1. It’s Smart to Prepare for a Breach

How many data breaches from 2014 can you name? The freshest one in your mind is probably the Sony hack, but there were also attacks on Home Depot, Staples, Dairy Queen, P.F. Chang’s the list goes on. Credit.com Co-Founder and Chairman Adam Levin recently wrote about the most important lessons you can learn from the Sony hack, encouraging consumers and companies to prioritize data security and behave with the knowledge that your personal information and correspondence could be exposed at any time.

Prepare for the possibility of fraud by monitoring your credit, regularly reviewing account activity and knowing what to do if your personal information has been stolen. Do what you can to strengthen your data security, but know that so much of it is beyond your control, so the best thing you can do is know how to react to a breach.

2. Communication Is Crucial to Getting Debt-Free as a Couple

We published several success stories about getting out of debt, but some of the most memorable involved couples working together to conquer their finances. The stories had similar themes: Ellie Kay married her husband without knowing about his $40,000 of consumer debt, and Ja’Net Adams was unaware her husband took out student loans to pay for college. Both families eventually hit breaking points where they realized debt was holding them back, and they needed to make drastic changes to get rid of it.

Getting out of debt is never easy, and the more people who are involved, the more complicated it can be. At the same time, having someone to work through the challenges with you can be extremely helpful. Adams’ and Kay’s stories highlight two crucial elements of getting debt free: staying committed to a plan and remaining open and honest about the process’ progress and challenges. Those lessons apply to any personal finance goal, whether you’re planning with a family or on your own.

3. Staying Up to Date on Your Credit Is Easier Than Ever

There’s really no excuse these days for not knowing what’s going on with your credit. You can get two of your credit scores for free every 30 days on Credit.com, and you probably have access to other free credit score tools, too. FICO rolled out a program called FICO Open Access, which allows consumers with certain financial products (including Discover credit cards and some Sallie Mae student loans) to review their FICO scores for free. In the past year, many more of these programs have become available to consumers, free of charge, because there’s a strong belief that an informed consumer makes better financial decisions.

Looking at the same credit score periodically helps you understand how your behavior, like credit card use and loan repayment, affects your credit. It can also help you spot and stop fraud and identity theft.

4. Paying for Health Services Is Harder Than It Should Be

In September, Credit.com Director of Consumer Education Gerri Detweiler broke her hand, resulting in a trip to the ER and a messy experience with medical bills.

“Our medical billing system is far too complicated and convoluted,” Detweiler wrote in a December post for Credit.com. “For all the talk of putting patients more in charge of their care, there is little opportunity to make informed decisions. One of the main things that irked me was my complete inability to confirm whether I received the services my insurance company and I paid for.”

This is coming from a woman whose first question upon arriving at the emergency room was whether the provider was in her insurance network. Detweiler’s experience shows you have to be exceptionally persistent in gathering information about your medical bills, otherwise you’ll easily lose track of something and possibly receive a collection notice about it. Even with her diligent record-keeping and frequent efforts to communicate with billing departments, Detweiler still doesn’t have all the answers she wants about her brief emergency room visit.

5. More Education on Student Loan Debt Is Needed

In December, the Brookings Institution released a report saying about half of students polled in a nationally representative survey didn’t know how much they borrowed for their education. That’s absurd. How can people prepare to repay debt if they have no idea how much of it they have?

Add this to the general consensus that borrowers aren’t well enough aware of their student loan repayment options, and the high default rate among student loan borrowers makes a lot of sense. Granted, the share of borrowers who defaulted within three years of entering repayment declined this year, from 14.7% to 13.7%, but that’s still a huge default rate. Considering it takes months of missed payments to default in the first place, there are millions of borrowers who are having serious trouble repaying their education debt who haven’t yet hit the dreaded point of default.

Not only do students need to have a better idea of what they’re getting themselves into when they take out student loans, they need to be well versed in their repayment options, should they find themselves unable to make the payments.

A lot happened in the personal finance world in 2014, and 2015 is sure to be similarly eventful. If these stories are any indication, the best thing you can do to ensure a productive financial year is to make sure you’re informed about your financial situation, credit standing and options for getting out or staying out of debt.

Reference:
The 5 Best Money Lessons We Learned Last Year

The U.S. health care system has changed significantly since the passage of the Affordable Care Act. The federal law introduced many changes to the insurance space and health care market and helped change the way that people shop for health insurance coverage. With the launch of insurance exchanges, new marketplaces were opened up to consumers, but these exchanges also represented a promising opportunity for scammers that are looking to exploit a person’s private information.

The U.S. Federal Trade Commission recently issued a warning about the growing prevalence of insurance scams, and there are some things that people can do to protect themselves and their information when shopping for insurance coverage.

