News Release

New Jersey Department of
Banking and Insurance

Commissioner Ken Kobylowski

October 22, 2014

For Further Information:
Ed Rogan or Marshall McKnight (609) 292-5064

TRENTON – As part of Insurance Fraud Awareness Month, New Jersey Department of Banking and Insurance Commissioner Ken Kobylowski today warned New Jersey consumers about health insurance fraud’s potential high cost and difficult problems that it can cause individuals. Health insurance fraud is the knowing misrepresentation or omission of any material fact in the application for coverage or in the filing of a health insurance claim for the purposes of financial gain.

“Health insurance fraud takes a serious toll on individuals as well as the entire marketplace in terms of higher costs through increasing annual premiums, the loss of legitimate health insurance and the threat to health as a result,” said Kobylowski. “Everyone is victimized by health insurance fraud.”

The United States spends an estimated $68 billion a year on various types of health insurance fraud according to estimates from the Coalition Against Insurance Fraud. An estimated19 percent of the some $600 to $800 billion in waste found in the U.S. healthcare system is due to fraud.

New Jersey consumers should be wary of becoming targets of health insurance scams. There are many types of health insurance fraud schemes to be on the look-out for, including:

Fake Health Insurance Scams: Fake insurance companies and dishonest insurance agents can defraud consumers by collecting premiums for bogus policies. Often in these cases, there is no intention or ability to pay claims. When a consumer does go to file a claim, they find out that they never had coverage. Here are red flags that can indicate consumers are receiving fake health insurance pitches:

• Aggressive or high pressure sales tactics by a sales person over the phone or online;
• Premiums from one company are much lower than quotes from companies offering seemingly similar plans;
• A consumer tries to call an insurer directly to get more information and there is no listed phone or it is difficult to get a company representative on the line;

Medical Discount Card Fraud: While many medical discount cards are legitimate, there are also many scam offerings that purport to offer health care insurance for a deep discount. These bogus medical discount programs reach potential victims through illegal robocalls, unsolicited faxes, other media ads as well as spam email. Here are common red flags to these schemes:

• The advertised monthly fee is extremely low;
• A policy or contract is unavailable or hard to locate;
• The list of participating medical providers is outdated or unavailable;

Medical Provider Fraud: Medical providers bill insurers for services they do not provide. Often called “medical mills,” such practices are frequently associated with auto accident or disability claims. They may also be set up to defraud Medicare and Medicaid insurance policy carriers. They may also include filing for false health claims such as:

• False symptoms or other representations reported by a medical provider or patient in a claim or insurance application;
• Inflated injuries by a patient or medical provider;
• Pumped up billing or “upcoding” of medical procedures;
• Billing for services not provided;
• Providing unnecessary services, which may also be risky, merely for the economic benefit of the medical provider; and
• Paying kickbacks to “recruit” patients or to solicit referrals from other medical providers.

How to Avoid Healthcare Fraud: Recognizing healthcare fraud’s red flags is the first line of defense. Be aware of anything that sounds too good to be true. To safeguard against healthcare insurance fraud, consumers can take these additional steps:

• Shop Around –Talk to several agents or health insurer representatives until satisfied about the legitimate healthcare insurance plans available in the New Jersey market.
• Stop – Take a step back after obtaining relevant policies, lists of benefits and in-network providers and read each document before making a decision, signing an application and writing a check or providing credit card information. Never provide private information to unsolicited sales people.
• Verify – Make sure any health insurance agent or health insurer offering coverage is licensed by the State of New Jersey.
  To verify that an agent is licensed, go online to:
  Licensee Search
  To verify that an insurer is licensed, go online to:
  www.state.nj.us/dobi/data/inscomp.htm
• Protect Your ID – Once coverage is purchased, a health insurance ID card needs to be guarded as if it is a credit card. Do not provide a healthcare insurance policy number to an unsolicited door-to-door sales person or to someone who makes an unsolicited sales phone call.
• Stay Informed – Understand all the health care services received. Keep good records of medical care and closely review all medical bills received.
• Scrutinize Explanation of Benefit (EOB) documents – EOBs are sent to patients by insurers. They define the services submitted to them by the medical providers, including hospitals, laboratories, medical practices, etc. Ask questions if you do not understand or disagree with the procedures, as described. Report such questionable items to your insurance company.
• Report Fraud – Anyone who believes they have been a victim of insurance fraud or who has information about an individual or entity that may be in violation of the law should call 1-877-55-FRAUD, or e-mail NJInsuranceFraud@njdcj.org.

For more information from the New Jersey Department of Banking and Insurance, call 1-800-446-7467 or go online to: www.dobi.nj.gov.