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Crime Costs
5 scams that could be placing your benefits plan at risk

By many estimates, up to 10% of health-related insurance benefits are squandered through fraud. Putting the figure another way, the Canadian Group Insurance Brokers association says this crime accounted for up to $8 billion in healthcare spending in 2007 alone.

The victims of these crimes are not limited to faceless insurance companies. The cost of fraud can translate into higher service costs, lead to steeper insurance premiums, or sacrifice a plan’s available coverage.

It can even make it more difficult to access a service you need. There was a time, for example, when orthotics could be quickly prescribed to those who struggle with back problems. That process had to be tightened to include formal visits with a medical specialist like a chiropodist or podiatrist as well as a formal examination of your gait.

Unfortunately, thieves have been pretty creative when finding new ways to defraud these valuable programs. Consider these 5 scams that may be putting your coverage at risk:

1. Code breakers

There is no secret that some dental procedures cost more than others. But unscrupulous dental offices have been known to change the codes on their invoices, making it look like the bill for one procedure was actually linked to a different procedure covered by a benefits plan. A close look at the invoice for a new set of crowns, for example, may uncover the codes for a series of fillings; a simple procedure may be described as a complicated extraction.

2. The shoe sham

One Toronto chiropodist offered patients $150 gift certificates to a local sporting goods store, but issued receipts so the cost could be billed to insurance plans, according to a College of Chiropodists’ discipline decision. Patients who received “prescribed” Birkenstock sandals were handed receipts for custom-made orthotics.

It led to a massive cost for benefits providers. In one year alone, he purchased more than $323,000 in gift certificates for this purpose.

3. Bought benefits

Some fraudsters have been known to buy and sell benefits like commodities.

The crime works something like this: A scam artist buys a plan holder’s available coverage for pennies on the dollar. A massage therapist is then paid to issue a bogus receipt, which is then used to claim the maximum amount allowed under the benefits plan.

Plan holders who sell their policy numbers may pocket some short-term profits, but they will also be left exposed to any legitimate medical costs that emerge.

4. “Spa” treatments

In one report, CBC News uncovered spa owners who recorded esthetic treatments as therapeutic massage so the treatments would be covered by insurance plans.

5. Doctored receipts

Plan holders who have already claimed their “calendar year maximums” may be greeted by an offer to change the date on an invoice, to make it look like a procedure was completed in the following year.

It is not the only way that receipts have been doctored. Fraudsters have been known to apply the cost of one client’s procedure to another client’s benefits package, or even charge for services which were never actually performed at all.

Plan holders can help to protect their benefits plan from these scams by asking for detailed receipts which include exact amounts, descriptions of every treatment, and the date of the service. They can also report any suspected fraud through groups including the Canadian Health Care Anti-fraud Association, Ontario Ministry of Health, Workers Safety and Insurance Board, Insurance Bureau of Canada, police, or benefits providers.

For their part, employers can offer different tiers of coverage depending on an employee’s years of service. This will limit the exposure related to short-term employees who plan to defraud the programs as much as possible during their brief time on the payroll.

Unfortunately, these scams are difficult to track. Fraudulent invoices can slip through the cracks without being checked, as benefits providers look to process insurance claims as quickly as possible. And an increase in the number of invoices submitted through a benefits plan may simply indicate that employees are maximizing the value of their programs.

But a little education can educate employees about the true cost of the fraud which puts these programs at risk, and help them take a bite out of this growing and costly crime.

Top Tips:

  • Encourage employees to ask for detailed receipts for any healthcare services, itemizing every treatment as well as the proper date of service.
  • Use tip lines to report suspected cases of fraud.
  • Base the amount of coverage on an employee’s years of service. This will limit exposure to short-term employees who want to defraud plans for as much as possible before leaving the payroll.

The Buzz Bits
Miscellaneous links to interesting benefits information

Did you ever wonder what single thing can make the biggest difference to your health? Click on the following link offered by Dr. Mike Evans, a family physician at St. Michael's Hospital, to find out.

What plan sponsors need to know

Protect your benefits plan from fraud

9 fraud prevention tips for benefits plan members

Community Ethics, Big City Expertise

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