Big Headache

The Explanation of Benefits (EOB) statement arrived from our insurance company; it concerned a hospital visit that had never occurred. A stranger had successfully used a family member's Social Security number and birthdate to receive treatment and have it charged to our insurance. Phone calls to the hospital and insurance company corrected their records, and we weren't liable for any charges.

(Image from ABC News)

We were victims of a burgeoning cyber-crime, medical ID theft, and were lucky that the consequences weren't worse.[bold added]

Medical identity theft—in which someone fraudulently uses data to bill for medical services—affected 2.3 million adult patients in 2014 versus 1.4 million in 2009...

Thieves use many ways to acquire numbers for Social Security, private insurance, Medicare and Medicaid. Some are stolen in data breaches and sold on the black market. Such data are especially valuable, sometimes selling for about $50 compared with $6 or $7 for a credit-card number, law-enforcement officials estimate. A big reason is that medical-identification information can’t be quickly canceled like credit cards.

Medical privacy laws, enacted to protect patients' welfare, make it difficult to disentangle the thief's records from one's own:

Federal medical-privacy laws bar a person’s access to someone else’s data, even if the information is in their own files, medical experts say.

Despite the knotty problems, we are confident that medical identity theft will become much less of a problem: privacy laws will change, ID technology will improve, and the medical payments system will be overhauled. In the meantime, we are checking our statements and guarding our data.