Do you know what benefit fraud looks like?
BY Dave Patriarche, Mainstay Insurance Brokerage Inc. | October 16, 2012
In the Greater Toronto Area (GTA), the hardest hit areas have been medical equipment and services, including orthotics, surgical stockings and paramedical services.
This fraud can be performed with or without the employees consent and unfortunately in many cases the employees are complicit.
Fraud can be small dollar claims like a health spa performing manicures or pedicures and then providing a registered massage therapy receipt. The employee then submits the RMT receipt for reimbursement.
Some spas provide a service where they will review a client’s employee benefit booklet to see how they can best service the person and their family. They will review the booklet and look for areas where they have so-called arrangements with providers.
For example, an employee might be told: “Your plan has $500 for chiropractor treatment, $500 for massage therapy, $500 for registered acupuncture treatments, $500 for physiotherapy and $500 for naturopathic treatments. These combined will add up to $2,500. You pay us $2,500 cash and we’ll give you $2,500 on account to use for whatever services you want. Massage, haircuts, waxing, facials etc. Married? We can add the same amount for your spouse and each eligible child.”
Massages and spas aren’t the only sources of fraud. Employees may be offered orthotics or braces that are “off the shelf” products that are not custom made and therefore not eligible under most plans. The provider will mark the receipts as providing a custom-made product, which the employee will then submit for reimbursement under their plan.
Is it fraud?
Some areas of fraud are less obvious to employees. A dentist providing legitimate treatment that offers to forgive the 20% coinsurance on an 80% plan for example. Is this fraud? The insurer is not paying any more for the claim, and the employee is not paying their full portion. It is fraud. A dentist may choose to offer an employee a discount, but you are required to pay 20% of that discounted price while the insurer will pay the other 80%.
There is a new vertically integrated type of fraud that is occurring more often. This is where fraud is perpetuated at all levels, often without the knowledge of employees or the health care practitioners. Employee data can be obtained from a variety of sources including low-tech approaches as rummaging through dumpsters near health care clinics to find names or receipts. The organizers will also steal the practitioners’ registration numbers and file claims using the employee data and the practitioners’ registration information. This happens quite often in auto insurance where fake accidents are staged and fake injuries are billed using real people and real healthcare professionals data to obtain payment.
While insurers are constantly on the watch for these kinds of fraud, they are very difficult to catch and police are slow to respond to these “smaller” white-collar crimes.
If you are aware of these types of situations happening with your clients, call the insurer (many have tip lines where you can remain anonymous). Also consider setting up an employee meeting to educate everyone on what is and isn’t fraud. Ultimately any misuse, abuse or fraud of a benefit plan drives prices up and risks the benefit plan coverage for everyone.
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