Fraud: Not just for criminals anymore

While out for a run I strained my sciatic nerve. Thankfully, my company provides a benefits plan. To help ease the pain, I visited Jimmy the Acupuncturist. Following my treatment, he asks if I have a benefit plan. After confirming that I have coverage, he poses a second question: “What would you like me to claim this expense as? Massage or acupuncture?”

Did you know that claiming the expense as a “massage” after receiving an acupuncture treatment is considered fraud?

While a very high percentage of paramedical practitioners do not partake in this activity, through the course of my career I have seen fraud happen first-hand.

Abuse or fraud? This is a concept that many hardworking and loyal employees do not understand. Trust me, the people who are putting through these transactions are sales people as much as they are medical practitioners.

“Your company allocates these dollars to you every year. If you don’t use it, you will lose it.”

“You can use your wife’s coverage even though you are getting the treatment.”

“If you buy this pair of orthopedic shoes, I will throw in (3) free massages.”

These are some of the “pitches” that are happening to those loyal employees, and many of them enjoy the idea of getting something for free. Their judgement is often clouded by lack of knowledge and misunderstanding of how benefit plans work.

My goal here is to shed light on employee benefit plan fraud for both employees and employers. It seems a bit cliché to say that “fraud costs us all”, but it’s true. According to the Canadian Healthcare Anti-Fraud Association, it costs us anywhere between 440 million dollars to 2.2 billion dollars annually. Why the discrepancy? Because many of it goes unreported.

For the employees who think that fraud doesn’t cost them because their employers pay for all of their benefits, I will caution them. As a Benefits Consultant, I sit in many meetings where the escalating cost of benefit plans causes employers to make hard decisions, which come in the form of either reducing coverage to employees or having employees contribute to a benefits plan.

Here are four areas in which employers can help manage fraud and costs of their benefit plan:

1. Education

In my opinion this is the most important item on the list. Many employees do not understand how benefit plans work. This lack of understanding opens employees up to some of those crafty practitioners who try to convince them they are not doing anything wrong. Education can come in the form of:

• Written Communications: Outing the dos and don’ts of making claims on a benefit plan.

• Benefit Seminars: Provide employees with the opportunity to be educated in person about what exactly benefit fraud is, and also what practitioners are offering employees.

2. Combined Maximums

Most plans have a maximum applied against each practitioner per year. This means every employee on the plan (and each of their dependents) can spend up to the maximum for each practitioner (e.g. $500/chiropractic services, $500/massage therapy, etc.). This can add up very quickly. Some practitioners will exploit this system and send through claims for one service when an employee received another service. So, if an employee doesn’t use acupuncture, they now can have $1,000 put towards massage therapy. By combining the maximums of paramedicals and also orthopedic shoes and inserts, it will cap the amount an employee can spend. It will also cause the employee to conserve their dollars for when they actually need the service and not allow the practitioners to allocate dollars to services that were not performed.

3. Health Care Spending Accounts

Health Care Spending Accounts are “benefit dollars” that are allocated to each employee. They can spend those dollars on a variety of approved services and items listed by the CRA. The attractiveness of Health Care Spending Accounts to employers is fixed costs. Each employee has a limit and they cannot exceed it. Due to the fact that there is a limit, if the employee is committing fraud, they are taking dollars away from legitimate claims they might need throughout the year.

4. Multiple Plan Designs

For industries with high turnover, or Organizations who deal with high turnover, some new employees often know they are not going to be working for this company for a prolonged period of time. These employees have no attachment to the culture or employer, which may cause them to abuse or commit fraud on the benefit plan. Having multiple plan designs allows employers to limit the amount of coverage a new employee receives, and allows employees with longer tenure to be given higher amounts of coverage. This has proven to not only limit fraud and manage costs, but also acts as a great retention tool.

Remember, fraud costs us all. With the continued increases and usage of high cost prescription drugs, benefit plans are becoming more expensive and in some cases, unsustainable in their traditional forms. Fraud greatly adds to this expense and it begins to affect an organization’s bottom line. When this happens, employers will have to make some tough choices and that will not benefit anyone.

Written by:Mark Morassutti, Corporate Strategic Consultant, JONES DesLauriers Blevins


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