Be Careful About What You Share Online

Many insurance scams seek to collect personal information through fraudulent websites. These sites can be designed to look official, but are merely fronts for criminal activity. Many fraudulent sites attempt to show that they represent an insurance or government agency, offering policies at discounted rates, but the policies that these sites offer are not real and exist only to collect information, such as medical records.

Beware of Unsolicited Calls

Sometimes, scammers prefer to take a more direct approach and will disguise themselves as insurance agents representing a reputable company or exchange. These people often attempt to call consumers and offer inexpensive insurance policies based on the information that they provide. Insurance exchanges do not randomly contact consumers and organizations promoting coverage through exchanges will never ask for personal information to be shared over the phone.

Document Everything

Keeping records of all salespeople you may come in contact with, as well as the names of their representative companies, could be valuable if your information is ever compromised. Information can be used for or against you, and collecting information from the agents or organizations trying to sell you insurance could be a powerful tool in keeping yourself safe. Reputable organizations have little concern with sharing their own information.

Research

Research can help uncover a scam relatively quickly. Searching for a company’s name and the complaints lodged against them online can provide some insight into whether or not that company can be trusted. An organization with a poor, or non-existent, reputation may be something to avoid.

Wal-Mart endorsed ObamaCare in 2009 and helped drag the bill through U.S. Congress, and so far it hasn’t recanted. By holding back economic growth and incomes, perhaps the law is expanding the retailer’s customer base. Another plus—at least for management—is that Wal-Mart can jettison its employees into the ObamaCare insurance exchanges.

The Associated Press reported Tuesday that the largest U.S. private employer is dropping health benefits for some 30,000 workers, or about 5% of its part-time workforce. Earlier health-plan eligibility triage in 2011 had removed tens of thousands of Wal-Mart workers from the balance sheet, so this latest purge was probably inevitable.

Wal-Mart cites its inability to manage higher-than-anticipated health expenses. Perhaps— wasn’t ObamaCare supposed to bring those costs down? Obviously the company is also responding rationally to ObamaCare’s incentives. With a subsidized government alternative now open for business, and since corporations aren’t liable for a penalty for not covering people who work fewer than 30 hours a week on average, cost-control logic says to send such coverage ballast over the side. Other retail and grocery chains including Target, Home Depot and Trader Joe’s have already done the same.

ObamaCare’s critics predicted that such insurance dumping was inevitable, and the only question now is how many and how fast other companies partake of the new all-you-caneat entitlement buffet. Get whatever you like, the bill’s on taxpayers. The disruptions will be concentrated in industries with large numbers of low-skilled and low-income workers, like restaurants, hospitality and, yes, retail.

The irony is that even as Wal-Mart drops insurance because it is too costly, President Barack Obama is claiming credit for lowering health costs. He boasted the other day that the law gave every U.S. family “a $1,800 tax cut” by supposedly reducing the rate of employer-premium growth. ObamaCare had nothing to do with that, and it surely won’t be any consolation to Wal-Mart’s latest health-plan diaspora.

When shopping for a plan, start with the basics of what you’re looking for and what you’re willing to pay for, says Michael McMillan,Executive Director of Market and Network Services at Cleveland Clinic. Then make your selection carefully so you get what you’re paying for, he adds.

To help you navigate enrollment — either on health insurance exchanges or elsewhere — McMillan offers the following helpful tips:

1. Know what services are covered under a selected plan

Start by reviewing what each particular plan offers. For example, what does the network of care providers look like? What services are most important to you based on your particular health needs or conditions, and are they available within a plan’s coverage?

“This will be a period of great change, and consumers will have a lot of options they haven’t had before on the exchanges,” McMillan says. “It’s important to be clear on what’s available and what isn’t.”

2. Make sure your providers are part of the network

When choosing plans, this is a major factor. Look at any given plan to see if your doctors and hospitals you use regularly are listed as network providers.

One evolving trend has been for health plans to create narrow networks — smaller versions of their standard network that help them achieve a lower price. The bottom line: Not all providers are included in these limited networks, so it’s worth your effort to check first and make sure your new plan includes the doctors and other practitioners you see regularly, McMillan says.

3. Know your out-of-pocket costs

These are costs associated with the care received. They include things such as deductibles — the amount you pay before coverage kicks in — as well as copays and coinsurance on services. Out-of-pocket costs vary by the “metal” level of plan you choose on a health insurance exchange. So, for example, you would pay 40 percent of costs of coinsurance in a bronze plan, and 30 percent for silver.

In some high-deductible health plans, the first several thousand dollars will be your responsibility, too. For your personal budgeting and planning, it’s critical to know how much money you’ll have to pull out of your pocket when you go to the doctor, to the hospital, to the medical lab or for any other health service, McMillan notes.

