Health insurance scams are on the rise as criminals quickly take advantage of consumers’ confusion about how the new health care law changes their insurance coverage. Earlier this year, the Health and Human Services (HHS) Secretary Kathleen Sebelius warned state insurance commissioners about new schemes to sell bogus insurance policies. Just last week, HHS gave grants to states to strengthen the ongoing efforts to protect consumers from fraudulent insurance practices.
Sally Hurme, who handles fraud issues at AARP said seniors are especially vulnerable to these new scams. “We’re making a concerted effort to get the word out to our 40 million members,” she said. But seniors are not the only target. People who buy insurance out of pocket-unemployed and underinsured individuals, as well as individuals who do not get dependent coverage through their work are also vulnerable said Lou Saccocio. Lou Saccocio is the head of the National Health Care Anti-Fraud Association whose members include insurers, law enforcement and regulatory agencies. Saccocio says that the most common scams involve selling fake health plans, fraudulent medical discount plans and Medicare rebate checks scams.
Most of the schemes are poorly constructed, using the pretext of health reform. James Quiggle, the spokesman for the non-profit group Coalition against Insurance Fraud is worried that as more of the provisions mandated by the new law are phased in over the next few years, the number of scams could rapidly multiply. For instance, it is important to note that there is no enrollment period in the individual market and the law also gives uninsured individuals until 2014 to buy coverage before having to pay a penalty. In September, the AARP launched a major campaign called “Fight Health Care Fraud” to help educate seniors. Experts are stressing the need for consumers to educate themselves about the new law.