New Banking Fraud Schemes a Danger to All Businesses

October 01, 2021

Local health plan alerts public, medical providers to wire fraud

When it comes to health care fraud, CenCal Health, the publicly-funded health care program for Santa Barbara and San Luis Obispo counties, is constantly on the lookout for fraudulent billing, kick-backs schemes, overbilling by durable medical equipment suppliers, opioid exploitation, and other schemes that rob public programs like Medicaid and Medicare. These are not victimless crimes, as they exploit taxpayer-funded programs and the vulnerable people who rely on them.

Another type of fraud is on the rise: fraudulent wire transfers. In this type, a consumer is convinced to wire money to a fraudulent account because they believe they are paying a legitimate vendor. But now thieves have turned their sights to merchants, from hospitals to universities to health plans. Recent incidents involve millions of dollars, and once money is transferred, it is rare that any of it can be recovered.

CenCal Health is proud of our willingness and ability to pay our providers via wire transfer, however, just as with paper checks, there is inherent risk. A sophisticated fraudster, using a banking form available on our website, recently victimized CenCal Health. Much of the information on the form is easily found through web searches and our online provider directory. The request looked legitimate.

Between bank recoupment and insurance, CenCal Health will recover the majority of the money. However, it still represents a loss in the low six figures. Our lessons learned can apply to all health organizations.

Here’s what we’re doing:

First, we have removed any forms from our website that could be used by a fraudster impersonating one of our providers. While this creates an extra step for the providers we do business with, it also makes it harder for thieves. Banking forms are now located inside the Provider Portal.

Second, we have instituted two-contact verification for wire and ACH transactions. This is a best practice to call two separate known contacts of the requester, using a number you have previously called — not one from the current wire transfer request.

Third, we are undertaking additional training of our finance employees regarding such fraud.

Finally, we have informed the local police as well as the FBI who are working to help us solve this case.

These new guardrails worked: A second attempt at similar fraud was caught before monies were dispersed.

About CenCal Health

CenCal Health is a community-accountable health plan that partners with over 1,500 local physicians, hospitals and other providers in delivering patient care to more than 205,000 members – about one in four residents of Santa Barbara County and one in five residents of San Luis Obispo County. A public agency, the health plan contributes approximately $50 million a month into the local economy, primarily through payments to healthcare providers who serve its membership. Established in 1983, it is the oldest managed care Medicaid plan of its kind in the nation. View its annual Community Report at cencal2020.org

CenCal Health Contact:

Nicolette Worley Marselian (805) 685-9525 ext.1993 nworleymarselian@cencalhealth.org

Media Contact:

Sheri Mobley (805) 845-5627, 213 509-9816 sheri@seamlesspr.com