September 26, 2006 | Posted By Diane Pfadenhauer | print this article

Medical Identity Theft and Your Medical Plan

From the "just when you think you've heard it all category..."  The LA Times recently reported on a new and interesting twist on identity theft - medical identity theft.  Instead of just stealing your identity and scamming you out of money, this latest twist involves obtaining possession of your health insurance information, posing as you, having treatment and your insurance company gets the bill.  Works until there are fees not covered by insurance.  Then you get the collection notices.  According to the report:
Although the most typical of the millions of identity theft cases in the U.S. each year involve credit cards, a 2003 federal report estimated that at least 200,000 instances involved medical identity fraud. Experts believe that the rising cost of healthcare is driving more identity theft, and that many people are unaware they have become victims unless they receive a hospital bill or query from their insurer. The bulk presumably remain invisible.
With their medical records compromised, victims of this kind of fraud face a greater risk of injury or even death if doctors make treatment decisions based on bad information. Files might list incorrect prescriptions, the wrong blood type, or an erroneous diagnosis.
Imagine finding out that after your wallet is stolen, someone has has used the emergency room in your name.  The thief's medical history is now co-mingled with yours in your medical records - a disaster waiting to happen. 

For those in the business of purchasing insurance for our businesses, this clearly demonstrates the need to audit claims and plan usage.  It will serve not only to protect employees and plan participants but ensure that the experience charged back to our plans really belongs there.