Consumers yawn at healthcare fraud

Published: March 29, 2011 by bkrenek

Today’s headlines trumpet yet another high-profile medical data breach, this time through Health Net.  The company’s nine missing computer drivers have exposed the records of 2 million policyholders, thus compromising personal information that includes addresses, Social Security numbers, financial data and other information about customers, employees and healthcare providers.  California insurance regulators are conducting multiple probes to determine whether Health Net, which services 6 million policyholders nationwide, “did everything it could have done to avoid and appropriately remedy this security breakdown.”

This corporate catastrophe reminds us of the increasing hazard of medical fraud, which is the most expensive and time consuming to resolve of all types of identity theft[i].  The second annual National Study on Medical Identity Theft, fielded by the Ponemon Institute provides further insight into this pervasive problem and how it affects consumers.

Key finding include:

Recognizing the importance of privacy does not equate to action:

  • Nearly 1.5 million Americans have been affected by medical identity theft
  • The average cost to resolve a case of medical identity theft is $20,663, up slightly from $20,160 in 2010
  • Nearly 70% of total respondents felt it is important to have personal control over medical records
  • Nearly 80% felt that healthcare organizations should ensure the privacy of personal medical records
  • Nearly half (49%) of past medical identity theft victims took no new steps to protect themselves after their own incident
  • 50% of respondents did not report the incident to law enforcement or other legal authorities, up from 46% in 2010

Consumer indifference is fueled by lack of understanding of repercussions

  • Of those that failed to report an incident, 43% cited the lack of resulting harm and the desire to “not make it a big deal.” This is up from 37% in 2010
  • 37% of respondents fear embarrassment as a result of medical identity theft more than loss of medical coverage (21%) or a diminished credit score (18%)

Consumers are uninformed of new healthcare reform policies

  • More than half of respondents (55%) are not familiar or have no knowledge of the new healthcare reform policies
  • 79% are not aware of the plan to create a national electronic database of American’s health information
  • 33% of respondents believe that a national electronic database will increase the risk of medical ID theft

Medical identity theft is a family affair

  • In many cases, the victim discovers the thief to be a relative and the crime is often not reported to authorities
  • The leading instance of medical identity theft was at the hands of a family member, accounting for 36% of all victim responses, making it the most common scenario by an overwhelming margin
  • According to 51% of respondents, the number one reason for not reporting the incident after discovery is because the victim knew the thief and did not want to report him or her

Health Net is conducting its own investigation into its recent data breach, and regulators have praised the company for acting quickly to alert consumers about the incident.  Healthcare organizations are responsible for protecting consumer privacy and reporting breaches, but the National Study on Medical Identity Theft’s survey confirms that consumers need to play their own part in reporting incidents and helping healthcare companies protect private medical information.

[i]2010 Global Privacy Summit Presentation: The Potential Damages and Consquences of Medical Identity Theft and Healthcare Data Breaches – Dr. Larry Ponemon