Thieves target medical identity precautions suggested
In the past, thieves stole personal financial information such as credit card numbers, bank account numbers, ATM passwords and Social Security numbers with the intent to steal cash or purchase merchandise. In a new twist, thieves are now stealing personal medical information in order to obtain or receive payment for medical treatment, services or goods.
The World Privacy Forum states that since 2005, approximately 500,000 Americans have been victims of medical identity theft. The incidents will increase as more health records are computerized and made available on the Web, and as thieves take advantage of the confusion in implementing some form of national health care reform.
Scams and perpetrators
Receiving fraudulent medical treatment: Medical identity thieves send false or inflated treatment claims to the victims’ health care providers. The thieves are often doctors and other medical personnel who know how the insurance billing system works. Insiders steal thousands of medical of records, including billing codes for doctors, and sell them to organized crime rings. These rings set up fake medical clinics offering free health care screenings to draw in patients (often older people), submit false bills to insurers, collect payments for a few months, and then disappear or move on before the insurers and authorities realize the fraud. The World Privacy Forum states that health records currently sell for $50-$60 on the black market.
Obtaining free medical treatment: Medical identity thieves use the victims’ health insurance policies to receive free medical treatment. The thief assumes the victim’s identity at a doctor’s office, clinic, or hospital, and receives medical services that are billed to the victim’s insurer.
Obtaining restricted or illegal drugs: Various unscrupulous health care personnel including doctors, nurses and other staff and support people with access to medical records may steal medical identities to obtain prescription drugs and/or narcotics to feed their own needs or sell to others. In addition, dishonest pharmacists may use stolen medical identification numbers to bill insurance companies for drugs that were never delivered to the identity theft victim.
Medical identity theft can cause severe and long-term damage resulting in years of emotional and financial stress.
Ruined credit: A medical identity thief can ring up large medical bills in the victim’s name and disappear without paying. The victim is left with months or even years to correct inaccurate credit records and claims for payment.
Loss of health care coverage: Fraudulent insurance claims filed by a medical identity thief may have a significant impact on the victim’s health-care policy limits. The victim may find that future emergency or other health care treatments are denied due to policy limits caused by fraudulent claims.
Inaccurate medical records: Medical records are compromised when the identity thief’s treatment history becomes part of the victim’s medical records. Consequently, the victim’s active medical records may contain erroneous information such as blood type, medicines and damaging diagnosis.
Legal troubles and costs: Attempts to correct medical records are time-consuming, frustrating and expensive. Health privacy laws are limited and the identity theft victim must deal with varying degrees of bureaucracy in large hospitals, medical facilities, insurance companies and credit agencies.
Higher health insurance premiums: Due to fraudulent claims filed by the identity thief, victims often find their insurance premiums raised significantly by insurers. Or, the victim’s medical insurance coverage may be cancelled.
The 1996 U.S. Health Insurance Portability and Accountability Act (HIPAA) covers everything from health-care access, portability and renewal to preventing health care fraud. HIPAA encourages electronic transmission of medical information and strong safeguards to protect the security and confidentiality of medical information. In addition to HIPAA, various states and medical institutions have implemented measures to reduce medical identity theft.
Computer systems updates: Many larger medical institutions are currently reprogramming their computer systems to restrict medical staffers from accessing any patient data beyond what they need to know in everyday job performance.
Picture and/or biometric identification: Medical institutions of all sizes are moving toward requiring a current picture in the insured’s medical file in order to receive medical treatment. In addition, new digital technology is enabling individuals to include biometric (fingerprint) data with their medical records for purposes of confirming identification in a medical setting.
In addition to institutional safeguards, individuals must take significant steps to prevent theft of their medical records.
Explanation of benefits: You should review each EOB sent by health insurers for any treatments that you did not receive. Any discrepancies should be reported immediately. All dated EOBs and any other unneeded medial data should be shredded.
Medical records check. At least once a year, you should request a listing of benefits paid out under all policies. This review includes doctors’ offices, medical centers, hospitals, medical laboratories, dentists, chiropractors, pharmacies and any other treatment activities where identity theft may occur.
Credit report check: You should review your credit report on a regular basis. Specifically, these credit reports should be scanned for any unpaid medical bills.
Medical identification number: Social Security numbers are being phased out as identifiers for medical treatment. Anyone receiving Medicare has a medical insurance card and number identity. In the near future, perhaps as part of the American health care reform, everyone will have a medical identity card and number (including health information) providing for medical treatment.
Document protection: Many medical identity thieves steal information from wallets and purses left in treatment or hospital rooms, therapy sessions and waiting rooms. Extra care should be exercised when registering on toll-free numbers to ask about various drugs or treatments.
Image documentation: Ask your medical services providers to include a current photo or fingerprint identification in your medical files for future treatment and reference.
Stanton C. Lindquist is a professor of accounting & taxation, School of Accounting, Seidman College of Business, Grand Valley State University. He teaches undergraduate and graduate auditing and is a Certified Fraud Examiner and Certified Forensic Accountant.