Avoiding the Pitfalls of Medical Insurance Fraud

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If you’ve ever had your wallet stolen, you know the pain of losing cash and the annoyance of having to replace photos, frequent buyer and discount cards. The panic, however, really sets in when you imagine your credit cards and driver’s license in the hands of a thief.

Worse still, you may want to add one more item to the top of your list of most valuables – your medical insurance identification card.

Medical insurance fraud is one of the most dangerous forms of identity theft, and it threatens to both drain the economy and impact your personal life. According to the Federal Bureau of Investigation, this type of fraud costs some $60 billion a year, forcing the Department of Justice to make combating it a top priority. In February of this year, the DoJ’s anti-fraud task force recovered $4.1 billion that had been lost to Medicare and Medicaid fraud in 2011.

Yet beyond just dollars and cents, it’s also your health that’s at risk. James Quiggle, the director of communications for the Coalition Against Insurance Fraud, has worked in insurance fraud for more than a decade. He said medical insurance fraud can be broken down into three major categories. Listed below are tips that you can use to avoid becoming a victim.

Watch “Crime Inc: Medical Insurance Fraud” to learn more. Tonight at 9p ET/PT on CNBC

Medical Identity Theft

This subset of fraud occurs when someone steals your personal information and uses it to file phony claims against your policy. A person without coverage could assume your identity in order to receive treatment.

Quiggle said this type of fraud poses severe dangers to both your credit and health. The fraudster could change your address without you knowing, so bills go unpaid and thereby damaging your credit. Possibly more severe, however, are that your health records could be changed to reflect the scammer’s blood type and allergies. That would pose a major hazard – especially if you should find yourself unconscious in the ER.

Tips To Watch Out For:

-At least twice a year, contact the credit bureaus to check your credit standing, making sure to look for any suspicious unpaid medical bills;

-Protect your personal insurance identification card: don’t leave it exposed where people can see it. A large percentage of medical id thefts were committed by an acquaintance of the victim – maybe even a trusted friend or relative who rifles through your purse or wallet without your knowledge, according to Quiggle;

-If wallet is stolen or lost contact your health insurance company right away. Issue an alert and change your health insurance number;

-Examine your explanation of medical benefits on bills from your health insurance company for any unusual charges you don’t recall incurring;

-If you suspect your medical id has been stolen, get a copy of your records from your doctor, hospital, pharmacy, clinic and lab. Contact them and ask to remove any false information and to change records. Also ask to put on file that you have disputed some of the records.

Scams, scams, and more scams.

Generalized Medical Insurance Scams

Perpetrators of this area of medical fraud incorrectly bill patients for major procedures they did not receive, and/or overcharge patients for extras. Criminals can max out your benefits and cause increases in your premiums.

Fraudsters also create various scams to get you to hand over your Medicare or private insurance policy information. In many instances, they fake being government workers or healthcare professionals, according to Quiggle.

Tips to Watch Out For:

-Carefully review your bills and explanation of benefits. You should beware of phantom treatments you never received, or fraudulently inflated bills.

-Keep detailed personal records of treatments and procedures you receive. Note the dates and names of healthcare providers, doctors and facilities.

-Beware fraudsters taking advantage of healthcare reform by posing as representatives from the federal government, who may knock on doors selling fake “ObamaCare” insurance. Don’t fall for the pitch because its most likely a scam, Quiggle said.

-Watch out for crooks who offer you healthcare benefits like free checkups in parking lots, free nutrition drinks/supplements, massages or check-ups, in exchange for your Medicare or private insurance information.

-Never give strangers your policy number or Medicare number, especially if they try to offer you free cash or gifts. They might ask to review your Medicare info to ensure it is updated and accurate. Do not fall for this. Seniors were especially susceptible to this, Quiggle said.

Bogus Healthcare Plans

In these instances, marketers flat out lied, Quiggle stated. They claimed to sell honest health coverage when in fact they sold people a worthless piece of a paper, or a wordy contract full of fine print that was a stripped down policy.

They also sold medical discount cards which do not provide full coverage. Instead, these cards acted as a buyer’s club for health coverage, providing discounts but requiring you to pay the balance for healthcare. These cards can be legitimate, Quiggle said, but there was also a tremendous amount of deceptive language in the marketing information.

Tips To Watch Out For:

-Insurance company’s must be licensed to do business in your state. Contact your state insurance office to check if your plan is licensed in your state. Typically these plans are not licensed: if your company is not, that should be a red flag to discontinue business and find a new carrier.

-Ask to see the policy before you sign, and have someone who’s knowledgeable about insurance policies review the policy with you.

-Review the fine print to see if it contains unusually strict exclusions that would make it very hard for you to get a claim paid.

-Be very wary if a pushy salesperson tries to badger you to sign up quickly in order to get a special deal.

-If a sales representative is vague or evasive about the details, be very wary.

-If premiums are unusually low, and it’s too easy to sign up without detailed medical questionnaires or exams, than the deal might be too good to be true.

To learn more tune into “Crime Inc.: Medical Insurance Fraud” at 9P ET/PT tonight on CNBC.