As Health Insurance Exchange Ramps Up, So Does Fraud Threat

July 25--The national health reform law is expected to open the door for identity theft and insurance scams when millions of uninsured Americans begin enrolling in coverage this fall, officials and advocates warn.

The Federal Trade Commission said dozens of consumers have reported fraud since last summer's Supreme Court ruling upholding the law, and officials predict widespread abuse when enrollment begins in October.

One scam already making the rounds involves a caller promising to send a national Obamacare card if the person reveals personal and financial information. False enrollment websites have sprung up and at least one company has used Obamacare to promise huge medical savings and swindle consumers into buying fake insurance.

"Fraudsters read the paper too, and where there is confusion in the marketplace, they see opportunity to make money," said Lois Greisman, associate director of the commission. "This is unfortunately going to be an area where there is confusion."

Greisman said her staff is ramping up for the Affordable Care Act, which takes full effect in January.

The six-month enrollment period for the federal insurance exchange, which Florida along with 26 other states will be using to offer insurance to the uninsured, starts Oct. 1.

"We have lots of eyes on this," said Greisman.

Florida Insurance Commissioner Kevin McCarty said he recognizes how "in this new era of health care, fraud and misrepresentation could become a prevalent problem."

His office will work with the state's Department of Financial Services "to monitor these negative efforts and help protect the citizens of Florida," he said.

"We are seriously concerned about the possibility of further abuse in rolling out the exchange," said State Senator David Simmons, R-Altamonte Springs, who chairs the state's Banking and Insurance Committee. "Any time you have the government putting out a pot of money, you can be absolutely assured there will be a multitude of schemes to get to it."

The Coalition Against Insurance Fraud, a Washington-based nonprofit, has issued a national alert and has been working closely with the federal government and the media to get the word out, said spokesman James Quiggle.

"The sea changes in how America provides health insurance has created a breeding ground for so-called Obamacare swindles," he said.

While visiting Orlando this month, U.S. Secretary of Health and Human Services Kathleen Sebelius had advice for shoppers trying to avoid being scammed by federal insurance exchange lookalikes.

"No one [from the exchange] is going to be selling you a plan over the phone. If you get a call from someone who is, it is not legitimate," she said.

When in doubt, she said, consumers should check to see whether a plan is listed on the government's website, or ask a representative from the agency's call center to check into the plan's validity.

For information about plans available through the new exchange, federal and state health officials are directing consumers to the official website -- healthcare.gov -- or the 24-hour call-in center at 800-318-2596.

The Centers for Medicare & Medicaid Services is also warning consumers not to disclose their private medical or financial information in response to unsolicited calls, mailers, emails or visits and to beware of offers that seem too good to be true.

Those especially at risk for fraud are seniors, people who speak limited English and those who have never had insurance before, so have no baseline to judge what is being offered.

Because language barriers create a special vulnerability, the call center offers assistance in 150 languages, Sebelius said.

Simmons doesn't believe that's realistic enough.

"To suggest that all these people have to do is go online and read about the various opportunities is to assume that they can, and that they have the education and technology to do so," said Simmons. "But many of these people won't be able to go online and navigate their way through multiple options."

One area of exposure state legislators have looked to address is the role of navigators, who will be hired by states to tell consumers about their options and potential tax penalties.

Florida law will require navigators to be licensed and registered with the Department of Financial Services, Simmons said, "so we will be able to provide some supervision over them."

Navigators must complete training, and have a background check. The law also prohibits them from recommending any particular health plan, from representing that one plan is preferable to another, or from receiving any compensation from an insurer.

"This whole thing scares me no end," said Jeff Leston, president of Castlestone Advisors, an Illinois-based company specializing in preventing health-care fraud. "I see enough fraud out there every day, so have reason to worry."

Like other industry experts, Leston agrees, "fraud is inevitable."

So is downright confusion.

For instance, an unwitting consumer looking for what Florida plans are offered through the federal insurance exchange might do a web search for "Florida Health Insurance Exchange." They would be routed to a company called exactly that.

Only, that company is actually a contracting agency for Florida Blue insurance, said Erika Russo, head of operations for the Florida Health Insurance Exchange, based in Melbourne.

"We have nothing to do with the new insurance exchange," said Russo, whose firm only sells Florida Blue insurance plans that are part of the exchange.

But a consumer landing there may not know that.

Florida Blue refused to comment.

Similarly a search for "Florida Insurance Marketplace" directs consumers to another company selling plans only to employers that are not part of the exchange.

Such websites appear to be capitalizing on marketplace confusion, Simmons and others believe.

"And these are the legal ones," Simmons said. "Now imagine how many deceptive sites will spring up. The illegal ones are only limited by the imagination of the criminal."

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Marni Jameson

How to avoid a scam

To recognize and avoid potential fraud in the new era of health insurance, consider these tips from Jeff Leston, president of Castlestone Advisors, a company that specializes in preventing health-care finance fraud.

--Never give out your social security number, banking information or facts about your assets (such as how much your car or house is worth) to anyone calling about a plan through the exchange.

--If you receive a mailer or a cold call about a plan, check to see if it's on the government website or phone the call center and ask a representative to verify the plan.

--Call your doctor to see if the office accepts the plan, or has even heard of it.

--Beware of lookalikes. Many plans sound alike. Be sure the wording and plan number, if it has one, match exactly.

--No one should rush you. If someone is giving you a limited time offer, it's a hoax. Rates are pre-approved, and the rate schedules are stable. There will be no "specials." Rates will be stable throughout the enrollment period, from <chron>Oct. 1 to March 31. Offers won't change.

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