4. Understand how your monthly premium works

Premiums are the monthly payments you make for your insurance coverage. Because the benefits for most plans, both on and off the exchanges, have become standardized, it should be fairly easy to make apples-to-apples comparisons among plans.

“You should be able to compare premium amounts, how much you pay every month for the service,” McMillan advises. However, your personal premiums may vary depending on your own circumstances — including whether you’re single or married, a smoker or a nonsmoker, and other factors.

2015 open enrollment for health insurance exchanges starts Nov. 15, 2014 and lasts until Feb. 15, 2015. Open enrollment periods for insurance plans outside of exchanges vary. No matter which path you pursue, learn as much as possible about your plan options before you buy, and you’ll end up with coverage that suits your needs as a result.

Starting a business is risky enough in the best of circumstances. Most new ventures fail, and the prospect of forgoing a salary is enough to keep many would-be entrepreneurs from taking the plunge.

But think about how much harder it would be if your child had a health condition, and you couldn’t get her insurance if you struck out on your own.

That’s less of a problem in the U.S. than it was a few years ago, thanks to Obamacare, but until recently it was a very real conundrum. So does the extension of publicly provisioned health insurance prompt more people to start companies? That’s the question asked by a paper released earlier this year by Gareth Olds of Harvard Business School.

Olds analyzed Census data from before and after the passage of the Children’s Health Insurance Program in the U.S. in 1997 to assess its impact on entrepreneurship. CHIP, or SCHIP as it was previously known, provides publicly funded health insurance to children whose families don’t qualify for Medicare, but whose incomes still fall below a cutoff (typically around 200% of the federal poverty line).

His results suggest that the policy did significantly increase business creation by those families affected. The self-employment rate for CHIP recipients increased from just under 15% of those eligible to over 18%. That amounts to an a 23% increase. The rate of ownership of incorporated businesses — a better proxy for sustainable, growth entrepreneurship — increased even more dramatically, from 4.3% to 5.8%, an increase of 31%.

What about all the other factors that might skew this sort of analysis? Olds used several quasi-experimental statistical methods in his research to control for such variables. The basic intuition behind his methods is that a family just above the CHIP cutoff isn’t all that different from a family just below it. Whether you make 199% of the poverty line or 201% doesn’t matter for much, except whether or not you’ll be able to enroll in the program. With that in mind, his methods zero in on this sub-group, in order to confirm that the policy actually caused the increase in firm creation.

The mechanism by which Olds believes CHIP boosts entrepreneurship is relatively straightforward: it reduces the risk of “consumption shocks,” i.e. the possibility of having to pay out a large chunk of cash unexpectedly for a child’s illness. Lower the risk and more people start companies.

Though it may seem counterintuitive given the political rhetoric around social insurance and economic growth, Olds’ is not the only research to suggest that welfare programs can promote entrepreneurship. Previous research has found that American self-employment rates jump at 65. Why is 65 a better age to start a company than 64? Because you qualify for health insurance through Medicare.

All of this serves as a reminder that bigger government needn’t discourage entrepreneurship and risk-taking. The relationship between the two ultimately depends on what government chooses to spend money on.

The final takeaway from Olds’ work is just how many business owners do depend on public programs like CHIP. “12% of households with incorporated businesses report enrollment in a public program,” he writes, not even counting Social Security, Medicare, or veterans benefits. And “disproportionately more entrepreneurs are receiving public healthcare benefits than would be expected based on their income alone.”

Overall, though, entrepreneurs still hail from disproportionately well-off families. The lesson from Olds’ paper is that starting a business doesn’t have to be a risk only wealthy people can afford to take — and the government can help.

All the news about the Affordable Care Act has got me thinking about my health. I’ve been looking to download some health and fitness apps, but I notice many ask for a lot of personal information. Just how safe are these to use?

The Affordable Care Act is bringing health care to a lot people’s attention. It is also proving to be a field day for scammers.

The Affordable Care Act has finally gone into effect. It brings sweeping changes to America’s health care system. As usual, I am not going to comment on any of the politics involved. But I think everyone will agree that navigating the new system is very confusing.

As with any moment of confusion, scammers are jumping in. They have got some new scams cooked up to scare and trick you.

Let us start with insurance scams. One widely publicized requirement of the Affordable Care Act is that everyone needs insurance. I know some people are just going to grab whatever plan is cheapest. You might be tempted to fire up Google and search for insurance companies, but that is a bad idea.

Scammers are setting up tons of fake insurance websites. You think you are signing up for insurance but you are really giving away your information.

The place to start your search is the Health Insurance Marketplace at healthcare.gov. This is the official federal source for insurance providers. Of course, nothing is that simple. Sixteen states and the District of Columbia have their own marketplaces.

There is also some question about how well insurance companies are verified. So, do not think that just because a company is on a government site it is OK. You still need to do your homework.

