Workers’ compensation is the fastest growing type of insurance fraud in the nation and costs employers $7.2 billion annually. Policies, procedures, and controls need to be regularly reviewed and enhanced to stay ahead of the fraudsters.
What questions can CRA help answer?
- Do payments comply with statutes, rules, and policies?
- Do costs line up with comparable data points; and if costs are higher, why?
- Are there indicia of waste, fraud, or abuse by employee claimants, medical providers, and/or professional
services firms? - Is there a sufficiently robust process in place to ensure each employee’s timely return to work?
Phase 1: Assess risks and test controls
Understand the operations, controls, and risks of the workers compensation program, and test the presence and efficacy of controls.
This typically involves a review of:
- Applicable statutes, rules, and policies governing the compensation
program - Prior reviews, internal audits, and investigation reports
- Forms and reports that claimants are required to complete
- Employee and vendor contacts
- Workers’ compensation claims and related awards
- Payments to third parties who provided workers’ compensation services
Phase 2: Analyze claims data for patterns of interest
Analyze diverse data sets to identify patterns, trends, anomalies, and outliers; identify “red flags” and develop a risk-based sampling approach.
Analytical procedures may include reviews of:
- Length of time the claimant was an employee before filing a claim
- Department associated with the claimant
- Higher frequency of claims filed by employees (“outliers”)
- Claims filed against previous employers
- Employees granted awards without filing a claim
- Presence or absence of witnesses to the underlying incident
- Timeliness of reported incident
- Higher rate of claims compared to other occupations
Phase 3: Test claims, using a risk-based approach
Develop a risk-based approach to select a sample of claims. Test claims to assess the validity and extent of the awards.
Sample lines of inquiry:
- Were appropriate diagnostic exams performed to confirm the injuries?
- Do the underlying medical records support the diagnosis?
- Is there evidence that the employee sought appropriate treatment from qualified clinicians for the underlying injury?
- Are the details of the claimed injury consistent with the reported underlying incident?
- Do the medical bills and procedures performed appear reasonable based on the claimed injury?
- Is there evidence the employee is performing tasks or activities that would not be possible or appropriate, given the claimed injury?
