The sound of shattering glass pierces the night air. You sit straight up in bed and glance at the clock: 3:00 a.m. As footsteps creep closer, your heart pounds faster, the fear rising with every creak of the floor. Then, nothing. One second. Two seconds. Three. Maybe it was a bad dream? But as the doorknob begins to turn, your scream breaks the silence . . .

Benefit plan fraud may not be the antagonist in the next James Patterson thriller, but the consequences can be every bit as dramatic.

In the summer of 2016, in a single takedown, the U.S. Department of Justice arrested more than 300 physicians, nurses, pharmacists and other practitioners across the nation in connection with nearly $1 billion in fraud. And, according to the Canadian Life and Health Insurance Association (CLHIA), fraud accounts for 2% to 10% of health spending in Canada. This translates to an estimated $3 billion in annual losses by private insurers in Canada alone.

Instances of benefit plan fraud continue to grow, and the ramifications can reach far and wide. While smaller cases don’t command the headlines, their numbers add up to significant damage for plan sponsors and members, notes Cherri Burdeyny, CEBS, senior director, pension and benefit services with Alberta Urban Municipalities Association (AUMA), in her recent article for Plans & Trusts magazine. False claims lead to higher plan costs, which are passed along to members through premium increases and/or benefit reductions, and can threaten the sustainability of benefit plans.

[Fraud is avoidable—Invest in prevention by attending the Fraud Prevention Institute for Employee Benefit Plans, July 17-18, 2017 in Chicago, Illinois]

In our 24/7 digital world, fraud can occur anytime, anywhere, by anyone with access to a plan. This includes plan sponsor or provider employees, covered members, treatment providers, medical vendors or identity thieves.

For group benefit plans, most fraud occurs through inflated or false claims, Burdeyny writes. A survey by Statistics Canada indicates that most false claim submissions stem from someone other than an employee or plan member. For example, a company might have people sign a blank claim form and then inflate the numbers before submitting the claims. Or an organization might get members to submit a claim for a product that is falsely billed as customized when in actuality it could be found over the counter at a much reduced price. As technology becomes ever more sophisticated, so too do the methods for committing fraud. People who gain access to member information can use it to submit false claims and/or change deposit accounts online.

[Related: Data Breaches: Be Ready!—Benefit Bits Video]

But don’t let fear rule the day. Instead, take action. “Losses due to fraud are avoidable, and everyone needs to play a role in fraud prevention,” Burdeyny writes.

Industrywide efforts to combat fraud include exchanging information to identify common schemes, building awareness and partnering with police and antifraud commissions. Burdeyny points out that organizations and individuals also can take steps to protect their interests, with specific steps listed below.

Plan sponsors and employers

• Keep track of claiming patterns to note spikes in claims or areas of vulnerability.
• Increase plan knowledge among employees and members so they can help to identify fraudulent practices.
• Design your plan to encourage members to take an active role in managing costs, and let users know how to report fraud (including through confidential means).
• Ask your insurance provider about its fraud prevention measures.

Plan members and employees

• Protect personal material by establishing secure passwords and reporting lost or stolen information.
• Understand your plan coverage, options for treatment and benefit limits.
• Check documents for accuracy. Never sign blank claim forms, and always review your explanation of benefits forms to make sure the services and expenses match your actual treatment.
• Report fraudulent activity to your employer, provider and/or plan sponsor.

If fraud slips in through the cracks of your benefit plan, it may not be as obvious as a shattered window or heavy footsteps. But the signs are still there, and you can take action to limit or eliminate the damage. It’s no mystery: Benefit plan fraud is one plot you’ll want to uncover before it turns into a thrilling whodunit.

Robbie Hartman
Editor, Publications for the International Foundation