The danger is not just online. Some scammers take a more direct approach. They might call, email or even show up on your doorstep pretending to be from an insurance company. They will even promise incredibly low premiums, and claim that you would be a fool not to sign up!

Some will throw in a scare tactic. They will tell you that if you do not buy right now, you will face fines or jail time. Sign me up quick!

The only problem is that you may not be covered and your money will be long gone. Before you sign up with any insurance company, do your research. Run the name through Google. Make sure the company has a solid history and no fraud complaints.

Even if it is a legitimate company, don’t trust unsolicited calls or emails. Contact the company directly if you are interested in what it offers. Scammers have no problem lying about representing real companies.

As a rule, always pause and do research before making any decision like this. Trust me, the world is not going to end if you do not “act now.” Pushing you to act now is a big part of what scammers do. They rely on greed, fear or both.

That brings me to the next question you might hear. Did you get your “Obamacare card?” No? Good, because there is no such thing. However, you might get a phone call or email telling you otherwise.

The person will explain that everyone needs one; otherwise you will not have access to health care. Plus, you could face a fine or even jail time without one! However, the caller will graciously offer to send you one. You just need to provide your name, address, Social Security number, current medical plan numbers and possibly a small processing fee. Sound suspicious yet?

As a side note, the official name of the health care act is the Affordable Care Act. No legitimate companies are going to call it “Obamacare” in advertising or correspondence.

A similar scam you might hear deals with Medicare and Medicaid. You will be told that under the Affordable Care Act, you have to reapply. Otherwise your benefits will disappear! Naturally, the person informing you of this will be happy to help if you give them your information. How helpful! In fact, they will help themselves to your identity if you are not careful.

Seniors are already the number one target for medical fraud and identity theft, and it is only going to get worse. But even so, no one is safe.

You need common. It helps to remember a simple rule: Never give out financial or medical information over the phone or through email. That is not how legitimate companies work.

Every company or organization that deals with medical information falls under the Health Insurance Portability and Accountability Act, or HIPAA. HIPAA regulates how your medical information is stored and shared. The Federal Trade Commission has similar rules for financial institutions.

These are not the only scams around. There are hundreds more you could run into.

George Cox is the owner of Computer Diagnostics and Repair. He can be reached at 346-4217.

 

BY PETER KIRAGU

Kenya: The number of insurance fraud cases reduced by more than half last year thanks to tighter supervision by the Insurance Regulatory Authority ( IRA)’s Insurance Fraud Investigation Unit.

According to the just released industry report for the year ended December 31, 2013, the unit received reports and detected cases of insurance fraud totaling 57 during the period compared to 133 similar cases in 2012.

The report shows that fraud remains highest in motor insurance category with 21 cases reported in the year, down from 35 the previous year.

Out of this, four fraudulent accident and 14 theft claims were made. Another three fraudulent cases of forged certificates were also reported.

There were three fraudulent claims in the medical insurance category down from six the previous year with two fraudulent funeral claims made in the year down from nine in 2012.

Fraud related to insurance agents also dropped with only six cases reported down from 38 the previous year. All the six reported cases were theft by insurance agents.

The level of fraud related to insurance companies especially theft by employees remained the same with 10 cases reported.

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However, the number of firms operating without registration rose significantly from one in 2012 to five last year.

The Insurance Fraud Investigation Unit was established in 2011 by IRA to deal with cases of fraud in the insurance industry.

Last year, IRA said it received 800 complaints compared to 700 received in the previous year. Out of the complaints received, 80 per cent level of resolution was achieved.

The general insurance business underwriters incurred claims totaling Sh34.17 billion, reflecting a 16 per cent, up from Sh29.47 billion incurred in 2012.

I. The Anti-Kickback Statute

One purpose of the anti-kickback statute is to protect patients from inappropriate medical referrals or recommendations by health care professionals who may be unduly influenced by financial incentives. Section 1128B(b) of the Social Security Act (the Act) makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, referrals of items or services reimbursable by a Federal health care program. When remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal health care program, the anti-kickback statute is violated. By its terms, the statute a scribes criminal liability to parties on both sides of an impermissible “kickback” transaction. Violation of the statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment up to 5 years, or both. Conviction will also lead to exclusion from Federal health care programs, including Medicare and Medicaid. OIG may also initiate administrative proceedings to exclude persons from the Federal health care programs or to impose civil money penalties for fraud, kickbacks, and other prohibited activities under sections 1128(b)(7) and 1128A(a)(7) of the Act.

II. Remuneration From Laboratories to Referring Physicians

Arrangements between referring physicians and laboratories historically have been subject to abuse and were the topic of one of the OIG’s earliest Special Fraud Alerts.

1 In that Special Fraud Alert, we stated that, “[w]henever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business.” More generally, we have, on various occasions, repeated our position that arrangements providing free or below-market goods or services to actual or potential referral sources are suspect and may violate the anti-kickback statute, depending on the circumstances.

