You are viewing westhillconsult | westhill consulting insurance - While credit card breaches at retailers are grabbing headlines, identity thieves are quietly homing in on an even more lucrative area: health insurance and medical records.

More than 1.8 million people in the U.S. were victims of medical identity theft in 2013, according to a survey by the Ponemon Institute released in September. That's a 19 percent increase over the previous year. "Medical identity theft is the fastest growing component of ID theft," says Drew Smith, founder and CEO of InfoArmor, a provider of business-to-business identity theft solutions.

The latest case involves the alleged theft by Chinese hackers of 4.5 million medical records from Community Health Systems, a company that runs 206 hospitals in 29 states. Thieves stole records including names, addresses, birth dates, telephone numbers and Social Security numbers. Like any type of identity theft, medical ID theft can damage your credit and cost you hours of hassles trying to clear it up. But it could also endanger your life if incorrect information appears on your medical records.  Why the bull's-eye? Health information is easier to hack than credit. In April, the FBI issued a private industry notification warning to health care providers that their data networks are not as robust as those in the financial and retail sectors, and "the possibility of increased cyber intrusions is likely."

Safeguards are in the works, but the move to electronic records and the health exchanges set up under the Affordable Care Act, otherwise known as Obamacare, have opened new opportunities for fraud, both online and off. Experts say Americans can expect to see medical fraud heat up again in the months before open enrollment for 2015 government-subsidized insurance begins in November 2014.

Your medical ID: black market gold

Why would hackers bother with health insurance when they could get a direct line to your pocketbook via credit cards or financial accounts? "It's very lucrative," says Ann Patterson, senior vice president and program director at the Medical Identity Fraud Alliance. "Stolen protected health information can be monetized for a much greater value than traditional financial account information."

A complete medical identity -- including name, address, phone number, Social Security number, medical insurance information and access to medical records -- is worth about $50 on the black market, says Michael Bruemmer, vice president of Experian's Data Breach Resolution group. "Without medical or insurance information, that drops to about $10 for someone's stolen information." Bruemmer's group helped resolve 1,000 health care client breaches last year, including the largest breach of HIPAA, the Health Insurance Portability and Accountability Act.

Medical identity theft usually happens on a large scale, with hundreds or even thousands of identities stolen at one time. Once hackers have a medical ID, they can use it to procure prescription drugs or expensive medical equipment or simply to commit financial fraud -- often for months or years before anyone notices. Why? Partly because people don't pay much attention to their medical or insurance records. While most of us wouldn't let a bank or credit card statement go unread, we tend to ignore the explanation of benefits (EOB) issued by our health insurance after we have a doctor's appointment or medical procedure.

'Friendly' fraud common

More than half of all medical identity theft is what's known as "friendly fraud" or "a victimless crime," according to the Ponemon Institute study. A typical example: an uninsured sibling or friend borrows your insurance card for a procedure, with or without your permission.

In 2013, the Medical Identity Fraud Alliance interviewed 800 victims of medical fraud. When asked what they would do differently, half said nothing. "Especially with the Robin Hood or 'victimless' crime, most people don't think there are consequences," says Patterson. "They say it's no big deal."  Yet there is no such thing as victimless medical identity theft. "If your sister has allergies that you don't have or a different blood type, her allergies and blood type are now comingled in your records," Patterson says. If you're unconscious and need an emergency transfusion or injection, that misinformation can kill you.

That kind of consequence comes, in equal measure, from both friendly and malicious medical identity theft, yet we continue to be lax about sharing our health information. "As a society, we just look at health in a very different way than we look at our finances," Patterson says.

Detecting medical fraud before it hurts you

Sometimes it takes a questionable medical bill to alert someone of a compromised medical identity, but even that doesn't always do the trick. Many people simply ignore such bills from their insurance companies. By the time a red flag goes up, your insurance may have been used to procure prescription drugs, black-market medical equipment and emergency room visits.

The consequences can be expensive. The Ponemon Institute found that 36 percent of medical ID theft victims pay to resolve the issue, and their out-of-pocket costs average nearly $19,000. Even if you don't end up paying out of pocket, such usage can wreak havoc on both medical and credit records, and clearing that up is a time-consuming headache. That's because medical records are scattered. Unlike personal financial information, which is consolidated and protected by credit bureaus, bits of your medical records end up in every doctor's office and hospital you check into, every pharmacy that fills a prescription and every facility that processes payments for those transactions.

Bruemmer expects that will change soon, with more progressive states raising the bar. "California, in particular, has the most stringent standard for what constitutes a medical or health care breach," he says. If an individual's username and password is compromised on a health care portal there, the provider is required to notify him or her within five days, Bruemmer says. "I actually think that's the way the industry is going and there will be more regulations across more states," Bruemmer says.

Compiling a composite identity for the big scam

One small breach of information here and there may not seem like much, but each one could be adding up to something serious. "Five years ago, most hackers were looking for Social Security numbers, credit card numbers. They were going for the quick, easy fraud," says Smith. "Today, they're looking to steal someone's health credentials, insurance information, credit card account passwords, so they can continue to monetize victims' identities over a longer period of time."

