Final Paper: Medical Identity Theft at Molina Healthcare, Inc.
Barlahan, Andrei
ID B00459963
Brandman University

Define the Problem
Medical Identity theft has become an increasing problem in the United States and continues to negatively impact millions of individuals. Medical identity theft usually occurs when individuals share their information with someone else, who in turn uses that information to receive medical services and fill for prescriptions. Other times, individuals lose their medical card or have their information stolen by a friend or close relative. According to a 2013 survey conducted by the Medical Identity Fraud Alliance (MIFA), medical identity fraud has increased nearly 20 percent compared to the year before in the U.S., affecting an estimated 1.84 victims and having a total out-of-pocket medical costs incurred by medical identity theft victims of $12.3 billion (DeGaspari, 2013). This is a serious problem, because not only are millions of dollars wasted, but patient medical records are compromised, which can result to misdiagnoses, wrong procedures and treatment, and wrong prescriptions.
On a smaller scale, Molina Healthcare’s Special Investigation Unit (SIU) conduct investigations on referrals they receive indicating a Molina member may have been a victim of identity theft. A lot of times when the issue is actually identity theft, the SIU is only able to “band-aid” the problem and have found the issue resurfacing months later and Molina continuing to pay claims for services the actual member did not receive. An example of this is a referral the SIU received in 2013, indicating that a Molina member’s identity had been stolen. Someone had used our member’s health information to receive hospital services for severe illness at another state. The SIU interviewed the member and confirmed that they have never traveled outside their city they were currently living in, nor ever been diagnosed with any illness. This creates a major problem because Molina paid for services that were not rendered and the member’s medical records has been compromised and may affect his health insurance eligibility in the future due to false diagnoses.
What the SIU did was inform all the hospitals that were impacted and let them know that after investigation, it was found that it was not a Molina member that they had seen and as a result, the claims that were paid would be retro-denied. The SIU also made the Enrollment department aware to flag the member’s account for identity theft. For a while, it looked like the problem had been resolved and the steps that were taken had prevented the impersonator from obtaining services using our member’s ID. Though, months later, the SIU received a new referral indicating the same member’s account had been compromised again and claims for hospital services were able to get passed the system, even with an identity theft alert on file and the claims were paid.
This raised questions of how this was possible and how are we able to prevent this from happening in the future. Was this a communication problem between departments? Is there a conflict with the different systems that are in place? Are there additional steps we can take to empower members to detect and prevent identity theft? The main problem is that Molina is losing thousands of dollars due to inappropriately paying out claims for services the member did not receive and the process that is currently in place is not enough to tackle the problem.
Determine the Objectives
In most private-sector decisions, profit is the principal objective of the firm and the usual barometer of its performance. Thus, among alternative courses of action, the manager will select the one that will maximize the profit of the firm (Samuelson, pg. 7-8). Molina Healthcare has moved to being a public company since 2002, but profit still becomes a driving factor for the company. Their main mission is to provide quality health services to financially vulnerable families and individuals covered by government programs, but to also be careful in the management of their financial resources and serve as prudent stewards of the public’s funds.
As part of the SIU, one of our main goals is to maximize the company’s profits and decrease the millions of dollars inappropriately paid to health care providers. One of our other objectives is to ensure the safety of Molina members, while conducting investigations of potential fraud, waste and abuse. One way we accomplish to do this is to identify individuals who have stolen our members’ identity in able to receive medical services. While doing so, we must also be aware to have the most effective and cost-effective processes in place when dealing with identity theft issues. Currently, the process Molina has for identifying identity theft is reactive. Potential identity theft is only investigated once a member or a Molina employee suspects and reports it. By the time an investigation is opened, thousands of dollars could have already been inappropriately paid to providers and prescriptions from different pharmacies could have been filled.
Explore the Alternatives:
There are various ways of how the SIU can tackle medical identity theft. One of the ways we can decrease medical identity theft at Molina is to create a written Identity Theft Prevention Program designed to detect the warning signs of identity theft. This includes gathering resources from other anti-fraud organizations to pave way for a more educational and proactive tool to prevent medical identity theft. The Federal Trade Commission has a brochure that educates members about ID theft and it provides numbers to report ID theft to (BOCP, 2011). The most important points from this brochure can be included in the written program, along with a check list of questions that members can ask themselves when trying to identity whether they may be victims of identity theft. This written program will also include the various suspicious patterns that may indicate identity theft.