2 Likewise, when a laboratory pays a physician more than fair market value for the physician’s services or for services the laboratory does not actually need or for which the physician is otherwise compensated, the anti-kickback statute is implicated. Such payments are suspect under the anti-kickback statute because of the implication that one purpose of the payments is to induce the physician’s Federal health care program referrals. OIG also historically has been concerned with arrangements in which the amounts paid to a referral source take into account the volume or value of business generated by the referral source. Arrangements in which laboratories provide free or below-market goods or services to physicians or make payments to physicians that are not commercially reasonable in the absence of Federal health care program referrals potentially raise four major concerns typically associated with kickbacks—corruption of medical judgment, overutilization, increased costs to the Federal health care programs and beneficiaries, and unfair competition. This is because such transfers of value may induce physicians to order tests from a laboratory that provides them with remuneration, rather than the laboratory that provides the best, most clinically appropriate service. Such transfers of value also may induce physicians to order more laboratory tests than are medically necessary, particularly when the transfers of value are tied to, or take into account, the volume or value of business generated by the physician. We are particularly concerned about these types of arrangements because the choice of laboratory, as well as the decision to order

laboratory tests, typically is made or strongly influenced by the physician, with little or no input from patients. Although physicians may order any tests they believe are appropriate to diagnose and treat their patients, Medicare will pay for laboratory tests only if they meet Medicare coverage criteria and are reasonable and necessary.3

Moreover, claims that include items or services resulting from a violation of the anti-kickback statute are not payable by Medicare and may constitute false claims under the False Claims Act, even if the items or services are medically necessary.4 OIG recognizes that the lawfulness of any particular arrangement under the anti-kickback statute depends on the intent of the parties. Such intent may be evidenced by the arrangement’s characteristics, including its legal structure, its operational safeguards, and the actual conduct of the parties to the arrangement. Nonetheless, we believe the following types of arrangements between laboratories and physicians are suspect under the anti-kickback statute.

A. Blood-Specimen Collection, Processing, and Packaging Arrangements

OIG has become aware of arrangements under which clinical laboratories are providing

remuneration to physicians to collect, process, and package patients’ specimens. This Special Fraud Alert addresses arrangements under which laboratories pay physicians, either directly orindirectly (such as through an arrangement with a marketing or other agent) to collect, process, and package patients’ blood specimens (Specimen Processing Arrangements).5 Specimen Processing Arrangements typically involve payments from laboratories to physicians for certain specified duties, which may include collecting the blood specimens, centrifuging the specimens, maintaining the specimens at a particular temperature, and packaging the specimens so that they are not damaged in transport. Payments under Specimen Processing Arrangements typically are made on a per-specimen or per-patient-encounter basis and often are associated with expensive or specialized tests.Medicare allows the person who collects a specimen to bill Medicare for a nominal specimen collection fee in certain circumstances, including times when the person draws a blood sample through venipuncture (i.e., inserting into a vein a needle with syringe or vacuum tube to draw the specimen).6 Medicare allows such billing only when: (1) it is the accepted and prevailing practice among physicians in the locality to make separate charges for drawing or collecting a specimen and (2) it is the customary practice of the physician performing such services to bill separate charges for drawing or collecting the specimen.7 Only one collection fee is allowed for each type of specimen for each patient encounter, regardless of the number of specimens drawn.8Physicians who satisfy the specimen collection fee criteria and choose to bill Medicare for the specimen collection must use Current Procedural Terminology (CPT) Code 36415, “Routine venipuncture – Collection of venous blood by venipuncture.

OIG has become aware of arrangements under which clinical laboratories are providing

remuneration to physicians to collect, process, and package patients’ specimens. This Special Fraud Alert addresses arrangements under which laboratories pay physicians, either directly or indirectly (such as through an arrangement with a marketing or other agent) to collect, process, and package patients’ blood specimens (Specimen Processing Arrangements).5 Specimen Processing Arrangements typically involve payments from laboratories to physicians for certain

specified duties, which may include collecting the blood specimens, centrifuging the specimens, maintaining the specimens at a particular temperature, and packaging the specimens so that they are not damaged in transport. Payments under Specimen Processing Arrangements typically are made on a per-specimen or per-patient-encounter basis and often are associated with expensive or specialized tests.Medicare allows the person who collects a specimen to bill Medicare for a nominal specimen

collection fee in certain circumstances, including times when the person draws a blood sample through venipuncture (i.e., inserting into a vein a needle with syringe or vacuum tube to draw the specimen).6 Medicare allows such billing only when: (1) it is the accepted and prevailing practice among physicians in the locality to make separate charges for drawing or collecting a specimen and (2) it is the customary practice of the physician performing such services to bill separate charges for drawing or collecting the specimen.7 Only one collection fee is allowed for each type of specimen for each patient encounter, regardless of the number of specimens drawn.8 Physicians who satisfy the specimen collection fee criteria and choose to bill Medicare for the specimen collection must use Current Procedural Terminology (CPT) Code 36415, “Routine venipuncture – Collection of venous blood by venipuncture.