"Thieves are getting smart," Bruemmer agrees. "One organization may take a username and password, another is your credit information, and another is your Social Security number. The last one may actually get your medical records. What they're doing is amassing, in three or four incidents over a period of time, the full identity stream." Bruemmer says, for example, that thieves often use hacked email accounts to gain personal information. "People say, 'Oh, it's just the username and password for my email account, I'll just change that.' You'd be surprised how many people forget and let it go. Then, all of a sudden, something really bad happens."

As with any organized crime, fraudsters jump from one channel to the next, as each locks down. "In the financial world, they jumped from hard checks to electronic to online banking, and now mobile fraud," Patterson says. "Now they're jumping from traditional financial channels into health care channels."

Like the RAM-scraping in 2013's big retail breaches, online medical fraud has become more sophisticated in recent years. Yet old-fashioned huckstering is alive and well. In July, the owner of NC Behavioral Health and Counseling Services of Durham, North Carolina, was indicted for health care fraud, identity theft and 13 other criminal charges after submitting bogus claims for at least 56 clients. Court records allege that instead of covering medical services for the patients, the owner spent the $1 million she received from Medicaid on a Cadillac Esplanade, a Mercedes and a swimming pool.

New fraud opportunities courtesy of Obamacare

Obamacare and the expansion of Medicaid have opened up a whole new stream of opportunities for fraudsters, experts say. In June, a backpack was discovered on a street in Hartford, Connecticut, near the Access Health CT exchange. Inside were four notepads containing the Social Security numbers of 151 people enrolled in Connecticut's Obamacare exchange. "There are so many opportunities out there to defraud people," says Dennis Jay, executive director of the Coalition Against Insurance Fraud. "You're dealing with populations that are new to insurance and don't understand the dangers of selling a Medicaid number or sharing a health ID number."

Just before the rollout of Obamacare, roving gangs began knocking on doors in lower-income neighborhoods, requesting health information they said was needed to expedite the new health plans. "People gave it out," Jay says. He expects that kind of fraud to pick up as the open enrollment period for 2015 coverage through the health insurance exchanges nears.

The expansion of Medicaid accompanying Obamacare has led to similar door-to-door solicitations, he says. "The Medicaid expansion also concerns us because there are roving gangs that will pay you to share the numbers with them," Jay says. "Once [fraudsters] have those numbers, they know they're golden. A lot of Medicaid systems won't detect it for many months and there could be tens of thousands or even tens of millions gone before that happens." It's too early to measure the impact of the health exchanges set up under Obamacare and the sharing of health records online. "We haven't even seen how secure those sites are," Smith says. "But given the problems they've had, it would be surprising if we don't see identity theft bump up over the next couple years because information has been compromised."

What you can do to keep your medical identity safe

   •    Be vigilant about your personal information. Shared all documents with any kind of sensitive information and change your passwords on a regular basis. "Don't use the same password on multiple platforms," Bruemmer advises, "particularly health care platforms, financial institutions, government records."

   •    Don't share health information with solicitors or phishers. Steer clear of links in emails that request that information online. Don't give out your information over the phone to someone claiming, for example, to represent your insurance company. Don't give it to anyone who appears at the door, either. A common scam now, according to Jay, is to knock on doors asking for medical information to renew an Obamacare policy.

   •   Avoid sharing sensitive information. Even health care providers sometimes over-reach. Many automatically ask for your Social Security number. "In many cases, they don't need it but it's the default question," Bruemmer says. "As rule of thumb, don't share anything of a personal nature with a health care provider that you wouldn't consider sharing with your neighbor."

   •   Read that EOB, preferably via email. An Explanation of Benefits from your insurance provider is not exactly easy reading, but it's worth more than a scan -- and the sooner, the better. "I encourage people to get their explanation of benefits via email," Smith says. "They come through much faster, instead of getting lost in the mail. Anything you can do to monitor your EOB is a great start."

   •   Move quickly on breach notifications. If you get a letter from a health care provider saying your health care information has been exposed, read it carefully and follow the instructions immediately. Such letters usually offer helpful tips on how to protect yourself and take advantage of free services provided.

   •   Check credit reports and medical records regularly. You can access each of your credit reports from the three major credit bureaus for no cost once a year at Evidence of medical identity theft often shows up there in the form of unpaid medical bills. You also have the right to review your medical records. Any time you have a medical procedure or visit a new physician, you should request and review a copy of your records.

Pharmaceuticals. Flickr/Waleed Alzuhair.

Image: Pharmaceuticals. Flickr/Waleed Alzuhair. Some rights reserved.

Commerce has corrupted healthcare in the Irish semi-privatized insurance-based system.

Late last year Senator John Crown revealed under parliamentary privilege in Ireland’s Senead that his own hospital, St. Vincent’s University Hospital in Dublin, had in 2002 billed the country’s largest private health insurer €1 million for the drug trastuzumab (Herceptin). But the drug had in fact been supplied to the hospital free by pharmaceutical giant Roche, as part of clinical trials for women with breast cancer.

