of fraud hit into the hundred of thousands of dollars for a single company. These fraudulent claims often fall under custom hosieries, compression stockings, and foot orthotics. For these benefits, the catch is they often “look” like Birkenstock shoes, golf shoes, or other footwear…being worn by your employees. Practitioners are writing the prescription and through their own “connections” or a partnering company are selling a consumer items like running shoes, as opposed to the custom hosieries.
This whole process is not always driven, or even given thought to, by your employees. This is because it is very common for the service provider to approach the employee. They then “educate” and “coach” the employee on how their plan covers these items. From the employee perspective this can be appealing given they often have to contribute portions of their paycheque to plan premiums. Ethics aside, this is happening and often spreads rapidly though a given company’s plan once the word gets out about how to obtain these types of items through the plan.
So what are the insurers doing? The most common step right now is that the insurers are no longer paying out claims from providers who they suspect of committing these offences (“known as delisting”). Unfortunately, the damage is typically done before there is enough evidence to delist a provider. The more concerning aspect of this for me as an advisor is knowing the provider community (i.e. medical supply stores, dentists, paramedical practitioners etc.) view your plan as a way to generate income. Providers know employees are less likely to use their service or buy their products out pocket, however, are very receptive when using their benefit plan. The dentistry industry has become a prime example of this. Even though they are operating legally and ethically– they never miss an opportunity to proactively book you for a check-up when your plan allows. Now other industries are finding ways to build revenue via your benefit plan, and some professionals working in these industries are using fraudulent tactics to profit.
Lastly, we have recently been informed that Sun Life has helped provide incriminating evidence on a local scam using CPAP machines (breathing monitors). In these cases the employee and the “provider” share in the profits of a fraudulent claim being paid, and no equipment being provided.
All of these fraudulent claims are having a significant impact on benefit plans, and in turn their premiums. At the very least, it is something to be monitoring in your claims experience going forward.
Matt Fraser has spent the last 14 years as a Group Benefits Consultant at Silverberg Group. Having continuously challenged the status quo Matt has pushed past the normally accepted results many employers and insurers have considered the standard. This has allowed Matt to become a leader in the area of claims and expense management. When you work with Matt employers will receive transparent information about the industry, they will be informed as to the innovative products and solutions in the market place, and they will have an advisor who focuses on guiding them away from risks and towards the opportunities that align to their employee benefit plan philosophies.