·       * Payment exceeds fair market value for services actually rendered by the party receiving the payment.

·         Payment is for services for which payment is also made by a third party, such as

Medicare

·      * Payment is made directly to the ordering physician rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen.

·

·       * Payment is made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals.

·         * Payment is offered on the condition that the physician order either a specified volume or type of tests or test panel, especially if the panel includes duplicative tests (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information), or tests that otherwise are not reasonable and necessary or reimbursable

·         * Payment is made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.

OIG’s concerns regarding Specimen Processing Arrangements are not abated when those arrangements apply only to specimens collected from non-Federal health care program patients. Arrangements that “carve out” Federal health care program beneficiaries or business from otherwise questionable arrangements implicate the anti-kickback statute and may violate it by disguising remuneration for Federal health care program business through the payment of amounts purportedly related to non-Federal health care program business. Because physicians typically wish to minimize the number of laboratories to which they refer for reasons of

convenience and administrative efficiency, Specimen Processing Arrangements that carve out Federal health care program business may nevertheless be intended to influence physicians’ referrals of Federal health care program business to the offering laboratories. Finally, because the anti-kickback statute ascribes criminal liability to parties on both sides of an impermissible “kickback” arrangement, physicians who enter into Specimen 

MEDICAL science is hazy about many things, but doctors agree that if a patient is losing pints of blood all over the carpet, it is a good idea to stanch his wounds. The same is true of a health-care system. If crooks are bleeding it of vast quantities of cash, it is time to tighten the safeguards.

In America the scale of medical embezzlement is extraordinary. According to Donald Berwick, the ex-boss of Medicare and Medicaid (the public health schemes for the old and poor), America lost between $82 billion and $272 billion in 2011 to medical fraud and abuse (see article). The higher figure is 10% of medical spending and a whopping 1.7% of GDP—as if robbers had made off with the entire output of Tennessee or nearly twice the budget of Britain’s National Health Service (NHS).

Crooks love American health care for two reasons. First, as Willie Sutton said of banks, it’s where the money is—no other country spends nearly as much on pills and procedures. Second, unlike a bank, it is barely guarded.

Some scams are simple. Patients claim benefits to which they are not entitled; suppliers charge Medicaid for non-existent services. One doctor was recently accused of fraudulently billing for 1,000 powered wheelchairs, for example. Fancier schemes involve syndicates of health workers and patients. Scammers scour nursing homes for old people willing, for a few hundred dollars, to let pharmacists supply their pills but bill Medicare for much costlier ones. Criminal gangs are switching from cocaine to prescription drugs—the rewards are as juicy, but with less risk of being shot or arrested. One clinic in New York allegedly wrote bogus prescriptions for more than 5m painkillers, which were then sold on the street for $30-90 each. Identity thieves have realised that medical records are more valuable than credit-card numbers. Steal a credit card and the victim quickly notices; photocopy a Medicare card and you can bill Uncle Sam for ages, undetected.

It is hard to make such a vast system secure: Medicare’s contractors process 4.5m claims a day. But pointless complexity makes it even harder. Does Medicare really need 140,000 billing codes, as it will have next year, including ten for injuries that take place in mobile homes and nine for attacks by turtles? A toxic mix of incompetence and political gridlock has made matters worse. Medicare does not check new suppliers for links to firms that have previously been caught embezzling (though a new bill aims to fix this). Fraud experts have long begged the government to remove Social Security numbers from Medicare cards to deter identity thieves—to no avail.

Start by closing the safe door

One piece of the solution is obvious: crack down on the criminals. Obamacare, for all its flaws, includes some useful measures. Suppliers are better screened. And when Medicaid blackballs a dodgy provider, it now shares that information with Medicare—which previously it did not. For every dollar spent on probing health-care fraud, taxpayers recover eight. So the sleuths’ budgets should be boosted, not squeezed, as now.

But the broader point is that American health care needs to be simplified. Whatever its defects, Britain’s single-payer National Health Service is much simpler, much cheaper and relatively difficult to defraud. Doctors are paid to keep people well, not for every extra thing they do, so they don’t make more money by recommending unnecessary tests and operations—let alone billing for non-existent ones.

Too socialist for America? Then simplify what is left, scale back the health tax-perks for the rich and give people health accounts so they watch the dollars that are spent on their treatment. After all, Dr Berwick’s study found that administrative complexity and unnecessary treatment waste even more health dollars than fraud does. Perhaps that is the real crime.

