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Health Insurance Fraud: Most Common Government Benefit Risk

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According to TransUnion’s most recent Consumer Pulse Survey, the number of people who reported experiencing digital fraud attempts and falling victim to them was 34% and 9%, respectively — statistically flat from Q2 2022. Individuals who reported being affected by a fraud scheme targeting a public benefit program dropped to 22% from last quarter.

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Health insurance fraud remained most experienced government benefits fraud

Health insurance fraud and medical identity theft often involve using a victim’s identity or insurance information to gain access to prescription drugs and medical care. This fraud leaves the victim on the hook for associated bills, and potentially complicates future treatment due to erroneous information being added to their medical and medical billing records. Other scams included billing for non-rendered services (enrolling victims in fake, supplemental benefits plans) or using health insurance information to steal a victim’s identity.

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The Q3 Consumer Pulse Survey found among consumers who knew they’d been targeted by or fallen victim to a digital fraud attempt, 47% said health insurance was the target. Health insurance scams were the most reported public benefit fraud scheme by survey respondents the past three quarters. Given the significant emergency funding offered to pandemic assistance programs, and grants to pay for COVID testing and treatment, fraudsters could continue to exploit these programs for personal gain by stealing identities and submitting false claims.

Additionally, among respondents targeted by health insurance fraud, 23% reported falling victim to a digital fraud scam during the quarter — nearly one in four. More respondents may have been targeted by or fallen victim to fraud but were unaware at the time they took the survey, meaning the actual level of fraud activity is likely higher than indicated by responses.

Younger generations most at risk of public benefit health insurance fraud

The generational distribution of consumers who reported their health insurance was targeted by a fraud scheme skewed younger —­ in Q3, ­­more than half (53%) were Millennials and one in five (22%) were Gen Z. One hypothesis to explain the results is older consumers may be unaware they’d been targeted by such schemes; alternatively, younger consumers are more likely to be ‘digitally active,’ which creates a greater surface area for attacks and increases the probability of being targeted by digital scams.

Data breaches put Americans — and their healthcare providers — at risk of health insurance fraud

Data breaches are an ongoing source of consumer identity data from which health insurance fraud can follow. In fact, 44% of survey respondents who reported being targeted by health insurance scams also reported being notified they’d been affected by a breach in the past three months. Any consumer reliant on government-provided health insurance — whether through Medicare, Medicaid or TRI-Care — should be wary of fraud attempts, regardless of age.

This is especially true for consumers notified that sensitive personal information was recently exposed in a data breach. Personal information can be exploited by fraudsters to find potential victims and pose as credible medical professionals when contacting them. Fraudsters can also use personal information to more believably misrepresent themselves as an insurance policyholder to legitimate caregivers.

Protecting constituents requires a multifaceted approach to identity and fraud prevention

To ensure benefits go to intended recipients, government agencies that administer such programs need to continually adapt fraud-management processes to combat emerging schemes. This requires sharing information about known fraud actors and compromised identities and devices as it becomes available; developing education resources to warn citizens of new schemes; and strengthening identity verification processes at the point of enrollment. It also includes improving constituent authentication in every channel used to deliver services.

Learn more about TransUnion Public Sector Fraud Solutions.

If you’re a consumer with questions or issues related to your personal credit report, drivers history report, disputes, fraud, identity theft, credit report freeze or credit monitoring services, please visit our Customer Support Center for assistance.

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