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What is Medical Identity Theft?

The Federal Trade Commission (FTC) describes medical identity theft as the crime committed by stealing another person’s name, Medicare number, Social Security Number (SSN) and using their personal information to submit illicit medical insurance claims, get treatment, surgery, or prescription drugs without consent. This type of identity theft is a major concern for taxpayers, patients, health plans, health care providers, and health insurers.

Besides disrupting medical care, it causes significant financial losses for taxpayers – recent studies show that besides repaying the insurer for health services obtained by the thief, 65% of medical identity theft victims need to hire legal counsel or hire identity service providers. In the end, it costs them around $13,500 just to deal with the effects of their hacked medical or insurance records, resolve the crime, and fix the damages. The FTC sees medical identity fraud as a growing menace after 2019 reports show a 101% jump in reported cases.

To protect confidential patient information from being revealed without their knowledge or permission, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) has set strict national rules. Any willful violation could cost institutional perpetrators financial penalties of up to $1.5 million, per year and per negligence category.

What is Medical Identity Theft?

How Does Medical Identity Theft Occur?

Fake Treatments

After stealing patient names, diagnosis codes, birth dates, billing information, and insurance policy numbers, crooks often pair with doctors and insiders who know how the insurance billing system works. They bill your insurance plans for bogus treatments or make inflated claims.

Prescription Drugs

Medical identity thieves could assume someone else’s identity to purchase, stockpile, and resell illegal drugs or buy restricted prescription medication such as opioid painkiller pills through the victim’s health insurance plan. They could also use them to feed their own drug habits.

Free Medical Care

Another scam pulled by medical ID thieves happens when they don’t have their personal policies. In this case, con artists steal and exploit someone else’s personal information to obtain free treatment, surgeries, tests, and government health benefits like Medicaid or Medicare.

Medical Equipment

Forged medical receipts and stolen credentials could also be sold or used by cybercriminals to create fake identities or to obtain expensive medical equipment such as electric wheelchairs through your insurance benefits. They later resell the devices for profit on the black markets.

Friendly Fraud

A 2015 research by the Ponemon Institute discovered that in 50% of the cases, medical identity theft perpetrators are close family members who have easy access to the victim’s health insurance card, with 23% of people admitting they share their health information with family members and friends.

Data Breaches

The Medical/Healthcare sector is one of the most targeted by hackers, in 2016 alone being the source of 376 data hacks, which is 34.4% of all information breaches. Data from medical providers and insurance companies is ten times more profitable on the dark web than financial records.

How Can I Detect and Protect Myself from Medical Identity Theft?

Monitor Public Records

Even if your personal information was exposed, you might not be a victim yet, but it’s very important to prevent fraud by using a service such as IDStrong to monitor your medical record number, medical accounts, insurance number, name, SSN, address, liens, court records, bankruptcies, or assets.

Identity Theft Monitoring

Identity theft monitoring is used to spot fraudulent activity linked to a person’s sensitive data such as SSN, email address, bank statements, or credit card numbers, and notify the owner that their confidential information has been compromised and/or illegally sold online.

Check Medical Records

Ask your doctor for copies of medical files and analyze them. Every year, request an Explanation of Benefits (EOB) from your health insurer. Check the list of all benefits paid out through your policy to spot any strange activity, for instance, medical treatments that you didn’t receive.

Monitor Credit Reports

Keep an eye on your credit history and review it frequently. At least once a year, contact the three main credit bureaus or visit their websites (Equifax, Experian, and TransUnion) to pull a free credit report. If you see anything suspicious, ask them for a credit freeze and a fraud alert.

Don’t Overshare Information

Don't share SSN, medical, and health insurance information with strangers or companies who claim to offer free products or services via email or on the phone. Keep any other Personally Identifiable Information (PII), mail, or official documents safe even from friends and family.

Protect your Online Accounts

If you subscribe to a healthcare provider's online patient portal to access your record, always create a strong, unique password that won’t include your SSN or other personal info. Update firewall, spyware, and anti-virus software programs and password-protect any PII files.

