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Medical Identity Theft: The Newest Threat to Your Practice

All small businesses have to worry about things like credit card fraud. Medical practices, however, have the added responsibility of guarding against medical identity theft. Medical identity theft is the illegal acquisition of a patient’s personal information–full name, Social Security number, health insurance number, and so on–with the intent to fraudulently obtain insurance reimbursements, prescription drugs, or the like.

Unlike fighting credit card fraud, which is common enough that even web hosts often feature built-in prevention tools, battling medical ID theft often falls to individual practices. There are some steps, of course, that can be taken at a higher level, such as working for change within the industry. In the end, however, most of the precautionary practices are ultimately implemented on a practice-to-practice basis. That means one more thing on the dentist’s already overflowing plate … one that is dangerously tempting to ignore.

But medical identity theft is a large and growing threat: In 2013, the health care industry accounted for 44% of all breaches, experiencing more data breaches than ever had before and surpassing total breaches for any other industry. Polls indicate that the Public at large that doesn’t believe their health information is being protected, and rightly so: the current system is riddled with loopholes and all but obsolete in a digital era.

Medical identity theft is particularly troublesome in that it victimizes not only the dentist and the patient, but other medical professionals as well. For example, when fraudsters steal data, they may either go to different medical establishments (such as another doctor) and use the phony information to illegally obtain drugs for themselves … or sell the information to other criminals who do so.

In another scenario, fraudsters may file bogus insurance or Medicaid claims to obtain settlements. Many in the medical and insurance fields have specialists trained to be on the lookout for monetary fraud, but when a patient hands over all the pertinent information, there is little seeming reason for additional proof to validate the patient’s identity.

More and more, criminals are discovering that billing insurance for goods and services ordered using fraudulent medical credentials is easier and more profitable than other crimes. In fact, it has been estimated that medical identities are 20 to 50 times more valuable to criminals than financial identities. The increasing need to digitize patients’ health information means the problem is only going to get worse.

Unfortunately, industry-wide updates to acceptable best practices are still a long way off. Health care companies could be doing more to prioritize information security, the way the credit card industry has migrated to EMV “chip” card technology … but so far, that isn’t happening.

Equally unfortunate is the fact that the antiquated system in the U.S. makes it nearly impossible to clear up a medical record once this type of identity theft has occurred. However unfair it may seem, for now, dentists are largely on their own when it comes to protecting patient data.

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5 Tips for Handling Patients Who Don’t Pay

According to the National Retail Federation, U.S. retailers suffered more than $260.5 billion in lost sales due to merchandise returns. Dental practices may not figure into that total specifically, but that doesn’t mean they’re off the hook.

As a rule, dentist don’t provide services that are returnable: caps, fillings, x-rays or orthodontia aren’t things aren’t things that patients bring back after two weeks and say “This really isn’t working for me, and I’d like my money back.” But that doesn’t mean there still won’t be issues with payment.

Every practice deals with unpaid bills. It’s an annoyance and a hassle but it’s not likely to go away. Even if you insist on payment up front, you’ll still have to contend with bounced checks and/or chargebacks (for a detailed explanation of chargebacks, see this post from last year.)

While there’s no surefire way to guarantee you’ll get paid, there are a few things you can do to help minimize your number of unpaid bills, and what to do with the ones you have.

  1. Sign on the dotted line. Each dental practice is unique, so it helps to Put your policies in a written contract that can be signed by both patient and dentist. Work with an attorney to create a document tailored to your specific practice; don’t use a generic contract. Make sure the document is easy to read and easy to understand, too: it needs to cover you, legally, but it shouldn’t be so loaded with legalese that patients can claim they didn’t know what they were signing.
  2. Give details upfront. Service details, options, and pricing should all be discussed in detail at the initial consultation. Dentists need to make sure patients understand the issues that need attention, pros and cons of different available treatment options, and the costs that will be associated with each option. Insurance, co-pays, and other financing issues need to be laid out in clear, concise language. And along those same lines …
  3. Make a plan. The bigger and more complicated the treatment, the more important it is to have a written treatment plan that includes details, approximate dates, and financing. A treatment plan doesn’t replace your standard contract; it’s a supplement catered to each patient. That means it is crucial that you listen carefully to the patients considerations.
  4. Do the legwork. If you do end up with a bad debt, don’t expect the patient to go out of his or her way to help. Your office should be expected to be the instigator of all communications. Make it as convenient as possible for the patient to pay–the ability to take credit card numbers over the phone is one example. It is essential that all contacts are made in the most professional manner, and that care is taken to verify the identity of the person you’re speaking to avoid breaching confidentiality.
  5. Leave it to the pros. Face it: you’re a dentist, not a bill collector. You’ve got better things to do. While your office should make the first few attempts, there comes a point of diminishing returns; if you decide the patient is deliberately trying to avoid payment, don’t be afraid to turn the case over to a collection agency. Take care to hire a firm experienced in medial collections to avoid any HIPPA violations.

When it comes to bad debt, the real work should happen long before the patient ever walks in. Don’t be afraid to Push patients to pay money they clearly owe. And if it gets to that point, call in professional help. That might upset the patient … but seriously, if it’s this hard to collect from him or her, you probably don’t want that person as a patient, anyway.