From a plan sustainability standpoint, benefits fraud is 'very impactful to the end consumer,' says VP of anti-fraud at CLHIA
As vice president of anti-fraud at the Canadian Life and Health Insurance Association (CLHIA), Joanne Bradley has seen the growing threat technology poses but also the opportunity it presents, notably around benefits fraud.
At a recent technology in action showcase hosted by Connex Health, Bradley acknowledged the widespread perception that benefits fraud is minor, emphasizing that it doesn’t receive the attention it deserves.
“It's more widespread than it should be, and that really just comes down to the fact that it's not taken as seriously as it should. Most people think when you're caught, all you need to do is repay the benefits. And those that perpetrate fraud really do convince people who are involved in it that it is really inconsequential,” she said.
She categorized benefits fraud as ranging from casual, opportunistic misconduct to coordinated, large-scale operations while underscoring a growing challenge in detecting collusion, especially because it often involves close cooperation between individuals, making it difficult to investigate.
Meanwhile, identity theft and credential theft are also on the rise, facilitated by the same technological advancements used in other types of digital fraud.
Survey results published by Reinsurance Group of America suggest that fraud is increasing with a global incidence at 3.8 per cent. Top challenges with investigating fraud globally include difficulty obtaining evidence, resistance from claimants and healthcare providers, cooperation with investigators and personal data protection laws, including privacy.
AI continues to be at the core here, both as a tool for detection and, conversely, as a weapon for fraudsters, noted Bradley. Some are even using artificial intelligence to create more convincing fraudulent documentation.
The downstream effects of benefits fraud, she added, ultimately hit plan sponsors and employees hard through plan sustainability.
“People are in a position where they have to start making those decisions as to whether or not they're going to keep the quantity and the quality of the benefits they have in their employee plans,” Bradley emphasized, adding that it also puts health care at risk.
“It costs us a lot of money to investigate and put preventative tactics in place. From a plan sustainability standpoint, it’s very impactful to the end consumer,” she added.
That’s why the insurance industry took a collective step forward and banded together to start a coordinated anti-fraud strategy, launching several tools, with a goal to bring insurers into alignment under a common program.
Bradley highlighted three of those tools, the core of what CLHIA calls “industry collaboration tolls”, which consist of a Provider Alert Registry, the Data Pooling Program, and Joint Provider Investigations.
The Provider Alert Registry, introduced in 2021, allows insurers to flag suspicious provider activity in a secure, non-public database.
“It doesn’t contain any personal group health data,” she emphasized, noting the tool is protected by strict privacy and security measures and is available only to members who meet contractual standards.
Whereas the Data Pooling Program, launched in 2022, allows participating insurers to share anonymized claims data that is analyzed for patterns of potential fraud and augments individual insurers’ fraud detection, she explained, noting that participation by the majority of major insurers indicates how seriously the industry is tackling the issue.
The third component, Joint Provider Investigations, was added in 2023 to allow for formal collaboration when fraud is suspected. She explained this tool is a framework that “strictly adheres to all privacy legislation and expected info security standards.”.
Bradley stressed that these tools were purpose-built to function together, even if some integration still requires manual steps.
“If something is in the alert registry, that is something that potentially could become a joint investigation,” she explained. Conversely, insights from joint investigations could feed back into the registry, and the pooling program may flag issues worth pursuing further.
The Data Pooling Program, which she highlighted as the most technologically advanced of the three, uses AI to flag fraud across shared industry data.
“Our goal with this tool is to enhance each of the data analytics that exists in each one of our insurers,” she said. “The idea here is to complement their programs, identify fraud sooner and identify fraud that may not be uncovered by a single insurer on their own.”
CLHIA partnered with Shift Technology to power the platform. Shift uses advanced algorithms to aggregate the information, analyze industry-wide claims data and returns alerts through a web-based interface, which insurers can then choose to investigate.
Bradley turned to other emerging technologies in the anti-fraud toolkit. These include case management software, like a workflow system around underwriting analysis or claims management, that mirrors the way law enforcement handles fraud cases, digital document forensics, and social network analysis.
She also pointed to Optical Character Recognition (OCR) as a valuable tool in digitizing physical documents for deeper analysis, which takes two-dimensional data, digitizes it and allows investigators to efficiently analyze large volumes of documents for signs of fraud, she said.
Bradley acknowledged that while CLHIA’s current efforts to track benefits fraud are still somewhat limited by the scope of their data, the organization is working to aggregate the available information into reporting tools to better identify emerging patterns.
Advocacy efforts are also underway to better embed benefits fraud into national anti-fraud strategies, she added, noting that the CLHIA is pushing to get entrenched processes within bodies like the Canadian Anti-Fraud Centre.
“Education is at the foundation of all this,” she said. “To get people to clearly understand the value of their benefits and the value of potentially misusing those benefits.”
