Canadian HR Reporter

CANADIAN HR REPORTER September 5, 2016 FEATURES 15 ORDER YOUR COPY TODAY! Visit carswell.com or call 1.800.387.5164 for a 30-day no-risk evaluation THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES AND COURTS. With more than 1,400 pages of essential legal references, Ontario Lawyer's Phone Book is your best connection to legal services in Ontario. Subscribers can depend on the credibility, accuracy and currency of this directory year after year. 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(prices subject to change without notice) Compensation Surveys Incentive Programs Job Descriptions Job Evaluation Pay Equity Performance Appraisal Salary Administration Sales Compensation (416) 498-7800 www.resourcecorporation.com COMPENSATION CONSULTING BENEFITS Fighting benefi ts fraud Insurance fraud prevention requires joint approach between plan sponsor, insurer By Diane Bezdikian I t's estimated fraud costs Ca- nadian life and health insur- ers hundreds of millions of dollars every year, according to the Canadian Life and Health Insurance Association. These costs also impact group insur- ance plan sponsors. Two examples of group benefi ts frauds recently detected by Great- West Life highlight the nature of fraudulent activity faced by the insurance industry. One case began with a simple massage therapy claim that the insurer's fraud systems flagged due to high claim volume within a family. A full review of the plan member's claim history turned up a false hospital receipt, among other inconsistencies. When the plan member was asked to provide details of her hospital stay, she submitted a bank statement into which she'd insert- ed false information, in an attempt to show the hospital charge. She also provided a fake name and phone number for a contact per- son to verify the invoice. Deeper investigation revealed $15,000 in suspected fraudulent claims, which was reported to police to pursue restitution and criminal charges. In another situation, a service provider was found to be com- mitting fraud in collusion with a plan member. A tip from a former member revealed four clinics with the same owner were working with some patients to commit fraud. e clinic submitted claims for paramedical services on behalf of patients but, in reality, provided non-insured spa treatments to the plan members. An undercover investigator visited the clinics and was off ered participation in the fraud scheme and even received gift certifi cates for spa services in exchange for authorization for the clinic to bill Great-West directly for paramedi- cal services that would never take place. Acupuncture, osteopathy and physiotherapy claims related to the undercover investigator were later submitted, totalling more than $5,000 over three visits. All four clinics have since been removed from Great-West's ap- proved provider listing and the matter was reported to the police to pursue restitution and criminal charges. Evolved technologies To help avoid plan impacts of fraud, the insurer has a team of experts that includes specialists from many diff erent backgrounds, such as former police officers, former security and military in- telligence analysts, certifi ed fraud examiners, accountants, lawyers, pharmacists and medical and dental professionals. Every claim that is paid is pro- cessed through a sophisticated risk-analysis tool to evaluate the likelihood of fraud. e tool uses statistical analysis to adapt to the evolving fraud landscape. Unearthing a fraud may begin with an investigator identifying trends from previous fraudulent activity. Analysts use observa- tions to build new fraud indicators into claim review metrics. Using intelligence-based techniques, analysts translate observations into detectable data points. ese data points can then be used to analyze claim records. Because claim and policy data- bases are so large, big data tech- nology allows insurers like Great- West to mine extensive records to spot emerging trends on a large scale. Specialized analysis soft- ware is used to look more closely at social networks and geographic patterns, trying to identify behav- iour that may indicate an elevated risk. In the latest three-year report- ing period, Great-West's special investigations unit (SIU) inves- tigated more than 1,800 cases of fraud, resulting in close to $3 mil- lion in prevented losses and close to $4 million in recovered funds. When fraud is confirmed, a number of actions may be taken, depending on the dollar value and circumstances. Findings of an investigation may be referred to a law enforcement agency and the provider removed from a list of approved providers, if the pro- vider was involved. A complaint may be fi led with a provider's regulator or profes- sional association. e plan spon- sor may also be informed and a re- covery of fi nancial losses sought from the fraudster. Fraud prevention Despite all these measures, fraud continues to happen. In fact, some plan sponsors may experience es- calated premiums to recover ben- efi ts costs lost to fraud. And these increases may trickle down to the plan members, who may see in- creased benefi t plan costs. Fraud prevention requires a joint approach between the plan sponsor and the insurer. Plan design is the fi rst step to an eff ec- tive, fi nancially viable and healthy group benefi ts plan. Plan sponsors can also incorporate background and reference checks as part of ro- bust hiring practices and provide ongoing staff education. Fraud can happen for a variety of reasons. In some cases, indi- viduals are experiencing fi nancial hardship or other issues, such as gambling or substance addiction. Intervention and support for these individuals is important in order to help prevent them from turning to fraud for fi nancial re- lief. In some cases, it may be ap- propriate to refer plan members to employee assistance programs. Plan members too can take an active role in ensuring they aren't unwittingly involved in fraud. For instance, they should never submit claims for services that weren't provided by checking statements to ensure charges are accurate and refusing to take part in any fraud schemes a service provider may suggest. It's also important for plan members not to sign a blank claim form. Doing so could mean the provider could add any services and supplies they like, without the plan member being aware. And they shouldn't accept money, products or services in exchange for benefi ts information. e bottom line is fraud costs everyone — the insurance com- pany, the plan sponsor and the plan member. at's why it's im- portant for all involved to be con- stantly vigilant, understand and follow plan guidelines, and work together with law enforcement agencies and other stakeholders. A zero- tolerance approach to fraud allows for rapid and focused action to combat benefi ts fraud and help protect the value of ben- efi ts plans. Diane Bezdikian is senior vice-presi- dent of group benefi ts at Great-West Life.For more information, visit www. greatwestlife.com. Plan sponsors can incorporate background and reference checks as part of robust hiring practices, and provide ongoing staff education. Credit: vladwel (Shutterstock)

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