Health Insurance Scams Targeting Small Businesses, Individuals Increasing

Main Category: Health Insurance / Medical Insurance
Also Included In: Public Health;  Medicare / Medicaid / SCHIP;  Litigation / Medical Malpractice
Article Date: 20 Nov 2007 - 9:00 PST

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The Wall Street Journal on Sunday examined the increasing number of small employers and individuals "searching for affordable health insurance" who fall "victim to scams and misleading offers." According to Mila Kofman, a Georgetown University associate professor who has studied the issue, more than 200,000 small businesses and U.S. residents since 2000 have purchased fraudulent health care plans and were left with hundred of millions of dollars in unpaid medical claims.

Telemarketers also have begun targeting seniors by selling fake Medicare prescription drug plans and Medicare Advantage policies, according to Kim Holland, commissioner at the Oklahoma Insurance Department. Holland said some telemarketers use the calls as a ploy to collect private data for identity theft. Meanwhile, fake group policies for small businesses and their employees often are "pitched through unsolicited faxes," the Journal reports.

Medical discount cards also are "sometimes misrepresented as insurance by unscrupulous agents and Web sites," according to the Journal. While legitimate discount programs can offer discounts of 5% to 25% or more on services from a list of in-network providers, some illegitimate programs do not have many providers in their networks or do not provide the promised discounts.

Holland said, "It is amazing how long these things can go on before regulators are advised of them," adding, "Until people complain, we don't know" (McQueen, Wall Street Journal, 11/18).

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