This was not an inadvertent error as the hospital claimed, said Senator Crown, but deliberate financial fraud, which the hospital board had spent perhaps tens of thousands trying to cover up, employing ‘substantial intimidation’ to bury the matter.

Senator Crown is also Professor Crown, arguably Ireland’s most distinguished oncologist. He had been told of the fraud in 2002 and at once notified all relevant health authorities.

An investigation started, and then stopped in its tracks. The hospital argued it had not known about this major research program me taking place on its premises.

The debacle had ended with the suspension of the drugs trial for a year, jeopardising the lives of women with breast cancer who might otherwise have participated in this important trial, said Professor Crown.

This was not the only instance of the hospital charging insurers for drugs which had been provided for free, he said (Seanad Eireann, 2013), but only recently had additional corroborating documentation come into his possession.

The bombshell about St Vincent’s creative accounting highlights several aspects of the unworkable two-tier Irish health care which should serve as a warning to English readers.

The growth in unaccountable private hospitals, Big Pharma’s protected presence in Ireland, and a rapacious private health insurance industry, and the very best paid consultants and managers. All of these have benefitted from the supposedly ‘non-political’ structures set up in recent years to oversee health provision.

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Protect yourself from Marketplace fraud

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When you apply for health coverage through the Health Insurance Marketplace, you can protect yourself from fraud by following a few simple guidelines.
IMPORTANT: After you complete an application, you may get a phone call from the Marketplace to verify or ask for more information. See “If you get a call from the Marketplace” below.

Be informed about your health care choices
·        Spend some time with to learn the basics about getting health coverage. It’s the official Marketplace website.
·        Compare insurance plans carefully before making your decision. If you have questions, call the Health Insurance Marketplace call center at 1-800-318-2596. TTY users should call 1-855-889-4325.
·        Look for official government seals, logos, or web addresses (which end in “.gov”) on materials you see in print or online.
·        Know the Marketplace Open Enrollment dates. No one can enroll you in a health plan in the Marketplace until Open Enrollment begins or after it ends unless you have special circumstances.

Protect your private health care and financial information
·        Never give your financial information, like your banking, credit card, or account numbers, to someone who calls or comes to your home uninvited, even if they say they are from the Marketplace. (See “If you get a call from the Marketplace” below.)
·        Never give your personal health information, like your medical history or specific treatments you’ve received, to anyone who asks you for it. (If you apply for certain Marketplace exemptions, you may be asked for medical documentation.)

Ask questions and verify the answers you get
·        The Marketplace has trained assisters in every state to help you at no cost. You should never be asked to pay for services or help to apply for Marketplace coverage.
·        Ask questions if any information is unclear.
·        Write down and keep a record of the name of a salesperson or anyone who may assist you, who he or she works for, telephone number, street address, mailing address, email address, and website.
·        Double check any information that is confusing or sounds fishy. Check out to verify things or call the Marketplace at 1-800-318-2596. TTY users should call 1-855-889-4325.

If you get a call from the Marketplace
After you apply you may get a phone call from the Marketplace asking you to verify or provide more information. If we don’t have this information we may not able to process your application.
Follow these tips to help prevent fraud:
If your phone has caller ID, check the number. The display may show one of these:
·        Health Insurance MP
·        606-260-4191
·        479-877-3203
·        636-698-6320
·        580-354-7707
The customer service representative will say they are calling from the Marketplace and provide a full name and agent ID number. Write them down.
A Marketplace representative may leave a message on your answering machine. If this happens, you won’t be able to call back. If the Marketplace can’t reach you after 3 tries, you’ll get a letter in the mail telling you what to do next.

The Marketplace representative may ask you the following:
·        To verify your identity, using information you provided on your application
·        To provide or verify the last 4 digits of your Social Security number. If you didn’t put your full Social Security number on your application, they may ask for the full number.
·        To verify or provide income, household, and employment information, but NOT personal financial information, like a bank name and account number. They will also not ask about any personal health information, like your medical history or conditions. (If you’re applying for certain Marketplace exemptions, you may be asked to provide medical documentation.)
If you don’t want to answer over the phone, ask the representative to mail you a letter with instructions for completing your application.
In certain cases, the Marketplace may request additional documentation. If you need to mail any information to the:
Health Insurance Marketplace
465 Industrial Blvd.
London, KY  40750-0001
Don’t mail any information to a different address. The Zip code may end with 4 extra numbers the representative provides.

When to report suspected fraud
It’s time to take action if:
·        Someone other than the insurance company you’ve chosen contacts you about health insurance and asks you to pay – or asks for your financial or personal health information
·        Someone you don’t know contacts you about getting health insurance and asks you to pay – or asks you for your personal financial or health information
·        Someone contacts you and claims to be from the government or Medicare – and asks you to pay for a new “Obamacare” insurance card
·        You give your personal health, bank account, or credit card information to someone who calls you and says they’re from the government

How to report suspected fraud
You can report suspected fraud one of 2 ways:
·        If you suspect identity theft, or feel like you gave your personal information to someone you shouldn’t have, use the Federal Trade Commission’s online Complaint Assistant.