The scams

Phantom treatments. Dishonest medical providers will bill health insurers for expensive treatments, tests or equipment you never received - and for illnesses or injuries you don't even have.

Double billing. Unethical providers may double- or triple-bill health insurers for the same treatments, hoping the insurer won't discover the overruns in the big stack of bills.

Shoddy care. You might receive shoddy or substandard treatment for real and urgent medical problems. One eye doctor shined pen lights into patients' eyes and said he'd performed cataract surgery. Surgeons have used defective pacemakers and catheters during heart surgeries, which have killed patients or required more surgeries to correct the problems.

Unneeded care. You might receive dangerous and even life-threatening treatment you don't need. One surgeon performed heart surgery on patients who didn't need it.

Bogus insurers. Insurance agents or brokers sell you low-cost health coverage from fake insurance companies. Then they take your premiums and disappear. You're left without vital health coverage, and don't even know it until you make a claim.

Identity theft. Cheaters steal your medical ID number, then use it to bill health programs tens of thousands of dollars for phantom treatment. Crooks steal your health info from dumpsters behind medical clinics, break into doctor offices and steal files, and hack into computer databases containing your records.

Rolling labs. Mobile diagnostic labs give needless or fake tests or physical exams to consumers, then bill health insurers for expensive procedures.

Runners. A person hired by a medical provider to drum up business trolls through neighborhoods, often low-income areas, enticing people to come to a clinic for tests. These runners will even round up children for unneeded tests and procedures.

The price you pay

Coverage drained. Your coverage limits might be drained by worthless and unnecessary treatments.

Financial disaster. Inflated or phantom medical bills can increase your co-payment, beyond your ability to pay. This could force you into collections and damage your credit rating. And if you bought health insurance that ends up completely fake, you could face financial disaster if you must pay large medical bills with your life savings because your policy's worthless.

False medical record. Your medical record contains false information about illnesses, diseases, injuries or other problems you never had. Your information is available to insurers, so you could be denied health coverage or pay higher premiums because of a trumped-up medical record.

Premiums rise. Your health premiums rise because insurers pass the cost of fraud onto policyholders. High health premiums discourage employers from offering this needed employee benefit.

Personal distress. You receive bogus or needless treatments that are painful, distressing, can threaten your health — and even kill you.

Taxpayer ripoff. Billions of your tax dollars pay for fraudulent claims against Medicare, Medicaid and other taxpayer-funded health programs every year. These are your tax dollars being stolen.

Fight Back

• Keep detailed records of treatments you receive. Include all dates, locations, who provided the treatments, what services you received, and what medicine, supplies or equipment were provided.

• Carefully review the billing and summary statements you receive after treatment. Are the treatment dates, doctor name(s), facility locations and medical services the same as you remember? Know what medical equipment and supplies your provider ordered, as well.

• Never sign blank insurance claim forms.

• Ask your medical providers what price they charge, and what you'll pay out-of-pocket.

• Avoid door-to-door or telephone salespeople who offer you free medical services or equipment.

• Never give strangers your policy number, insurance ID number, Medicare claim number or other info, especially if they offer you cash or free gifts, treatments or equipment.

• Know what your medical benefits are — what's covered and what isn't.

• Back off if someone says they can bill your health program to pay for an uncovered treatment or equipment. You're being pulled into an illegal scheme. You could lose your health coverage, be arrested, fined, thrown into jail, and live with a conviction record that disrupts your life for years to come.

• Never pay your health premiums in cash, and be wary if the health insurer asks you to pay a full year's premium upfront.

• Be careful if medical providers say they're connected with the federal government, Medicare, Medicaid or other health programs.

• Back off if the insurer offers you health coverage for "just pennies a day," or sells coverage at a price far lower than others.

• Check with your state insurance department to make sure the health insurance company is licensed to do business in your state.

• See if the health insurer has a history of consumer complaints, bankruptcy, fraud convictions or other problems. Your state insurance department and consumer protection agency, and Better Business Bureau are good places to start.

Dear Savvy Senior,

I just turned 65 and received my Medicare card. I see that the ID number on my card is the same as my Social Security number, and on the back of the card it tells me I need to carry it with me at all times. What can I do to protect myself from identify theft if my purse and Medicare card get stolen?

Answer: Many people new to Medicare are surprised to learn that the ID number on their Medicare card is identical to their Social Security number (SSN). After all, we’re constantly warned not to carry our SSN around with us, because if it gets lost or stolen, the result could be identity theft.

But the Medicare ID is more than an identifier. It’s proof of insurance. Beneficiaries need to show their Medicare card at the doctor’s office and the hospital in order to have Medicare pay for treatment.

Over the years, many consumer advocates, have called for a new form of Medicare identification. The Centers for Medicare & Medicaid Services, which administers Medicare, also acknowledges the problem, but so far nothing has been done.

