Medical Identity Theft

I’m sure you’ve heard of medical identity theft in the news or know someone who was forced to pay for healthcare services or medication received by another person. This article discusses the fraud, how it happens, its consequences, and solutions. Medical identity fraud as it relates to identity theft is on the rise and it’s impact is getting bigger and more dangerous. We will briefly talk about what medical identity theft is and then analyze the reasons why the crime is on the rise and why its impact is much worse and dangerous than any other type of identity theft. We will also discuss how this crime can be detected and what solutions are available after the fraud is discovered.

What is medical identity theft?

Imagine yourself getting married and planning to buy your first home. You buy a copy of your credit report, or even better, you get a free copy of your credit report, to check your credit file before you apply for a mortgage. Surprisingly, you discover there are collection notices against you on your credit file for many emergency visits and thousands of dollars. Even more surprising, you later discover you had your leg cut off after a car accident and were even air lifted to a nearby hospital for treatment. All of this shocks you to death because you have never been to an emergency room and still have both of your legs. You wonder, how did this happen? This must be an error? What do I do now? Who do I contact? All these thoughts go through your mind within seconds and a cold sweat covers your face and body instantly. This is a typical case of medical identity theft which can be discovered in many different ways. You may discover this yourself through a credit report examination or a review of the billing statement you receive from the hospital. Or, you may be contacted by the hospital or the police regarding a fraud investigation in which they suspect you might be a potential victim. Regardless of how you discover a medical fraud committed in your name, the sooner you detect and address the fraud, the better off every one is except of course the identity thief.

Why is medical fraud on the rise?

This specific type of identity fraud is on the rise because medical records are increasingly exposed to theft on the internet, medical fraud is easy to commit, and the fraud can go undetected for a long time. More and more, medical records are becoming digital and shared frequently among health insurance, health providers, and consumers. The US government also plans to heavily invest in and support the use of electronic medical records in the coming years which may further support the rise of medical fraud if electronic medical records are not properly protected against all threats. Hospitals and other health care providers are also not helping solve this huge problem by not validating the identity of those seeking health services or detect suspicious medical activities by monitoring their own transactions and sharing the information with other health care providers who should also monitor and track potentially fraudulent activities. Most hospitals and health service providers only require a name and social security number to provide services even without health insurance coverage and when the patient fails to pay for the services, they send the charges to the collection agency and notify the consumer credit reporting agencies of actions taken against the rightful owner of the social security number.

What is the impact of medical identity fraud?

Consumers in general have more protection against credit identity theft than medical identity fraud. For example, if consumers face credit identity theft, and promptly detect and notify the banks, the most they have to pay is $50 regardless of the credit card fraud amount. However, in the case of medical identity theft, paying fraud charges is the responsibility of the identity theft victim whose social security number has been illegally used to receive services. Medical privacy laws aimed at protecting consumers not only provide limited protection against medical fraud as it relates to identity theft, but also equally protect the identity thief when the personal information of both the thief and the victim commingle. You see, when a fraudster attempts to get medical help with your name, your medical records are updated with the thief’s medical information and subsequently not only this commingling can be detrimental to your life during your future doctor visits, but also, you may be prevented to separate your medical records from the thief’s medical records because the thief also has privacy rights in the eyes of the consumer privacy laws.

Prescribing the wrong medication to patients based on false medical records can cause death and thus the impact from medical identity theft in such cases can be irreversible. In addition, how do doctors and hospitals reconcile a patient’s past and recorded information with the identity thief’s medical information obtained from a recent blood analysis after a case of medical identity theft is detected? These are some critical points that every one involved in this crime must think about and address collectively. As you can see, the impact of the health identity theft is huge to the victim’s life, privacy, and financial losses. As we have recently learned, economic recovery is strongly tied to the consumer’s ability to borrow and spend money. With increasing number of people hit with medical identity theft in which cases their credit file is negatively impacted and financial life destroyed, less people may be able to borrow and spend money leading to a slower economic recovery. The government and healthcare service providers must work together to identify and address the residual security risks of the electronic medical records before it’s too late. How long can healthcare providers and regulators point their fingers at consumers for fraudulent medical charges? Can healthcare providers continue to incur huge losses from their own negligence for failing to validate patient identities? Can they face the same fate as the financial institutions which made poor credit decisions? Can economic recovery come to a grind because of medical identity fraud? If not for consumer privacy sake, everyone must come together to limit losses and improve the healthcare environment in which we operate. It’s not just about the health insurance and health service options, but it’s also about ensuring patient medical records are accurate and shared only with authorized people, and, health services and charges are applied to the rightful account owner.

How do you prevent medical fraud?

Preventing medical identity theft is a bit harder because as I mentioned, only a name and social security is necessary to receive medical care in most cases. The main key is to monitor the credit report changes because most fraud transactions with financial implications lead to a change in the consumer’s credit file. Although detecting a fraudulent activity in the credit report occurs after the medical identity fraud has been committed, it can prevent additional medical charges and stop further changes to your medical records and files which can be hard to reconcile. Under the Health Insurance Portability and Accountability Act or HIPAA, you can also request and review your medical records to detect any unauthorized changes but it’s usually more expensive than ordering your free credit report. Also, since most people visit many doctors and healthcare facilities in their lifetime, patient’s medical information can be in more than one place and thus extremely difficult to identify its location, obtain a copy, and review or update the information.

What to do after medical identity fraud is detected?

When you detect a potential case of medical identity fraud, you should contact your health insurance company, the health service provider and the credit reporting agencies if your credit reports are negatively impacted. File a police report, document your case and discussions with others from the beginning, and inform all parties that you are a victim of identity theft. Visit this page for medical identity theft victim solutions.