Fraud Management & Cybercrime , ID Fraud

Why Medical ID Fraud Is Rapidly Growing

Expert Analyzes Results of New Report
Ann Patterson

As the healthcare industry continues to digitize patient records, that data is a growing target for cybercriminals intent on committing medical identity theft and fraud, says Ann Patterson of the Medical Identity Fraud Alliance.

In fact, the number of individuals affected by medical identity theft in the U.S. increased 22 percent in 2014 vs. the previous year - an increase of nearly half a million victims, according to The 2014 Fifth Annual Study on Medical Identity Theft. The study, conducted last November by the Ponemon Institute, was co-sponsored by the alliance.

Ponemon Institute estimates that medical identity theft incidents affected 2 million victims in 2014, nearly double the number of victims affected when the survey was first conducted five years ago.

"As the health industry creates more and more electronic health records and becomes fully digitized ... it just creates more cyber data for hackers to try to attack," Patterson says in an interview with Information Security Media Group.

"Medical records are highly lucrative on the black market," even more so than credit card data, she notes.

It's not just the data stored by healthcare providers and health plans that is being targeted, she warns. Consumers also need to safeguard their medical information, whether it's by shredding paper-based "explanation of benefits" documents they receive in the mail from insurers, or being more mindful of the information they share on social media.

"Cybercriminals are really good at aggregating and data mining all kinds of data that's available on online platforms, like social media, to create really rich, robust medical identity about you, Patterson says. "It's not just your date of birth, Social Security number, and health plan ID number ... that need to be protected. All other health information can be aggregated to create a really rich identity that can be exploited."

In its 2013 study, Ponemon found that about third of medical ID fraud victims were faced with various out-of-pocket expenses, such as legal fees. But in 2014, about 65 percent of medical ID fraud victims dug into their pockets, paying, on average, about $13,000 to clean up the mess left by medical ID fraudsters, Patterson says. "However, what we're finding is that oftentimes, even after spending all of that money, the problem doesn't get solved. Your medical record is still not correct." That's because false information can become part of an individual's medical record when someone fraudulently receives treatment as a result of identity theft.

In the interview, Patterson also discusses:

  • The difference between medical ID theft and medical ID fraud, and the various ways those crimes are committed;
  • What healthcare organizations can do to better protect patients from becoming victims of medical ID theft and fraud;
  • Why she believes the Affordable Care Act, more commonly called Obamacare, has the potential to reduce incidents of medical ID fraud by half over the long haul.

Patterson is senior vice president and program director for the Medical Identity Fraud Alliance, an association of healthcare providers, payers and service provider stakeholders working to help its members better protect consumers from medical identity theft and the resulting fraud. Before joining the alliance, Patterson was vice president of member relations and communications at BITS/Financial Services Roundtable. She also managed a product certification program that allowed companies to certify against security criteria.

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