According to estimates from the Canadian Life and Health Insurance Association, benefits fraud results in the loss of two to 10 per cent of health-care dollars. In terms of preventative measures, Sun Life Financial estimates it saves plan sponsors about $20 million a year, while Great-West Life Assurance Co. suggests its strategies resulted in savings of $11.4 million in 2017.
Since March is Fraud Prevention Month, what measures are group benefits providers taking around fraud and what can employers do to help?
“We’re certainly, as an organization, feeling more and more like this is a large industry problem that needs to be taken on by all the various carriers and other parties in the industry,” says Dave Jones, senior vice-president for group benefits at Sun Life.
Service provider fraud and collusion schemes are growing, he adds, citing the example of a provider that offers a plan member orthotics but also throws in a free handbag or pair of shoes. “[If] you take the handbag and pair of shoes and you never come back to pick up the orthotics, that’s fraud, and that happens on a fairly large scale.”
For Sun Life’s part, it’s investing in big data to analyze networks of benefits fraud. Rather than looking at a single claim or person, it looks at the behaviour among a network of people. “We start with the big data analysis . . . and then they might hand that particular base to investigators that would employ a number of techniques, which might be as simple as validating claims with providers, with members, right through to the more complicated and interesting undercover investigations on-site at a provider to see what happens,” says Jones.
Sun Life also uses predictive analytics, he adds. It takes a range of variables into account and then creates a model that can apply to a situation to predict claims patterns. “And where you find different patterns than what is expected by past behaviours, you find potential for investigation as well,” he says.
One of the actions taken by Sun Life when it does find evidence of potential benefits fraud is to delist providers. In 2017, it delisted more than 1,000 providers across Canada. “Where we do find behaviour that is difficult to explain — and we will work with providers to ask them to explain it — if we can’t get solid explanations . . . we will delist the providers,” says Jones.
“If we’re finding more than 1,000 entities a year that need to be delisted, I wonder what others are finding?” he adds.
Great-West Life and Manulife Financial Corp. were unable to provide those numbers. However, both insurers are also using analytics to investigate benefits fraud.
“Cases of collusion require more sophisticated tools and analytics, along with well-developed investigative techniques,” a spokesperson from Great-West Life wrote to Benefits Canada. “This is especially true when it’s collusion between plan members and service providers. When multiple parties are involved, the stakes grow higher and the level of secrecy increases.”
Manulife has a number of controls in place to help fight and prevent fraud prevention, according to Marija Mandic, vice-president of global external communications. They include a team of data scientists, programmers and analysts who identify irregular activity and trends.
Mandic also says there’s an overall misconception that it’s employees’ right to maximize their benefits. “The misuse of benefits leads to increasing health-care costs for an employer and their members. It’s important to help plan members understand how their plan works and how to properly protect it,” she says.
Both insurance companies and plan sponsors should be raising awareness about benefits fraud, making it clear to employees that defrauding a group health plan is also stealing from an employer and an insurer, as well as taking funds that could support the health of Canadians, says Jones.
“I think there’s a big role that employers have in educating their employees that it is theft, that it is fraud, that it is a crime, that there are people in Canada that have not only lost their job but had to go to jail over this, and that it’s something we ought to all be pursuing, whether it’s through employment practices that make it clear there will be a zero tolerance for fraud or whether it’s through simple education programs so people realize maybe [they] shouldn’t do that,” he says.