A New Medicare Card Seeks to Prevent Identity Theft and Healthcare Fraud

Topics: Financial Crime, Fraud, Government, Government Fraud, Risk Management


Identity theft continues to be a buzz phrase. We’ve been hearing a lot in the news lately about ways in which the federal government is seeking to protect citizens from identity theft. We need look no further than the federal Real ID mandate which will require everyone in the country to obtain a “Real ID” to board commercial aircraft without a passport by October 2020.

The Centers for Medicare and Medicare Services (CMS) is no different. CMS recently sent out new Medicare cards to all Medicare beneficiaries. Why? To help prevent fraud. The new cards use a unique, randomly assigned Medicare number known as a Medicare Beneficiary Identifier (MBI). Previously, Medicare cards used the beneficiary’s Social Security number which left the individual vulnerable to fraud.

Using MBIs instead of Social Security numbers helps protect Medicare beneficiaries from medical identity theft.

Medical Identity: The Fastest Form of Identity Theft

Indeed, medical identity theft is the “fastest growing” form of identity theft, according the Office of Inspector General (OIG) for the U.S. Department of Health and Human Services. For identity thieves, Medicare numbers and other protected health information can be even more valuable than credit card information. This type of healthcare fraud costs the federal government and taxpayers billions of dollars each year; for example, in FY 2018, the OIG reported expected investigative recoveries of $2.91 billion.

Identity thieves frequently target Medicare beneficiaries with scams promising “free” medical devices such as scooters, back or knee braces. The goal is not to provide the device but to obtain the beneficiary’s medical information. Additionally, Medicare beneficiaries who are the victims of medical identity theft might face delays in care or even denial of care because of the fraud.

Under the Medicare Access and CHIP Reauthorization Act of 2015, CMS was required to issue new Medicare cards with the MBI no later than April 2019. CMS began mailing out the new cards in April 2018 and completed mailing more than 61 million cards ahead of the scheduled deadline.

How Thieves Use a Beneficiary’s Identity

Medical identify theft from a Medicare beneficiary can be a virtual gold mine. Thieves can use a Medicare beneficiary’s medical identity to:

  •  Submit false claims for healthcare services that the beneficiary never received;
  •  Submit false claims for more healthcare services than the beneficiary received;
  •  Submit duplicate bills for services; and
  •  Commit prescription fraud to obtain medications — often opioids — that are then sold on the streets.

Medicare Part D, the optional prescription drug benefit, covered 45 million Medicare beneficiaries in 2015. Almost Medicare 460,000 beneficiaries received prescriptions for high amounts of opioids in 2017.

In the Medicare program, approximately 10% of every budget dollar is lost to fraud, waste, or abuse. Overall, experts estimate that more than 20% of healthcare spending is lost to healthcare fraud.

The move to replace Social Security numbers on Medicare cards with a randomly generated MBI should reduce the risk of identity theft for Medicare beneficiaries as well as reduce fraud and abuse in the Medicare system.

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