By John Breyault, Vice President of Public Policy, Telecommunications and Fraud
On January 1, 2006 the Medicare Part D prescription drug benefit took effect. Medicare Part D today helps nearly 24 million Americans afford their prescription drugs. The $49.3 billion (annual) program has undoubtedly helped many American consumers avoid having to make the difficult choice between paying the rent and buying critically important medicine.
Unfortunately, one of the by-products of this new benefit was an increase in scams targeting seniors unfamiliar with the new benefit. In 2006, consumers were suddenly faced with multiple insurers offering different levels of drug coverage, a situation that confused many at first. Unsurprisingly, scam artists took advantage of the confusion and high visibility in news coverage to launch a wave of Medicare Part D-related scams.
Such scams included telephone calls, unsolicited emails, and house visits to seniors to trick them into paying a fee to enroll in a Medicare Part D plan (it costs nothing to enroll), disclosing bank account information say that the benefit could be “paid” into the victim’s account, or claiming to enroll the victim in a Medicare Part D plan only to enroll them in a more expensive Medicare Advantage plan. (Click here to read more from the FTC about these scams.)
Regardless of the specific con employed, all of these scams took advantage of consumers’ unfamiliarity with the new benefit to defraud them.
Fast-forward to 2010: the recently passed health care reform bill will extend Medicaid benefits to millions of previously uninsured Americans, set up insurance “exchanges,” and send rebate checks to millions of seniors to close the prescription drug “donut hole” in the Medicare drug coverage program. These and other benefits will require a sustained consumer education effort to inform Americans about the benefits. However, these new benefits will also likely create consumer confusion. Combined with the saturation of media coverage of health care reform, this is likely to be a ripe target for scammers.
Indeed, only weeks after the reforms were enacted, fraudsters already seem to be taking advantage. A recent National Public Radio story:
Days after President Obama signed the $938 billion bill into law, a cable television advertisement exhorted viewers to call an 800-number so they wouldn’t miss a “limited enrollment” period to obtain coverage available “now that historic health care legislation has passed.”
And there have already been reports of door-to-door salespeople peddling “Obamacare” insurance policies.
This is likely to be just the tip of the iceberg. Medicare Part D covers only a fraction of those who will be affected by the new health care reforms. Tens of millions of Americans may be at risk.
The health care reform bills signed into law by President Obama included funds for consumer education and greater enforcement efforts. However, if the experience of Medicate Part D scams is any indication, these resources will be insufficient to meet the ever-evolving threat of opportunistic scammers. It will be up to consumers to educate themselves and those they look after to ensure that the coming wave of fraud victimizes as few consumers as possible.