One of the main reasons is because it would cost an estimated $255 to $317 million to fix it. And that’s just the direct cost to the federal government. It doesn’t include the expense for physicians and other health care providers to adjust their systems, or the cost to the states.

Other government health systems like the Department of Veterans Affairs and Department of Defense have already begun using ID numbers that are different from SSNs, but no one knows when Medicare will follow suit.

In the meantime, here are some tips offered by various consumer advocate groups that can help keep your Medicare card safe and out of the hands of fraudsters.

• For starters, AARP suggests that you simply don’t carry your Medicare card at all, because it’s not necessary. Most health care providers already have their patients in their electronic systems and know how to bill you.

• But if you really don’t feel comfortable not having it with you, then the Privacy Rights Clearing House, a national consumer resource on identity theft recommends that you make a photocopy of your card and cut it down to wallet size. Then use scissors to cut out the last four digits of your SSN, or take a black marker and cross them out, and carry that instead.

You will, however, need your actual Medicare card with you the first time you visit a new health care provider, who will likely want to make a photocopy of it for their files.

If you’re worried that you’ll need your card in an emergency situation in order to get care, you should know that emergency personnel cannot refuse you care until you show an insurance card. Although you’ll need to come up with billing information before leaving a hospital, that doesn’t mean you won’t receive care

Lost or stolen

If your Medicare card does happen to get lost or stolen, you can replace it by calling Social Security at 800-772-1213. You can also apply for a new card online at ssa.gov/medicarecard or go to your local Social Security office.

If your Medicare card has been lost or stolen, you will need to watch out for Medicare fraud. You can do this by checking your quarterly Medicare summary notices for services or supplies you did not receive. If you spot anything suspicious or wrong, call the Inspector General’s fraud hotline at 800-447-8477.

If you need help identifying Medicare fraud, contact your state Senior Medicare Patrol program. See smpresource. org or call 877-808-2468 for contact information.

Dear Savvy Senior,

What are the cheapest cell phone options available today to seniors living on a shoestring budget? I only need it for occasional calls.

Answer: For financially challenged seniors who only want a cell phone for emergency purposes or occasional calls, there are a number of inexpensive no contract plans you can get. Or, depending on your income level, there are also free cell phones and monthly airtime minutes you may qualify for. Here’s where to find some of the cheapest deals.  

One way infrequent cell phone users can save money is with a prepaid cell phone – also known as pay-as-you-go phones. With a prepaid phone, there’s no contract, no fixed monthly bills, no credit checks and no hidden costs that come with traditional cell phone plans. With this type of service, you buy a special prepaid phone then pre-purchase a certain amount of minutes (for talk or text) that must be used within a specified period of time.

While most major carriers like AT&T and Verizon offer inexpensive prepaid plans, as do independents like Net10, Cricket and Virgin Mobile, some of the best deals are offered by TracFone (tracfone. com, 800-867-7183) and T-Mobile (t-mobile.com, 800-866-2453).

TracFone has phones that start as low as $10 and call plans that cost under $7 per month. And T-Mobile has a super-cheap 30-minute plan for $10, and minutes don’t expire for 90 days. That averages out to $3.33 per month. If you need more talk time, they also offer an annual plan where $100 gets you 1,000 minutes that are good for a full year. T-Mobile does, however, charge a one-time activation of $35.

Or, it you would rather have a no-contract senior-friendly phone with big buttons and simplified features, the Doro PhoneEasy 618 sold through Consumer Cellular (consumercellular.com, 888-345-5509) is probably your cheapest option. It costs $60 for the phone, with calling plans that start at $10 per month.

If your income is low enough, you also need to check into the Lifeline Assistance Program. This is a government-sponsored program that subsidizes wireless (and landline) companies who in turn provide free cellphones and around 250 minutes of free monthly airtime and texts to low-income Americans. (Some programs in some states provide more minutes, some less, and some charge a small monthly fee.)

There are currently around 15 million Americans who have a free cell phone through the Lifeline program, but millions more are eligible.   

The free phones and minutes are provided by a number of national prepaid wireless companies like Safelink and Assurance Wireless, along with a host of other regional carriers throughout the country.

Many states have more than one wireless company that provide the free phones and minutes. If you are eligible, the free cell phone you’ll receive is a basic phone that also offers text messaging, voice mail, call waiting and caller ID.

To qualify, you’ll need to show that you’re receiving certain types of government benefits, such as Medicaid, Food Stamps, SSI, home energy assistance or public housing assistance. Or, that your household income is at or below 135 or 150 percent of the Federal Poverty Guidelines – it varies by state. The 135 percent poverty level is currently $15,754 for singles and $21,235 for couples. The 150 percent level is $17,505/singles, $23,595/couples.