You should also contact your local police department.

Visit to learn more about identity theft.

·        Call the Health Insurance Marketplace call center at 1-800-318-2596. TTY users should call 1-855-889-4325. Explain what happened and your information will be handled appropriately.

Source: Protect yourself from Marketplace fraud

Austin Company Leads Medicaid Fraud Crackdown

Austin Company leads Medicaid fraud crackdown

Texas pays out $28 billion a year to some 4.8 million people, according to Kaiser.

The state picks up one-fourth of the tab, and the feds pay the rest.  The FBI estimates that 10% of Medicaid claims are fraudulent, which comes out to $2.8 billion a year in Texas alone.

On Monday, Austin company 21CT launches a new computer system called “Torch” to help the state bring scammers to justice.

Torch will collate state data around the clock. The system will monitor frequency of claims, the size of claims and any funny patterns or anomalies.

21CT has grown to over 100 employees, most of them devoted to the crackdown. Company officials say what they are finding is eye opening.

“You know it’s there,” said Kyle Flaherty, Vice President of Marketing for 21CT. “What’s so surprising is how complex and entrepreneurial the fraudsters can be. This is a business for them and we need to disrupt the business they are creating.”

Torch will eyeball providers: businesses, medical supply companies, doctors, therapists, dentists, ambulance firms, hospitals and more. The system will make it easier to sort out.

“In my old job as a healthcare fraud investigator for the state I would have eighteen browser windows open with tabs in them,” Ross Worden, 21CT Director of Data Science said. “I had no idea what was going on. Now, it’s all in one place. I can click through and see who is connected to what… what they are doing… what they are going to do potentially. It’s a fantastic tool.”

Cheats use patterns to pull off their scams, but they can be spotted if you know what to look for. However, Torch isn’t talking.

“The reason I won’t tell you what they are is they may be listening,” Flaherty said. “The last thing I want a fraudster to know is the techniques we can pick up on.”

Those could include suspicious associations, peculiar transaction accounts and unsavory networks.

A little modest bill padding, or honest mistakes are to be expected in Medicaid. Torch looks for the big boys.

“There’s always something where you say no, you knew it,” Worden said. “It was bad and you tried to hide it. Those are the things that really interest us. We want the bad people.”

When the red flags fly, they are passed along to state investigators to pick up the trail.

If you are busted, it could mean a fine, paying restitution or even jail time.

Watch out for health care scams

All the news about the Affordable Care Act has got me thinking about my health. I’ve been looking to download some health and fitness apps, but I notice many ask for a lot of personal information. Just how safe are these to use?

The Affordable Care Act is bringing health care to a lot people’s attention. It is also proving to be a field day for scammers.

The Affordable Care Act has finally gone into effect. It brings sweeping changes to America’s health care system. As usual, I am not going to comment on any of the politics involved. But I think everyone will agree that navigating the new system is very confusing.

As with any moment of confusion, scammers are jumping in. They have got some new scams cooked up to scare and trick you.

Let us start with insurance scams. One widely publicized requirement of the Affordable Care Act is that everyone needs insurance. I know some people are just going to grab whatever plan is cheapest. You might be tempted to fire up Google and search for insurance companies, but that is a bad idea.

Scammers are setting up tons of fake insurance websites. You think you are signing up for insurance but you are really giving away your information.

The place to start your search is the Health Insurance Marketplace at This is the official federal source for insurance providers. Of course, nothing is that simple. Sixteen states and the District of Columbia have their own marketplaces.

There is also some question about how well insurance companies are verified. So, do not think that just because a company is on a government site it is OK. You still need to do your homework.

The danger is not just online. Some scammers take a more direct approach. They might call, email or even show up on your doorstep pretending to be from an insurance company. They will even promise incredibly low premiums, and claim that you would be a fool not to sign up!

Some will throw in a scare tactic. They will tell you that if you do not buy right now, you will face fines or jail time. Sign me up quick!

The only problem is that you may not be covered and your money will be long gone. Before you sign up with any insurance company, do your research. Run the name through Google. Make sure the company has a solid history and no fraud complaints.

Even if it is a legitimate company, don’t trust unsolicited calls or emails. Contact the company directly if you are interested in what it offers. Scammers have no problem lying about representing real companies.

As a rule, always pause and do research before making any decision like this. Trust me, the world is not going to end if you do not “act now.” Pushing you to act now is a big part of what scammers do. They rely on greed, fear or both.

That brings me to the next question you might hear. Did you get your “Obamacare card?” No? Good, because there is no such thing. However, you might get a phone call or email telling you otherwise.

The person will explain that everyone needs one; otherwise you will not have access to health care. Plus, you could face a fine or even jail time without one! However, the caller will graciously offer to send you one. You just need to provide your name, address, Social Security number, current medical plan numbers and possibly a small processing fee. Sound suspicious yet?

As a side note, the official name of the health care act is the Affordable Care Act. No legitimate companies are going to call it “Obamacare” in advertising or correspondence.