Frequently Asked Questions about Medical Identity Theft

What Are the Consequences of Medical Identity Theft?

A stolen medical identity could have serious consequences such as:

  • Physical health threat. Contaminated medical records have the perpetrator’s fake data which could lead to patients receiving the wrong treatment, diagnosis, being prescribed the wrong pharmaceutical, delays in receiving crucial care, or other errors that could worsen existing conditions or even cause death.
  • Damaged reputation. 45% percent of Americans say medical identity theft harmed their reputation mainly because of the embarrassment linked to the disclosure of certain medical conditions.
  • Missing an employment opportunity. If someone applies for a job yet has certain diseases or conditions erroneously listed in their health records, they might fail the screening process. Also, 19% of patients believe that their stolen medical identity blocked their access to some career opportunities, while 3% lost their jobs because of it.
  • Financial losses/medical debt. Unlike financial institutions that refund victims of fraud, 36% of medical identity theft victims pay money out of their pocket to fix the issues. In a year, targeted patients could collectively pay as much as $12 billion to solve their cases.
  • Ruined creditworthiness. If crooks used your insurance to amass bills under your name, expect to be stuck with higher interest rates, have debt collectors on your back, receive notifications for unpaid bills, and be denied new credit cards, mortgages, loans, or jobs.
  • Damaged insurance. Patients could lose all their medical insurance benefits, health, and life insurance coverage.
  • Invasion of privacy. Similar to other types of identity theft, once your medical history is no longer confidential and virtually anybody can access information that you would like to keep private, or buy it from hackers, your right to privacy has been breached.

How Common Is Medical Identity Theft?

More than 50% of Americans have had their identity stolen at some point or know someone who has been a victim of identity theft, with statistics on medical identity fraud showing the following:

  • In 2015, healthcare services have dealt with more than 73 million security events, ranking first in cybersecurity attacks.
  • 42% of 2015’s security incidents resulted from unauthorized access to the healthcare industry.
  • 25% of Americans have had their medical data stolen, and 33% of those hacks took place in a hospital.
  • According to a study featured in The American Journal of Managed Care (AJMC), in 2016, 16 million patient records were stolen in the US.
  • In 2017, 27% of data breaches were connected to medical records.

What’s the Difference between Identity Theft and Medical Identity Theft?

Identity theft occurs when someone uses another person's PII, such as their name, date of birth, driver's license number, social security number, credit card number, bank account, or passwords, without their authorization, to commit crimes. Medical identity theft, on the other hand, is a form of identity fraud that occurs when perpetrators use a patient’s name, Social Security number, health insurance number, and other PII data to purchase medical products, pharmaceuticals, or receive medical services or procedures. The culprits, in this case, are usually “insiders” who work at healthcare facilities and can easily access patient information. They use the info themselves or they sell it to organized medical identity theft gangs.

What to do if you think you’re a Victim of Medical Identity Theft?

If you suspect you've been a victim of medical identity theft, here’s what you should do next:

  • Report the crime to the Federal Trade Commission at 877-438-4338 or online at IdentityTheft.gov. They will release an identity theft report with a recovery plan.
  • To file Medicare-related complaints, contact the U.S. Department of Health and Human Services’ Office of Inspector General at 800-447-8477 or online.
  • Even if only 40% of medical identity theft victims report it to law enforcement, it’s better to file a police report for your peace of mind.
  • Contact your insurance provider and start gathering evidence. Get an “accounting of disclosures” (you’re entitled to request one per year) that shows who received your medical files from your healthcare provider.
  • Request copies of your medical plan and medical files, and ask medical providers to fix inaccuracies if needed.
  • Consider adding a fraud alert to your credit reports and freezing your credit.
  • Subscribe to monitoring services for your identity and credit reports so you can be notified when someone steals your identity and attempts to misuse your data.

Can Someone Else Use My Medical Insurance?