This written Identity Theft Prevention Program can be given to members when they first sign up with Molina and then every year after that, so they are reminded of the importance of identifying possible ID theft. The written program can also be given to providers during their orientation, so they can also be aware of what to look for when seeing patients. There can be a portion in the written program of what providers can look for, such as verifying ID before seeing patients and making sure their ID is not fake. Included in the program is an ID theft Response Plan (HDM, 2014). This is executed by employees once members identify ID theft. Some actions included in the response plan would be to contact local law enforcement and to lock the member into only one pharmacy. If Molina can become more proactive about ID theft, then members will more than likely follow and do their part to prevent their accounts from being used by someone else.
Another way to fight medical identity theft is to implement a new system that alerts all departments involved in handling claims. Users of this system would include the Member Services Department because they are usually in the front line and communicate with members pretty often. Utilization Management and Claims Department would be the main users of this system because they are the ones that approve and deny authorizations and pay or deny claims. Other departments that would have this system would be Pharmacy Services because they handle paying for prescriptions and if they are notified of identity theft issues right away, they can stop prescriptions from being filled. Lastly, The SIU would also be included in this system because we are in charge of conducting the potential ID theft issue and determining whether it is actually ID theft.
The new system put in place will ensure that everyone involved in the claims process is on the same page. It will force all suspected claims to be inspected by a Claim Reviewer before it is paid. Currently, Molina has an adjudicated system for claims and the computer analyzes a claim by certain criteria. If it meets the criteria, then it will automatically pay the claim, without the need for human contact. Though, the adjudicated system is convenient and is another way to help save the company money, it is not convenient or cost effective when it comes to trying to stop inappropriate claims from being paid as a result of identity theft.
Under the Every year, Molina educates their employees about fraud, waste and abuse by requiring all employees to take a training course through the company’s intranet. In addition to this training course, the SIU can create another training course specifically for medical identity theft, so employees can learn how to detect and prevent is type of fraud. In this training course, the SIU can include various examples of identity theft cases. Also, including statistics regarding ID theft cases and overpayment amounts identified can help create a picture for employees of how serious identity theft is. This can motivate employees to take action against potential ID theft.
Another way to tackle identity theft at Molina is for the SIU to collaborate with other health care organizations to discuss and improve ID theft efforts. If we are able to do this, then we can share processes that we have in place and obtain feedback from a different perspective than our own. This can dramatically improve our processes. As our health care system increasingly relies on digitized health care information, health care fraud risks will develop and grow, including the threat of medical identity fraud, particularly through cyber attacks. To face these threats, it is critical that our industry commits itself to greater sharing of health care fraud investigative information (AHIP, 2014). Currently, there is actually an existing organization that partner with other health organizations and takes anti-fraud information sharing to the next level. That organization is called Healthcare Fraud Prevention Partnership (HFPP) and they have not yet been fully established, as there are some laws in place that limit health information sharing. Though, once they are able to get passed certain laws, Molina should join in this movement in sharing information.
Lastly, the SIU can decide to take no action and keep the same processes we already have in place for fighting identity theft. We can continue to use the same resources and wait until referrals come to the SIU, indicating potential ID theft has been identified. Once identity theft has been identified, we can alert all departments that are involved with claims by making phone calls.
Predict the consequences
Predicting the consequences to the options mentioned above can help narrow down the best path to take when it comes to fighting and preventing ID theft. If an Identity Theft Prevention Program is created and implemented, one of the consequences that we can foresee is the increase in volume of referrals the SIU will receive that actually isn’t identity theft. Also, this may increase the fear members may have about identity theft. If we implement a new system that alerts all departments that handle the member’s claims, this may be costly due to training and development of the system. This may also take years until it is implemented. Having an additional training course about medical identity theft for employees to take may also be costly, in terms of production that is slowed down because of employees taking the training course during work hours. Collaborating with the HFPP may be a good idea, but we may be taking a risk of violating some laws when it comes to information sharing. We may also be limited to what information can be shared. Lastly, if we do nothing then the company will lose millions of dollars over time and as mentioned, doctors may misdiagnose members and prescribe them incorrect medications.