A similar scam you might hear deals with Medicare and Medicaid. You will be told that under the Affordable Care Act, you have to reapply. Otherwise your benefits will disappear! Naturally, the person informing you of this will be happy to help if you give them your information. How helpful! In fact, they will help themselves to your identity if you are not careful.

Seniors are already the number one target for medical fraud and identity theft, and it is only going to get worse. But even so, no one is safe.

You need common. It helps to remember a simple rule: Never give out financial or medical information over the phone or through email. That is not how legitimate companies work.

Every company or organization that deals with medical information falls under the Health Insurance Portability and Accountability Act, or HIPAA. HIPAA regulates how your medical information is stored and shared. The Federal Trade Commission has similar rules for financial institutions.

These are not the only scams around. There are hundreds more you could run into.

George Cox is the owner of Computer Diagnostics and Repair. He can be reached at 346-4217.
(westhawaiitoday) - Prescription pills and over-the-counter drugs are becoming increasingly popular drugs of choice among teens, young adults and others, in part because of their accessibility.

Big Island law enforcement officers and state officials offered a peek into the drug culture during a presentation Tuesday to West Hawaii seniors. Briefly discussed were pharm parties — an emerging dangerous trend where an assortment of pills is mixed in a bowl and taken at random by partygoers — and sizzurp — a high addictive drink with serious side effects consisting of prescription cough syrup with codeine and a mixer such as soda or punch.

Several factors, including peer pressure, availability, environment, media and attitudes, influence medication drug abuse. Officials agree seniors can effectively help stop the problem from happening if they keep track of all medication, secure any medications and disposed of unused pills. The Police Department encouraged participation in the upcoming prescription drug take-back day, happening from 10 a.m. to 2 p.m. Sept. 27 at the Kona police station. The public can then turn in unused, unneeded or expired prescription medication for safe, anonymous disposal.

More of Health Care Articles at westhill consulting insurance and their social page Health Care Administration.

Other prevention methods touted were having clear rules about substance abuse, promoting healthy activities and being a role model by setting a positive example.

Valerie Mariano, chief of community and crime prevention at the Department of the Attorney General, shared federal data showing drug overdose deaths rose for the 11th straight year, most of which were accidents involving painkillers. In 2010, the Centers for Disease Control and Prevention, reported 38,329 drug overdose deaths nationwide and medicines, mostly prescription drugs, were involved in nearly 60 percent of those deaths.

Mariano, along with Ed Gomes of the Department of Public Safety’s Narcotics Enforcement Division, explained problems often arise because of incorrect use and drug interactions. To avoid such problems, they advised reading the labels of medications; making and maintaining a medication list; reviewing medications at least annually with doctors; using one pharmacy to fill all medications; and speaking up about condition, medications and their validity or effects.

Tuesday’s presentation was part of the the Kupuna Alert Partners program, initially formed as a state multiagency partnership to bring pertinent information on Medicare fraud prevention, securities prevention and prescription drug misuse to the community. Similar presentations will be held today at 10 a.m. in Aunty Sally’s Luau Hale in Hilo and at 2 p.m. in the Keaau Community Center.

When it comes to medical identity theft, victims often don’t realize they’ve been targeted until they discover a decrease in their credit score or until an agency comes after them for unpaid medical bills. Thieves often steal personal information to obtain medical care, buy drugs or medical equipment or submit fake billings under their victim’s insurance policy. While theft of wallets or purses is one way thieves access this information, another common scenario involves the criminal persuading a consumer to divulge information through bogus telemarketing involving medical supplies or free items. Criminals also make unsolicited phone calls posing as Medicare or Social Security Administration representatives, Mariano said.

According to the Senior Medicare Patrol-prepared slides, 47 percent of beneficiaries gave suppliers their Medicare numbers before calling the Medicare hotline. Nationwide, the Centers for Medicare and Medicaid Services are aware of 276,408 Medicare beneficiary numbers, 5,038 Medicare provider numbers, and 169 Medicare Part D provider numbers compromised in this manner.

Mariano educated attendees about Hawaii identity theft laws and regulations. Businesses and government agencies are required to keep confidential personal information about consumers and to notify them if that information has been compromised. They are also restricted from disclosing consumers’ Social Security numbers to the general public. The penalty is $2,500 for each violation, she added.

Theresa Kong Kee, investor education specialist for the Department of Commerce and Consumer Affairs Business Registration Division, shared tips on how to protect personal information, as well as how to detect and report Medicare fraud or identity theft. She also explained what investment fraud victims can do and the importance of checking on the registration of a person who is “helping” them invest — something that can be done for free by calling the Office of the Securities Commissioner.

Kong Kee said the Office of the Securities Commissioner is the only state office that enforces Hawaii securities laws in Hawaii, and it’s “here to help before and after a fraud.” Investment fraud happens on every island and to all kinds of people, with Ponzi schemes being the No. 1 investment scam in the state. The public can file complaints to the office, which has investigators and attorneys who can investigate and prosecute investment fraud or violations. Education on wise investing practices, financial literacy and investor protection is also offered.


