Checking the Numbers Behind BC CareCard Fraud

Image by ivers

On January 7, 2013, the British Columbia government (re)announced that the province’s new identity card, the BC Services Card, would be arriving on February 15, 2013. To date, the Office of the Information and Privacy Commissioner of British Columbia has not released her analysis of the Services Card. To date, the provincial government has been particularly recalcitrant in releasing any information about the cards short of press releases. Though members of civil society are concerned about the card it remains unclear whether they can mobilize to effectively delay or stop the card: indeed, this lack of capacity is something that is explicitly recognized in government documents that were released by ICBC.

This will be the first of a few posts on the proposed Services Card. In aggregate, the posts will examine pragmatic (e.g. fraud, security, biometric privacy) and principled (access to information problems, lack of democratic discussion surrounding the cards, secret usage of citizens’ data, function creep) criticisms of the Services Card. This particular post examines the government’s misleading claims surrounding CareCard fraud. Specifically, I interrogate the government’s assertion that there are many more CareCards in circulation than there are residents and statements that fraud presently costs the province $260 million/year or more. I conclude by stating that the government ought to clearly tell citizens what is driving the cards, given that the primary driver is almost certainly not medical fraud.

The BC government’s press releases about the old CareCard, and proposed Services Card, regularly repeat a set of numbers that are intended to scare BC residents. Specifically, residents are told that more than 9 million CareCards have been issued since 1993 whereas there are less than 5 million legitimate residents in the province itself. Moreover, the government “estimated that some $260 million a year was being lost to fraud.” These are big numbers that are given to the public entirely out of context.

Cards in Circulation

So, what is the actual case on the ground? To begin, the BC government’s numbers on total CareCards in circulation is somewhat accurate. From a Freedom of Information (FOI) request last year we can actually see the breakdown of cards issued since 1993. As of December 27, 2011 the total number of residents eligible for CareCards stood at 4,559,556 and the total number of CareCards issued since 1993 stood at 9,418,218. That latter number is what the government trots out to claim there is “significant” suspected fraudulent use of the BC medical system.

The problem? That big number is incredibly misleading. The same FOI request also breaks down that aggregate number and after reviewing the categories for issued cards we find that there are likely far fewer actual cards in circulation than the total issued since 1993. In fact, many of the cards issued are reissued cards, on the basis that there was a change to an existing card. Most, in fact, fall under that category.

  • There were, in aggregate, 1,980,324 cards that were issued by request, on the basis that they were replacements or duplicates of lost cards
  • There were 2,955,629 cards that were issued after pre-1993 CareCards expired
  • There were 664,321 cards issued on the basis that residents changed their names or had their birth records corrected
  • There were 3,047,604 cards issued for new enrolments in the program and for temporary document (e.g. visa) holders
  • There were 642,244 cards issued to residents who had a card type change, such as what happens upon turning 65 years of age

So, when we look at those numbers, it becomes apparent that the big 9+ million card number is really reflective of two things:

  • Business as normal. Cards are lost, updated, and issued to residents as expected. Yes, a large number of CareCards have been issued but we shouldn’t be surprised: how many people change their last name (e.g. after marriage), lost their wallets, update their government records, move out of province and so forth? Remember, these numbers are the aggregate of 18 years (1993-2011) of government issuing CareCards.
  • Government failing to keep detailed statistics. The 9+ million number doesn’t give us clear insight into how many active cards are actually in circulation. In essence, we just know that a lot of cards have been (re)issued: why don’t we have (effectively) a ‘credit and debit’ style ledger that tracks how many cards were supposed to have been in circulation in any particular month/year? From the numbers provided it appears that most of the issued CareCards have legitimately been issued.

Moreover, when a colleague of mine, Rob Wipond, followed up on the total number of fraudulent cards, this is what he received from the Ministry of Health Services:

We have never said there are 4.6 million fraudulent cards in circulation.  We have said that there are slightly more than 4.6 million more cards than persons covered under MSP.  We fully expect some have been properly destroyed by their owners when they received a replacement card, or when their account became inactive (upon leaving the province for example). We fully expect some are kept at a person’s residence.  And we are aware that an unknown number are being mis-used or used fraudulently.  Because of the lack of photo identification and security features on the CareCard, it can be challenging to track that fraud.

What does all this mean? In essence, the 9+ million number is a red herring. The number of actual cards in circulation is presumably far below that massive number. Does the province need a better way of ascertaining how many legitimate cards are in circulation? Yes. But learning this information doesn’t require a fancy biometric and chip-enabled provincial identity card. The government for the past two decades seems to have systemically failed to keep decent records on the legitimacy of card issuance; the problem   the current government faces, then, is systematic mismanagement of card issuance. The solution to that problem is not issuing a province-wide ID card.

Tracing the Cost of Fraud

But…what about the cost of fraud? That even bigger $260 million/year number that the Health Minister has previously given to the media. After hearing this number – along with the total number of cards in circulation – Rob Wipond investigated. After pushing on government officials he learned that this big ‘cost’ number is largely the result of tortured logic.

To understand the origin of the Ministry’s $260 million number we must to turn to the Canadian Health Care Anti-fraud Association (CHCAA). As of January 3, 2013, we see that the Association simply states that 2-10% “of every health care dollar in North America is lost to fraud.”  This is a statement of fact/belief and one that, in Wipond’s research, was found to be derived from US think tanks that were focused on fraud in the US health care system. So, we have an American analysis of the American health system – a system that is radically different from the Canadian system – then adopted by a Canadian Association. Moreover, we have an aggregate for the entirety of North America: it is unclear how the province or CHCAA broke down relative levels of fraud across Mexico, the US, and Canada. All of these jurisdictions have different health care delivery systems and, presumably, localized domestic variations in delivery challenges.

