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Medical Identity Theft: A Need for Education and Monitoring

September 13, 2013
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'Family Fraud' is a persistent problem

Identity theft is a serious crime that can destroy the credit rating of victims and take years to set straight. A growing subset of the crime is medical identity theft, the subject of 2013 Survey on Medical Identity Theft, a report released by the Ponemon Institute this week; all of the survey’s respondents have experienced some form of medical identity theft. According to Larry Ponemon, Ph.D. chairman and founder of the Ponemon Institute, medical identity theft is up nearly 20 percent within the last year. It affected an estimated 1.84 million people in the U.S. in the last year, resulting in an estimated $12 billion in out-of-pocket costs. Yet there is one thing that sets medical identity theft from identity theft in general: it can result in serious and even fatal medical consequences due to inaccuracies in a victim’s medical record.

This is the fourth year the report has been released, and it has begun to shed light on some interesting trends. One of the most disturbing is phenomenon of “family fraud”—the fact that in many cases victims know the perpetrators or even have tacit knowledge that their medical identity is being inappropriately by someone else.

Thirty percent of respondents said they knowingly permitted a family member to use their personal identification to obtain medical services, including treatment, healthcare products or pharmaceuticals. That rate has been consistent over four years of survey results, Ponemon says.  When the crime involved family members, 51 percent said they shared their personal information only once, while 22 percent said they couldn’t remember. The most common reasons given were because the family member did not have insurance or could not afford to pay for treatments. In the case of non-family members, 17 percent admitted to sharing.

As noted in the survey, this is a medical identity theft is preventable, by not sharing credentials of being more proactive about credentials. Only 7 percent of respondents said the crime was the result of a data breach in a provider organization or insurer.

Unfortunately, half of the respondents surveyed were not aware that medical identity theft can create inaccuracies or damage their medical records. It’s also ironic that, at a time when there is much talk about the advantages of medical records, not to mention an emphasis, on the part of healthcare providers and payers, on patient privacy, that many consumers don’t take action to protect their health information. According to the survey, 50 percent of respondents said they do not take steps to protect themselves from future medical identity theft. Fifty-four percent of consumers do not check their health records, because they don’t know how and they trust their healthcare provider to be accurate; an equal number of respondents do not check their explanation of benefits. Of those who found unfamiliar claims, 52 percent did not report them.

Medical identity theft hurts individuals, it hurts provider organizations as well. According to this year’s survey, 56 percent of respondents said an incident caused them to lose trust in their healthcare provider, an increase of 51 percent compared to the previous year’s study.

Last month, an industry group, the Medical Identity Fraud Alliance, was formed to address the issue. It’s goal is to bring together all of the stakeholders—policymakers, healthcare provider organizations, payers, law enforcement and consumer groups—to develop best practices and technologies. One of its stated goals on its Web site advocates consumer education: “Consumers must take an active role in the security and privacy of their financial and health related information. Individual consumers can become vocal advocates for system-wide reform. Currently, very few patients can act as advocates on their own behalf and most are uniformed about the implications of such theft.”