Kenya: The number of insurance fraud cases reduced by more than half last year thanks to tighter supervision by the Insurance Regulatory Authority ( IRA)’s Insurance Fraud Investigation Unit.

According to the just released industry report for the year ended December 31, 2013, the unit received reports and detected cases of insurance fraud totaling 57 during the period compared to 133 similar cases in 2012.

The report shows that fraud remains highest in motor insurance category with 21 cases reported in the year, down from 35 the previous year.

Out of this, four fraudulent accident and 14 theft claims were made. Another three fraudulent cases of forged certificates were also reported.

There were three fraudulent claims in the medical insurance category down from six the previous year with two fraudulent funeral claims made in the year down from nine in 2012.

Fraud related to insurance agents also dropped with only six cases reported down from 38 the previous year. All the six reported cases were theft by insurance agents.

The level of fraud related to insurance companies especially theft by employees remained the same with 10 cases reported.

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However, the number of firms operating without registration rose significantly from one in 2012 to five last year.

The Insurance Fraud Investigation Unit was established in 2011 by IRA to deal with cases of fraud in the insurance industry.

Last year, IRA said it received 800 complaints compared to 700 received in the previous year. Out of the complaints received, 80 per cent level of resolution was achieved.

The general insurance business underwriters incurred claims totaling Sh34.17 billion, reflecting a 16 per cent, up from Sh29.47 billion incurred in 2012.

In undercover tests of the new federal health insurance marketplace, government investigators have been able to procure health plans and federal subsidies for fake applicants with fictitious documents, according to findings that will be disclosed to lawmakers Wednesday.

The results of the inquiry by the Government Accountability Office are evidence of still-imperfect work by specialists intended to assist new insurance customers as well as government contractors hired to verify that coverage and subsidies are legitimate. The GAO also pointed to flaws that linger in the marketplace’s Web site,
According to testimony to be delivered before a House Ways and Means subcommittee, undercover GAO investigators tried to obtain health plans for a dozen fictitious applicants online or by phone, using invalid or missing Social Security numbers or inaccurate citizenship information.

All but one of the fake applicants ended up getting subsidized coverage — and have kept it. In one instance, an application was denied but then approved on a second try. In six other attempts to sign up fake applicants via in-person assisters, just one assister accurately told an investigator that the applicant’s income was too high for a subsidy.

In their testimony, GAO officials plan to emphasize that the findings are preliminary and that they are continuing the investigation before reaching final conclusions, probably next year. The tests have been done in several states. Because the work is not finished, the GAO is not identifying the states.

House Republicans were eager for early information because the findings reinforce their contention that the Obama administration set up the health insurance marketplace in ways that leave it vulnerable to fraud and waste of taxpayer money. The allegation that does not properly verify the identity and eligibility of consumers has been one of several lines of attack that congressional Republicans have used in trying to discredit the 2010 Affordable Care Act and the way administration officials set it in motion.

The GAO investigation was requested before the marketplace opened in the fall, by House Ways and Means Chairman Dave Camp (R-Mich.); Rep. Charles W. Boustany Jr. (R-La.), chairman of the Ways and Means oversight subcommittee; and Sens. Tom Coburn (R-Okla.) and Orrin G. Hatch (R-Utah).

Even before the GAO delivered the early findings, the lawmakers were seizing them as fresh ammunition. “We are seeing a trend with Obamacare information systems: under every rock, there is incompetence, waste and the potential for fraud,” Camp said in a statement. “Now, we learn that in many cases, the exchange is unable to screen out fake identities or documents.”

A spokesman for the federal agency that oversees the marketplace, the Department of Health and Human Services’ Centers for Medicare and Medicaid Services, noted that the procedures for ensuring that the applicants’ information is accurate remain a work in progress. “We ... will work with GAO to identify additional strategies to strengthen our verification processes during this first year of the Affordable Care Act,” CMS spokesman Aaron Albright said.

The GAO’s account of fictitious applicants obtaining subsidized coverage goes beyond a related problem that surfaced this spring and that the investigators also cited: The government may be paying incorrect insurance subsidies to a significant share of the 5.4 million Americans who signed up for health plans for this year through the federal marketplace.

The GAO testimony contains updates on that problem, saying that, as of mid-July, about 2.6 million “inconsistencies” existed among applicants who had chosen a health plan and that 650,000 of them had been resolved.

Read More: Westhill Consulting Healthcare
I. The Anti-Kickback Statute
One purpose of the anti-kickback statute is to protect patients from inappropriate medical referrals or recommendations by health care professionals who may be unduly influenced by financial incentives. Section 1128B(b) of the Social Security Act (the Act) makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, referrals of items or services reimbursable by a Federal health care program. When remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal health care program, the anti-kickback statute is violated. By its terms, the statute a scribes criminal liability to parties on both sides of an impermissible “kickback” transaction. Violation of the statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment up to 5 years, or both. Conviction will also lead to exclusion from Federal health care programs, including Medicare and Medicaid. OIG may also initiate administrative proceedings to exclude persons from the Federal health care programs or to impose civil money penalties for fraud, kickbacks, and other prohibited activities under sections 1128(b)(7) and 1128A(a)(7) of the Act.

