TrendWatch: new developments about fraud in AmericaBy Coalition Against Insurance Fraud
September 11, 2012
New partnership expands fraud fight
A formal partnership involving fraud fighters from public and private insurance programs has great upside potential to enhance detection and prevent payment of fraudulent medical-insurance billings that steal tens of billions of dollars a year.
The Fraud Prevention Partnership was announced in July. Increasingly, the same dishonest medical providers are defrauding private automobile, workers compensation and health insurers, but also taxpayer programs including Medicare and Medicaid.
The partnership is needed to combat this kind of fraud trend. The voluntary collaborative effort will bring wide-ranging groups together to share information and best practices, HHS Secretary Kathleen Sebelius and U.S. Attorney General Eric Holder underscored at the rollout news conference in Washington, D.C.
In fact, a large Armenian fraud ring in California that lodged at least $160 million in Medicare claims using stolen identities also was staging car crashes. The ringleader recently was convicted.
The insights gained from the cooperative effort also will be shared with investigators, prosecutors, policymakers and others with a stake in preventing fraud, Sebelius and Holder stressed.
More and better field intelligence also can emerge. Sharing of claims data can identify certain cities or regions as emerging fraud hotspots, or certain kinds of fraud schemes that require specialized attention.
Payments can be stopped faster, and swindlers identified and arrested. The voluntary partnership will target suspected fraud rings of all sizes, and focus on individual medical providers who cheat.
Related concerns make the partnership’s added focus and resources timely. Healthcare fraud in the public and private sectors combined could be as high as $80 billion annually, the FBI says.
“Fraud rings are surfacing that try to steal several hundred million dollars apiece. How many more mega-rings are operating, and are their huge thefts creating a new norm for defrauding health-related insurers?” says the Coalition’s Dennis Jay, who serves as co-chair of the FPP’s Executive Board.”Organized crime in the form of increasingly large, complex and organized fraud rings also appears to be on the rise, according to Dennis Jay, executive director of the Coalition Against Insurance Fraud.
A suspected ring in New York, for example, has tried to steal at least $400 million in fake no-fault automobile crash injury claims. Several suspected Medicare and Medicaid rings that have tried to steal $150 million or more also have surfaced in recent months.
The partnership’s operating details are being worked out, including data-sharing agreements and signing of an official charter, which is scheduled for September 19, 2012. But in the longterm, the new entity expects to use the combined strategies and programs to reveal fraud trends and more quickly detect fraud schemes. Contractors will be brought in to facilitate information sharing and help comb through millions of claims and other associated billing data.
The partnership includes Health & Human Services, the Department of Justice, private health plans, property & casualty insurers, NAIC and major anti-fraud groups including the Coalition, the National Healthcare Anti-Fraud Association and the National Insurance Crime Bureau.
“The partnership’s timing comes at a pivotal moment. Fraud rings are surfacing that try to steal several hundred million dollars apiece. How many more mega-rings are operating, and are their huge thefts creating a new norm for defrauding health-related insurers?” says the Coalition’s Dennis Jay, who serves as co-chair of the FPP’s Executive Board.
Americans not ready for medical ID theft
Many Americans remain vulnerable to medical identity theft, suggests separate consumer-attitude surveys released in June by a prominent think tank and Nationwide Insurance.
Medical identity theft is a widespread crime that exacts a heavy personal and monetary price on victims. But too many Americans appear unaware and ill-prepared to protect themselves against this crime, reveals the Ponemon Institute’s study of victims.
About two million Americans have their medical identity stolen each year, the study estimates. In addition:
Nor do most victims appear willing to take further security precautions to prevent themselves from being defrauded again.
“Medical identity theft hits consumers both medically and financially,” says Dr. Larry Ponemon, who chairs the Ponemon Institute. “For three years in a row, our findings have consistently shown that the medical identity theft crime continues to increase in terms of prevalence and cost to victims.”
Relatively few Americans are familiar with medical identity theft and greatly underestimate the price victims can pay, suggests the consumer survey by Nationwide Insurance:
Medical identity theft is the fastest-growing form of identity theft but also the least-studied and most poorly documented form of identity-theft crimes, the World Privacy Forum says. South Florida appears to have the nation’s largest concentration of medical ID theft victims, the organization says in a 2011 report.
Individual identity thieves obtain free medical treatment by using a victim’s health-insurance information to lodge fraudulent claims. Crime rings also steal or buy patient data in large volumes, using the information to lodge large-scale treatment claims for phantom maladies. Medical ID theft also can threaten a victim’s health or even life: a victim may be allergic to the medicine with which a thief was treated, or a victim’s incompatible blood type could end up in a victim’s medical records. A victim could easily suffer a life-threatening reaction.
Prescription abuse spikes, overdoses rising
Recent studies reveal new insights into the scope of prescription-drug abuse and resourceful adaptation by users when drug supplies dry up. The key trends:
Most of the 75-percent surge involves men, and overdose deaths are soaring, says research newly published in the Archives of Internal Medicine.
Nearly 15,600 people died from overdoses of drugs such as OxyContin and Vicodin in 2009, more than double since 2002. About 4.6 million people on average abused drugs in both 2009 and 2010, compared with 512,000 in 2002 and 2003.
The findings were the first to review the frequency of non-medical use of painkillers and quantify who is using them, the study says.
“The public-health consequences associated with the non-medical use of prescription pain relievers...have dramatically increased over the last decade,” the authors write. Insurance fraud is a major financier of this crime. Insurers pay billions of dollars in illegal prescriptions for painkillers and other addictive drugs each year, reveals Prescription for Peril, a landmark study by the Coalition Against Insurance Fraud.
Crooked pain clinics are a major source of illegally obtained prescription drugs. They make painkillers and other addictive pills freely available to addicts and street dealers. The pills typically are purchased either with cash or by fraudulently billing the prescriptions to insurance companies.
In fact, painkillers cause more deaths than heroin and cocaine combined, says the Centers for Disease Control and Prevention.
But supplies of one of the most widely abused painkillers, OxyContin, are drying up.
The drug’s manufacturer Purdue Pharma has developed a new formula that makes the potent slow-release pills much harder for addicts to crush and snort, or dissolve and inject to create a heroin-like high, says a new study of opioid abusers by researchers at Washington University in St. Louis. It was published in mid-July in the New England Journal of Medicine.
Even so, one in five abusers of the drug are adapting by using heroin instead, the study says.
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