Recently we were employed by a large employer, located along the Texas-Mexico border, to assist them in evaluating their self-funded group dental plan. Claim data was sketchy. The current third party administrator failed to provide adequate claim information to their client. The data appeared suspect to us, and did not support the benefits in place.
We hired an actuary to validate our evaluatation of a start-up dental plan for this group as we were not comfortable in using the suspect data from the group’s third party administrator.
Dental risk is not hard to evaluate and is predictibile.
Based on our actuarial study performed in conjunction with a licensed actuary on the East Coast, we recommended a few benefit changes, with suggested funding to cover the overall cost of the program.
In six months we noticed a trend. Claims were exceeding our projections by a significant factor. Alarmed, we drilled down on the claims in detail.
We found that a significant percentage of claims were incurred in Mexico, yet the charges were billed to several P.O. Box’s on the U.S side, in U.S. dollars. The charges were identical to UCR tables used by underwriters specific to the area on the U.S. side. In other words, instead of charging the normal Mexico fee of $240 or less for a crown, the plan was being charged approx. $850.
Drilling down even further, we found numerous cases wherein a patient would receive as many as 4 crowns in one visit. Ironically, when comparing dates of service to employment records, some of the patients were at two places at one time. Or so it seemed. However, upon questioning, we were told that services were received after work, in the evening, as a typical Mexican dental office offers late hour service to accomondate workers.
We concluded that 75% of the claims were boggus. It was apparent the employees, in conjunction with others, were scamming their employer to the tune of thousands of dollars.
We advised the client to discontinue their dental plan immediately and contact the Texas Department of Insurance fraud division. They agreed to the former, but refused the later. As a federal contractor, they were already under a microscope by federal authorities for possible misuse of federal funds and did not want any more adverse publicity.