II. Remuneration From Laboratories to Referring Physicians
Arrangements between referring physicians and laboratories historically have been subject to abuse and were the topic of one of the OIG’s earliest Special Fraud Alerts.
1 In that Special Fraud Alert, we stated that, “[w]henever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business.” More generally, we have, on various occasions, repeated our position that arrangements providing free or below-market goods or services to actual or potential referral sources are suspect and may violate the anti-kickback statute, depending on the circumstances.
2 Likewise, when a laboratory pays a physician more than fair market value for the physician’s services or for services the laboratory does not actually need or for which the physician is otherwise compensated, the anti-kickback statute is implicated. Such payments are suspect under the anti-kickback statute because of the implication that one purpose of the payments is to induce the physician’s Federal health care program referrals. OIG also historically has been concerned with arrangements in which the amounts paid to a referral source take into account the volume or value of business generated by the referral source. Arrangements in which laboratories provide free or below-market goods or services to physicians or make payments to physicians that are not commercially reasonable in the absence of Federal health care program referrals potentially raise four major concerns typically associated with kickbacks—corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition. This is because such transfers of value may induce physicians to order tests from a laboratory that provides them with remuneration, rather than the laboratory that provides the best, most clinically appropriate service. Such transfers of value also may induce physicians to order more laboratory tests than are medically necessary, particularly when the transfers of value are tied to, or take into account, the volume or value of business generated by the physician. We are particularly concerned about these types of arrangements because the choice of laboratory, as well as the decision to order
laboratory tests, typically is made or strongly influenced by the physician, with little or no input from patients. Although physicians may order any tests they believe are appropriate to diagnose and treat their patients, Medicare will pay for laboratory tests only if they meet Medicare coverage criteria and are reasonable and necessary.3
Moreover, claims that include items or services resulting from a violation of the anti-kickback statute are not payable by Medicare and may constitute false claims under the False Claims Act, even if the items or services are medically necessary.4 OIG recognizes that the lawfulness of any particular arrangement under the anti-kickback statute depends on the intent of the parties. Such intent may be evidenced by the arrangement’s characteristics, including its legal structure, its operational safeguards, and the actual conduct of the parties to the arrangement. Nonetheless, we believe the following types of arrangements between laboratories and physicians are suspect under the anti-kickback statute.

A. Blood-Specimen Collection, Processing, and Packaging Arrangements
OIG has become aware of arrangements under which clinical laboratories are providing
remuneration to physicians to collect, process, and package patients’ specimens. This Special Fraud Alert addresses arrangements under which laboratories pay physicians, either directly orindirectly (such as through an arrangement with a marketing or other agent) to collect, process, and package patients’ blood specimens (Specimen Processing Arrangements).5 Specimen Processing Arrangements typically involve payments from laboratories to physicians for certain specified duties, which may include collecting the blood specimens, centrifuging the specimens, maintaining the specimens at a particular temperature, and packaging the specimens so that they are not damaged in transport. Payments under Specimen Processing Arrangements typically are made on a per-specimen or per-patient-encounter basis and often are associated with expensive or specialized tests.Medicare allows the person who collects a specimen to bill Medicare for a nominal specimen collection fee in certain circumstances, including times when the person draws a blood sample through venipuncture (i.e., inserting into a vein a needle with syringe or vacuum tube to draw the specimen).6 Medicare allows such billing only when: (1) it is the accepted and prevailing practice among physicians in the locality to make separate charges for drawing or collecting a specimen and (2) it is the customary practice of the physician performing such services to bill separate charges for drawing or collecting the specimen.7 Only one collection fee is allowed for each type of specimen for each patient encounter, regardless of the number of specimens drawn.8Physicians who satisfy the specimen collection fee criteria and choose to bill Medicare for the specimen collection must use Current Procedural Terminology (CPT) Code 36415, “Routine venipuncture – Collection of venous blood by venipuncture.
OIG has become aware of arrangements under which clinical laboratories are providing
remuneration to physicians to collect, process, and package patients’ specimens. This Special Fraud Alert addresses arrangements under which laboratories pay physicians, either directly or indirectly (such as through an arrangement with a marketing or other agent) to collect, process, and package patients’ blood specimens (Specimen Processing Arrangements).5 Specimen Processing Arrangements typically involve payments from laboratories to physicians for certain
specified duties, which may include collecting the blood specimens, centrifuging the specimens, maintaining the specimens at a particular temperature, and packaging the specimens so that they are not damaged in transport. Payments under Specimen Processing Arrangements typically are made on a per-specimen or per-patient-encounter basis and often are associated with expensive or specialized tests.Medicare allows the person who collects a specimen to bill Medicare for a nominal specimen
collection fee in certain circumstances, including times when the person draws a blood sample through venipuncture (i.e., inserting into a vein a needle with syringe or vacuum tube to draw the specimen).6 Medicare allows such billing only when: (1) it is the accepted and prevailing practice among physicians in the locality to make separate charges for drawing or collecting a specimen and (2) it is the customary practice of the physician performing such services to bill separate charges for drawing or collecting the specimen.7 Only one collection fee is allowed for each type of specimen for each patient encounter, regardless of the number of specimens drawn.8 Physicians who satisfy the specimen collection fee criteria and choose to bill Medicare for the specimen collection must use Current Procedural Terminology (CPT) Code 36415, “Routine venipuncture – Collection of venous blood by venipuncture.

