What’s behind the dramatic rise in medical identity theft?

October 24, 2014

by   OCTOBER 19, 2014, 11:44 AM EDT

A decentralized U.S. health system, increasing digitization of records, and demand in the black market are fueling a surge in thefts.

An elderly man went to the emergency room after injuring his back. When he got there, the doctor noticed that he also had an infection. He offered the elderly man penicillin, the same medication he received during his last visit to the ER.

The elderly man was confused. This was his first visit to the ER, and he was allergic to penicillin. Why would his records say otherwise?

It soon became clear that someone else had used the elderly man’s health insurance card at the ER to obtain penicillin and a host of other medications. At some point, the elderly man had misplaced his card; after reporting it lost, his insurance company had sent him a replacement with the same number.

This was just one of several harrowing anonymous stories told to the authors of a report by the Medical Identity Fraud Alliance called “The Growing Threat of Medical Identity Fraud: A Call to Action.” In the last five years, the number of data breaches in the medical sector has quadrupled. Last year, for the first time, the medical sector experienced more breaches than any other. It’s again on track to lead in 2014, according to the ID Theft Center. While the health care industry has long suffered fraud by providers or employees fraudulently billing insurers, Medicare, or Medicaid, the medical industry is only just now trying to catch up to the quickly growing threat from hackers.

With the increasing digitization of health information (in the form of electronic health records) and the formation of health exchanges (due to the Affordable Care Act), the trend in medical identity theft is unlikely to abate any time soon. Personal medical information is useful to many different types of criminals, which is why it fetches a higher price on the black market than financial information. The sheer number of targets also makes the medical sector easy prey. Furthermore, technology has come relatively late to the health industry, and data security at health organizations can lag behind. The digitization that accompanies the Affordable Care Act may initially cause a surge in the number of breaches, but some analysts believe it could eventually reduce demand for medical information.

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