Make a Choice To determine which alternative is the best to use in this situation, I used a forced decision matrix. Looking at the matrix below, I have come up with five criteria than can be used to evaluate the different alternatives. I decided that return on investment (ROI) id an important criteria to consider. Return on Investment attempts to measure the profitability of an investment (Investopedia, 2014). After analysis, I found that the ID Theft Prevention Program would probably bring the most return on investment because it much cheaper and easier to prevent ID theft than to recoup monies that have been inappropriately paid due to ID theft. Providing additional training, specifically for medical ID theft is not too costly and again, prevention is much more efficient. In terms of return on investment, doing nothing will more than likely cause the company to lose profits because over time monies inappropriately paid will add up and sometimes even go undetected. Expenses is another criteria that I wanted to look at. The cost of each alternative plays a big factor since Molina gets their money from the government. This goes back to being prudent stewards of public funds. Providing additional training and devising an ID Theft Prevention Program will cost less money because it is just gathering information from different anti-fraud resources and creating an educational tool for employees and members. The most costly would be implementing a new system that alerts all departments involved in the member’s claims. Some costs in implementing a new system include paying an employee do to extensive research on different vendors that specialize in this universal system and then the training and integration of this new system. Difficulty of making the change after an alternative is chosen also plays an important role. In this case, doing nothing is the most convenient. Implementing the ID Theft prevention program won’t be so difficult because it is mostly for members to have tools on how to detect ID theft. Providing additional FWA training may cause some inconvenience because it takes work time for employees to complete the training. Implementing a new system will be the most inconvenient because it calls for integration of the new system and employees may not have the capacity to take on a new system. The time it takes to implement is another key criteria that I wanted to consider. Additional training would take the least time to develop. Implementing an ID Theft Prevention Program also would not take very long to implement because it only calls for gathering information and putting it together. Collaborating with other health organizations and implementing a new system are the alternatives that will take the most times because it requires additional work than just gathering information. The last criteria I wanted to look at was the overall impact these alternatives have on members. The ID Theft Prevention Program has the best impact because it works directly with educating the members and it provides them with tools to take action when ID theft is suspected. Providing additional FWA training about ID theft to employees can also have a positive impact on members because members will usually interact with Molina employees who can pass on the knowledge they have about ID theft. Implementing a new system may be a reactive option and it doesn’t positively impact members directly. Doing nothing and keeping the same processes can actually have a negative impact on members because over time, ID theft can go undetected and members may be misdiagnosed. After adding up the totals from the matrix below, the best option to choose would be to create an ID Theft Prevention Program. | ID Theft Prevention Program | Implement new system | Provide Additional FWA Training | Collaboration with other health organizations | Do nothing | ROI | 1 | 4 | 2 | 3 | 5 | Expenses | 2 | 5 | 1 | 3 | 4 | Difficulty of change | 2 | 4 | 3 | 5 | 1 | Time it takes to implement | 3 | 5 | 2 | 4 | 1 | Overall impact on members | 1 | 4 | 2 | 3 | 5 | | 9 | 22 | 10 | 18 | 16 |

Perform Sensitivity Analysis
Because the ID Theft Prevention Program does not require new technology to be implemented and expenses would mostly come from paying employees to extract information from existing resources and the cost of paper to print the programs to send to members, this would be the best choice. To make sure that the ID Theft Prevention Program is the most optimal choice and the choice that will actually save the company more money, a sensitivity analysis may be performed. Sensitivity analysis considers how an optimal decision is affected if key economic facts or conditions vary (Samuelson, pg. 12). One key economic fact is that costs and revenue is uncertain. In the case that the program is costing more that the predicted cost, then the information that has been gathered can be integrated into the existing processes until budget is approved for more money to complete the program. Another condition to keep in mind is burnout for employees that will be developing this program. The creation of this program will be an SIU project, but to prevent burnout, certain portions of the program can be assigned to specific departments. The Legal Department can be involved since they work directly with certain laws, such as the False Claims Act and Health Information Portability and Accountability Act. Member Services and Enrollment Services can also be assigned to notify members of the new efforts.
Once the program has been complete, a copy has been added to the Molina website and hard copies have been sent to members, the SIU will continue to monitor the impacts that the program makes. The SIU will keep track of the savings identified due identity theft. A survey will be given out to members every year about how knowledgeable they are about ID theft and how confident they are about identifying it. Once feedback has been obtained, ongoing actions to make changes to the program will occur to make sure it is the most effective it can be.

References
American Health Insurance Plans (AHIP). 2014. Medical Identity Theft, Part 1 The Stakes and Consequences for Health Plans
Bureau of Consumer Protection (BOCP). 2011. Medical Identity Theft: FAQs for Health Care Providers and Health Plans. Retrieved from http://www.business.ftc.gov/documents/bus75-medical-identity-theft-faq-health-care-health-plan
DeGaspari, John. 2013. Medical Identity Theft Is Up, Affecting 1.84 Million U.S. Victims: Report. Retrieved from http://www.healthcare-informatics.com/article/medical-identity-theft-affecting-184-million-us-victims-report
Health Data Management (HDM). 2014. How Small Healthcare Organizations Can Fight ID Theft. Retrieved from http://www.healthdatamanagement.com/gallery/how-small-healthcare-organizations-can-fight-ID-theft-49051-1.html
Investopedia. 2014. Return on Investment – ROI. Retrieved from http://www.investopedia.com/terms/r/returnoninvestment.asp
Samuelson, W. F., & Marks, S. G. (2012). Managerial Economics (7th ed.). Hoboken, NJ: John Wiley & Sons, Inc.