10:06AM EDT October 10. 2012 - WASHINGTON -- More than a quarter-million Medicare beneficiaries are potential victims of identity theft and hampered in getting health care benefits because the government won't issue new IDs, according to an investigation report released today.
Medicare officials say it's too expensive and too many agencies are involved to reissue those numbers to patients victimized by identity theft — about 284,000 beneficiaries, according to a report by the Department of Health and Human Service's inspector general.
Beneficiary numbers are directly connected to a patient's Social Security number, and the government is unable to create a new Social Security number for a patient whose Medicare identity has been stolen, according to the report, which was obtained by USA TODAY.
And beneficiaries can do little more than report abuse of their beneficiary numbers because the government does not provide them with updates about investigations or amend their records with correct billing information. That, investigators say, slows down access to care.
The Centers for Medicare and Medicaid Services (CMS) "should mitigate the damage of medical identity theft by ensuring that beneficiaries retain their access to services if their Medicare numbers have been misused by others," the report states.
Investigators suggested that the CMS, which administers Medicare, place an indicator in breached records or records known to have been used fraudulently so claims processors know when a legitimate claim should go through. The agency agreed to consider that suggestion, the report said.
The report also said the government should find a way to issue new numbers, even if it means moving away from using Social Security numbers.
Investigators also found that though the government has created a database that includes the 284,000 breached or stolen beneficiary numbers, contractors have not received guidance about what to do with that list. In some cases, contractors continue to send out government checks even after the numbers have been compromised.
The government said the system is being fixed now.
Medicare should also correct beneficiaries' billing records when fraudulent activity has occurred, investigators recommended, but the CMS disagreed.
"Our major concern is that CMS's adjustment of beneficiary billing records could have a negative impact on criminal and civil prosecutions and on the underlying integrity of the Medicare claims processing system," wrote Marilyn Tavenner, acting administrator for CMS.
In 2011, the government recovered a record-breaking $4.1 billion in health care fraud money. Between 2009 and 2011, it collected $7.20 for every dollar spent on fighting fraud -- a jump of $5.10 for every dollar spent between 1997 and 2008, according to inspector general reports.

Compromised Medicare identities

The following numbers show cases Medicare classifies as having been involved in identify theft, believed to have been involved in identity theft and vulnerable to identity theft.

Risk level	Beneficiaries	Providers
High	56,164	1,383
Medium	213,792	3,547
Low	13,616	32
Total	283,572	4,962

Source: Department of Health and Human Services