·         Payment exceeds fair market value for services actually rendered by the party receiving the payment.
·         Payment is for services for which payment is also made by a third party, such as
·         Payment is made directly to the ordering physician rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen.
·         Payment is made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals.
·         Payment is offered on the condition that the physician order either a specified volume or type of tests or test panel, especially if the panel includes duplicative tests (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information), or tests that otherwise are not reasonable and necessary or reimbursable
·         Payment is made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

OIG’s concerns regarding Specimen Processing Arrangements are not abated when those arrangements apply only to specimens collected from non-Federal health care program patients. Arrangements that “carve out” Federal health care program beneficiaries or business from otherwise questionable arrangements implicate the anti-kickback statute and may violate it by disguising remuneration for Federal health care program business through the payment of amounts purportedly related to non-Federal health care program business. Because physicians typically wish to minimize the number of laboratories to which they refer for reasons of
convenience and administrative efficiency, Specimen Processing Arrangements that carve out Federal health care program business may nevertheless be intended to influence physicians’ referrals of Federal health care program business to the offering laboratories. Finally, because the anti-kickback statute ascribes criminal liability to parties on both sides of an impermissible “kickback” arrangement, physicians who enter into Specimen Processing Arrangements with laboratories also may be at risk under the statute.

That’s where the money is

MEDICAL science is hazy about many things, but doctors agree that if a patient is losing pints of blood all over the carpet, it is a good idea to stanch his wounds. The same is true of a health-care system. If crooks are bleeding it of vast quantities of cash, it is time to tighten the safeguards.

In America the scale of medical embezzlement is extraordinary. According to Donald Berwick, the ex-boss of Medicare and Medicaid (the public health schemes for the old and poor), America lost between $82 billion and $272 billion in 2011 to medical fraud and abuse (see article). The higher figure is 10% of medical spending and a whopping 1.7% of GDP—as if robbers had made off with the entire output of Tennessee or nearly twice the budget of Britain’s National Health Service (NHS).
Crooks love American health care for two reasons. First, as Willie Sutton said of banks, it’s where the money is—no other country spends nearly as much on pills and procedures. Second, unlike a bank, it is barely guarded.

Some scams are simple. Patients claim benefits to which they are not entitled; suppliers charge Medicaid for non-existent services. One doctor was recently accused of fraudulently billing for 1,000 powered wheelchairs, for example. Fancier schemes involve syndicates of health workers and patients. Scammers scour nursing homes for old people willing, for a few hundred dollars, to let pharmacists supply their pills but bill Medicare for much costlier ones. Criminal gangs are switching from cocaine to prescription drugs—the rewards are as juicy, but with less risk of being shot or arrested. One clinic in New York allegedly wrote bogus prescriptions for more than 5m painkillers, which were then sold on the street for $30-90 each. Identity thieves have realised that medical records are more valuable than credit-card numbers. Steal a credit card and the victim quickly notices; photocopy a Medicare card and you can bill Uncle Sam for ages, undetected.

It is hard to make such a vast system secure: Medicare’s contractors process 4.5m claims a day. But pointless complexity makes it even harder. Does Medicare really need 140,000 billing codes, as it will have next year, including ten for injuries that take place in mobile homes and nine for attacks by turtles? A toxic mix of incompetence and political gridlock has made matters worse. Medicare does not check new suppliers for links to firms that have previously been caught embezzling (though a new bill aims to fix this). Fraud experts have long begged the government to remove Social Security numbers from Medicare cards to deter identity thieves—to no avail.

Start by closing the safe door
One piece of the solution is obvious: crack down on the criminals. Obamacare, for all its flaws, includes some useful measures. Suppliers are better screened. And when Medicaid blackballs a dodgy provider, it now shares that information with Medicare—which previously it did not. For every dollar spent on probing health-care fraud, taxpayers recover eight. So the sleuths’ budgets should be boosted, not squeezed, as now.

But the broader point is that American health care needs to be simplified. Whatever its defects, Britain’s single-payer National Health Service is much simpler, much cheaper and relatively difficult to defraud. Doctors are paid to keep people well, not for every extra thing they do, so they don’t make more money by recommending unnecessary tests and operations—let alone billing for non-existent ones.

Too socialist for America? Then simplify what is left, scale back the health tax-perks for the rich and give people health accounts so they watch the dollars that are spent on their treatment. After all, Dr Berwick’s study found that administrative complexity and unnecessary treatment waste even more health dollars than fraud does. Perhaps that is the real crime.

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