This isn’t where things stop: the BC government then used the CHCAA’s statement of 2-10% fraud and applied the number to their own annual health budget. The 2010-11 budget was $14.8 billion, meaning that per the CHCAA’s numbers there was between $296 million and $1.48 billion in fraudulent activities. When we investigate the kinds of fraud the CHCAA/US think tanks were interested in we get a very broad understanding of health fraud:

  • Services Not Rendered: Billing for services or products that were never rendered or received
  • Upcoding: Billing for more expensive services, procedures, or products than were not actually provided or performed.
  • Unnecessary Treatment: Performing medically unnecessary services solely for the purpose of generating insurance payments.
  • Misrepresenting Services: Representing non-covered treatments as medically necessary covered treatments for purposes of obtaining insurance payments.
  • Unbundling Services: Billing for services separately instead of billing the code that includes multiple services.
  • Theft/Misrepresentation of Identity: Using another individuals identity, such as their health card, to illicitly receive health care treatment.
  • Malingering: Exaggerating illness or injury in order to collect financial benefits from health insurance payers.
  • Doctor Shopping: Receiving various narcotic medications from multiple physicians through acts of deception.
  • Misrepresenting Eligible Dependants: Maintaining eligibility for or adding an individual who does not legally qualify for benefits under the program.

Note that many items on the above list apply to fraudulent activity on the part of health care providers/delivery points, not the recipients. In fact, only the Theft/Misrepresentation of Identity, perhaps Doctor Shopping, and (maybe) Misrepresenting Eligible Dependants apply to recipients of public health care in BC. Note that neither the BC government nor the CHCAA seem to break down their ‘master category’ of 2-10% fraud to the sub-elements of such fraudulent behaviour.

As a result, when the BC government says that there are hundreds of millions to more than a billion dollars in fraud per year, from where does this fraud originate? Do we have a mass of doctors in BC that have gotten (or are getting) rich by defrauding the public health care system? Does the BC government’s “low balling” of fraud at only $260 million/year suggest that the private sector of medical insurance in the province is being defrauded by $36 million/year (accounting for the “missing” $36 million in the government’s reported number)?

In effect, the fraud numbers proposed by the BC government are questionable at best and dangerously misleading at worst.  Misleading insofar as they are suggestive of rampant fraud, and this fraud is used to justify the introduction of a massive new identity system. It remains unclear if there are millions of individuals defrauding the government – using the ‘extra’ cards – or a small population. What’s more, are we genuinely seeing hundreds of millions to more than a billion dollars in fraudulent behaviour each year? If so, then we have (again) witnessed gross mismanagement of the healthcare system in this province. It is similarly unclear whether the province has done due diligence to determine actual fraud levels beyond a back-of-napkin analysis using the CHCAA’s numbers.

A More Measured Approach

From this short analysis we can see that the fraudulent activity linked to the current CareCards is likely unknown, and the BC government is attempting to scare the public into adopting a wholesale identity system to defray phantom costs. Really, the new Cards are (in the health care context) serving to let government correct a past error (removing expiry dates) while enhancing basic authentication capabilities (e.g. photos of CareCard users on the cards and contemporary anti-fraud features to the cards’ physical substrate(s) themselves). However, in addition to these very reasonable additions to BC’s health credential the government wants to enroll all residents in a massive province-wide (and soon to be Canada-wide) identity infrastructure. (I’ll be writing more about this identity structure in detail over the next few posts.) This broader infrastructure is absolutely unnecessary for basic corrections to (seeming) poor government policy around health card issuance and fraud management.

The new BC Services Card really is an identity card by stealth, insofar as residents are being hoodwinked into spending hundreds of millions in tax dollars on an untested system that is ultimately designed, and planned, to let governments across Canada ‘integrate’ more deeply with Canadians’ lives. The project cannot be seen as ‘legitimate’ in the eyes of the public because the legislature cannot sit to debate the matter and the government is not actively conducting outreach to ascertain whether the public is interested in this new identity management framework. Indeed, even when citizens have sought to learn about the proposed cards they have been rebuffed by most major government agencies (with the exception of ICBC) and interviews with experts inside government who are involved with the program typically cannot be recorded or identify the person(s) interviewed. It isn’t only citizens who have had difficulties learning about the cards outside of misleading government press releases: even the Office of the Information and Privacy Commissioner of British Columbia is still waiting on information about a program that is supposed to launch in just over a month.

The government is rushing towards deploying a Services Card, in part, over false pretences related to fraud. Their aim is, seemingly, to implement the card infrastructure before the public wakes up and says “stop this nonsense!” The provincial government should be very publicly called out and forced to more adequately justify the Services Card before they impose it on the population of British Columbia.

Christopher Parsons

I’m a Postdoctoral Fellow at the Citizen Lab in the Munk School of Global Affairs at the University of Toronto and a Principal at Block G Privacy and Security Consulting. My research interests focus on how privacy (particularly informational privacy, expressive privacy and accessibility privacy) is affected by digitally mediated surveillance and the normative implications that such surveillance has in (and on) contemporary Western political systems. I’m currently attending to a particular set of technologies that facilitate digitally mediated surveillance, including Deep Packet Inspection (DPI), behavioral advertising, and mobile device security. I try to think through how these technologies influence citizens in their decisions to openly express themselves or to engage in self-censoring behavior on a regular basis.