As if sorting through the 70 or so new Medicare-approved prescription drug discount programs wasn't confusing enough, senior citizens now have something else to worry about: con artists taking advantage of the mess. Scattered reports from around the United States indicate criminals are using this month's launch of the discount program to sell bogus cards or commit identity theft.
The prescription drug program takes effect June 1, and providers began to sell the cards last week. With them, qualifying seniors can obtain discounts of 10 to 25 percent on medication.
The program is temporary, a bridge to more dramatic Medicare reforms coming in 2006. For now, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 has created a competitive marketplace for discount drug plans, approving about 70 different national and state plans operated by private companies.
Essentially, seniors must pick one card and stick with it; plans can only be switched once a year. But the plans aren't created equal -- not every card offers discounts on every drug, and the discounts can vary. Seniors trying to sort through all this have been urged to visit a special Web site designed to help them pick the right card.
Still, the myriad of options is sure to cause confusion, consumer experts say. And it already has encouraged con artists to take advantage of the situation.
"Whenever you have a good deal of confusion in a marketplace that involves seniors, you open the door for the potential for fraud," said Gail Shearer, Director of Health Policy Analysis for Consumers Union. She compared the situation to widespread fraud in the 1980s involving Medigap insurance -- policies which covered ailments not covered by Medicare. "People who do this kind of thing see opportunities."
7 million potential victims
The potential market for con artists is enormous. More than 7 million seniors are expected to enroll in the discount card program, according to the federal government.
In one example, con artists called seniors and said they needed personal banking information in order to place the promised $600 prescription drug credit into their accounts. In another, discount card sellers not approved to take part in the Medicare program use government logos to appear as though they are.
In both Iowa and Massachusetts, for example, seniors complained to the state attorney general's office about fliers from a company called Senior Security Prescription Plan.
"At first blush, this looks an awful lot like an official government seal on the mailing," Iowa Attorney General Tom Miller said in a statement. "It looks like it's from Social Security and is a Medicare-approved card, even though it contains a small-print disclaimer that it's not related to any government agency."
Warnings have been issued by state attorney general offices around the country, but the federal Department of Health and Human Services says there have been only a few reports of people actually falling for the trickery.
There is plenty of concern that the frauds might work however, because they are based on truth. There is a $600 annual credit that low-income seniors can qualify for. The money isn't deposited into bank accounts, however; it merely covers the cost of the first $600 worth of drugs purchased.
Seniors on limited income might not think they are prime targets for identity thieves, but they're wrong. Gaining access to a senior citizen's personal health information can be a small gold mine for a criminal. A Social Security number and a Medicare card are all that's needed to generate false Medicare claims, said Ben St. John, from the Inspector General's Office at the Department of Health and Human Services.
"We're very concerned about fraud with the introduction of the drug benefit," St, John said.
The discount card world was already a treacherous area for seniors, often mired in confusion, said Christine Pritchard, a spokeswoman for the New York state Attorney General's Office. Her office has settled four cases against four different discount card providers in the past two years after alleging deceptive practices. In each case, the defendants allegedly exaggerated the discounts they offered, or the exaggerated the list of doctors who would accept them, she said.
"Obviously there is a problem in this industry," Pritchard said.
Adding a myriad of Medicare-approved cards to that mix could make an already bad situation much worse, she said.
The string of frauds is predictable. Last year, when the state of Wisconsin began sending its first renewal notices for a new statewide senior drug discount plan, similar abuses occurred. While the state plan is free, other providers sent out fliers with government logos attempting to convince seniors to join their $5.95-per-month discount plan.
It's hard to say how common the Medicare-related card scams are right now. Peter Ashkenaz, spokesman for the Centers for Medicare & Medicaid Services, said there's really only been a "handful" of complaints around the country.
"It is enough that we're trying to make sure people are prepared, and that they know what information they should or shouldn't give out," Ashkenaz said.
One clear rule, the experts say: Medicare-approved cards won't be sold over the phone. Federal legislation prohibits that. So consumers should simply hang up on anyone who calls offering Medicare drug discount cards for sale. But the firms are allowed to send mail solicitations, and that's where it will get confusing for seniors. Companies trying to mislead consumers will say they belong to some impressive-sounding national organization, or even include government-type logos in their materials.
Because of the complexity, seniors need to use extra care when signing up for a discount card, Shearer said. And even those helping older family members or friends need to use caution.
"Don't give out personal information to somebody who cold calls you," she said. "Understand there are people out there who do want to steal your identity."