Did you know March is Fraud Prevention Month? It’s a month dedicated to spreading awareness and education about what fraud is, how it happens, and how to prevent it and reduce its impact.

Unfortunately, group benefits fraud and abuse are more common than you may realize. There are some bad apples out there – plan members and healthcare providers – who either collude or commit fraud on their own.

What does benefits fraud and abuse look like?

As we said, fraud and abuse can be committed through collusion between plan members and providers or done independently. Common types include:

• False claims;
• Upcoding (claiming a higher cost procedure to get more back in reimbursement); and
• Unnecessary or excessive charges.

A typical example used to explain benefits fraud is when instead of prescription glasses, a plan member purchases a pair of expensive sunglasses with no prescription. They’re falsifying their claim and using their benefits for something other than healthcare expenses.

Benefits abuse, on the other hand, is when members are making eligible claims for products or services they don’t really need. They’re over-using the benefits just because they can (think squeezing in extra massages before year-end).

All this adds up to a greater cost for you, the plan sponsor. You’re providing benefits to support your team’s health. If they’re abusing the benefits and making more claims, you’ll end up paying more in premiums. Costs may even get so far out of control that you need to rethink your plan.

Unfortunately, these scenarios happen more than you think, so how are you able to combat this?

Providing better benefits to fight fraud

Better benefits? That may not be the remedy you’re used to hearing or expecting to hear!

A lot of benefits providers will tell you they use advanced artificial intelligence (AI) and algorithms to detect patterns or linkages that could be fraudulent. Even the Canadian Life and Health Insurance Association (CLHIA) has jumped on the bandwagon, promoting their investments in technology.

The issue is this is a very reactive approach.

Reactive approaches are a great way to identify fraudulent activity after it has happened. However, they don’t help with the root cause and try to stop fraud and abuse before they happen.

When trying to deduce why fraud happens, we need to look at the motive behind it. This could be a lack of coverage or freedom for plan members to choose their benefits. It could also be a sense of entitlement. Plan members know that benefits are part of their compensation and want to maximize how much they get out of them.

The use it or lose it nature of traditional insured health and dental coverage only makes this worse. As the year is running out, plan members find any way they can to squeeze more dollars out of their plan, including fraud and abuse.

If we can get rid of these motives, we can take a proactive approach to prevent benefits fraud and abuse.

A Health Spending Account is a proactive approach to preventing benefits fraud and abuse

Implementing a benefits plan that provides your team with flexibility, a wider range of coverage, and autonomy can disincentivize fraudulent activity from the get-go. When benefits aren’t use-it-or-lose-it, members don’t feel the same pressures.

A Health Spending Account (HSA) does exactly that. It lets your team claim anything from the extensive Canada Revenue Agency (CRA) Medical Expense list for their eligible claims, giving them the flexibility to spend where they please. An HSA also doesn’t cap their spending for any benefit categories so your team can choose how much of their HSA funds they want to allocate towards different benefits. The only limit they have is the funds available in their account.

Taking the proactive approach not only gives you peace of mind when it comes to stopping fraud but also provides many more internal benefits. Read more about those here!

Even the most prepared can still encounter fraud

Unfortunately, there are some bad apples out there. Preventing 100% of fraud and abuse is difficult to do. Another great benefit of an HSA is that in the unlikely event that fraud does happen, it’s no skin off the plan sponsor's nose.

Since the contributions to the HSA are set by the plan sponsor as part of the compensation package, the plan sponsor is in complete control of their costs. If plan members decide to abuse the HSA, the plan sponsor doesn’t lose any money – they’ve already committed to how much they’re funding.

I still have questions!

Well, we have good news for you because we love answering them! Get in touch with our Growth Team for all things group benefits, fraud prevention, and tips on how to style cargo shorts (yes, they ARE still in fashion). We’re also social! Follow us on LinkedIn, Instagram, Twitter, and Facebook to stay up to date on the group benefits world!