Each health insurance plan is strictly associated with a person and their social security number and it’s illegal to use another person’s insurance plan. However, if you lose your insurance card or if hackers or identity thieves intercept your personal data, they could take advantage of your medical plan to get treatment, drugs, and file health claims with your insurer, in your name, without your knowledge. In this case, the perpetrator’s medical data will compromise your medical records, treatments, insurance, and payment records.

Why Are Medical Identities So Valuable?

Medical information is at least ten times more valuable than any other identifying data because:

  • It contains more sensitive information than financial records, giving criminals more possibilities to commit fraud.
  • Many patients don’t pay attention to their medical records therefore it takes longer to identify fraud.
  • Crooks make 10 to 50 times more profit by selling or using medical identities rather than financial identities.

Who Commits Medical Identity Theft?

Medical identity thieves usually fall under five categories:

  • Hackers. They practice social engineering scams to fraudulently get social security numbers and health insurance information from unsuspecting paying patients and medical providers.
  • Healthcare employees. Nurses, doctors, and lab technicians at medical facilities know how the system works and often want to make a quick profit.
  • Family. 24% of consumers claim that a family member used their medical credentials without their permission.
  • Organized crime rings. Perpetrators form entire networks. They buy stolen patient information from the black markets then set a system of fake clinics and start making fraudulent claims against honest patients’ insurance plans.

How can Identity Monitoring Help against Medical Theft?

Besides offering identity and credit monitoring, IDStrong helps patients and taxpayers keep their medical identity under surveillance against data thieves. By monitoring a person’s medical insurance number and the medical records number assigned to individuals by hospitals and medical groups, we may be able to help people act against suspicious activities or changes linked to their personal details. Our search engine scours the Internet, including the dark net, underground discussion forums, and black markets. When our search tools identify compromised data, a system of automatic notifications alert the affected user. Therefore, we’re enabling potential victims to take action sooner rather than later which could minimize possible losses and could even help them prevent medical id theft from happening.

Finding someone’s data exposed online doesn’t necessarily mean it’s already been used or bought by criminals, therefore intercepting it on time could make a significant difference in preventing stolen medical identities from being an accessory to a crime.

What Other Types of Health Insurance Fraud Exist Besides Medical Identity Theft?

Health insurance fraud can take place at any point during the medical insurance process, starting with purchasing coverage and ending with receiving care. Therefore, apart from medical identity theft, we have the following types of fraud:

  • Medicare fraud (covered by the government instead of private health insurance companies) – scammers slip fake claims past Medicare overseers.
  • Community mental health fraud – therapists bill patients and insurance companies for fictive, incomplete, or pointless services.
  • Supply coverage and medical equipment/devices fraud – insurance businesses forge medical equipment claims, particularly for senior citizens. They issue false claims, overcharge them, or intentionally deliver (and bill) more than is needed.
  • Ambulance fraud - ambulance service providers overcharge patients, sometimes even for services that weren’t offered.
  • “Too-good-to-be-true” offers, discounts, and marketing scams - discount cards and plans that are sold by deceitful insurance agents as low-cost insurance policies, but actually won’t cover medical claims.

How to Reduce the Threat of Medical Identity Theft?

Having a proactive approach towards preventing identity theft makes a huge difference. Patients could stay safe from becoming victims of medical identity theft by adopting some simple cautionary steps such as:

  • Frequently check medical records and have any errors corrected immediately.
  • Monitor when and where you’re asked to share health information online, in person, or over the phone.
  • Always read the privacy policies when buying medical coverage to know for sure where and when your information is shared.
  • When filling our medical forms online, always use secure "https" websites and stay away from "http" URLs.
  • Keep both digital and paper copies of medical files and insurance records.
  • Remove labels from prescription bottles and shred printed documents (healthcare statements, medical bills) that contain confidential data before throwing them away.
  • Engage specialized monitoring services that cover your medical identity such as medical records number and medical insurance number.
  • Search for health organizations that abide by the “Red Flags Rule,” which makes it compulsory for businesses and healthcare providers to have a written identity theft prevention program targeted at discovering the “red flags” of id theft as part of their daily processes and taking steps to mitigate risk and minimize damages as early as possible.
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