4 Identity Verification Tools for Health Insurance Providers to Prevent Fraud

4 Identity Verification Tools for Health Insurance Providers to Prevent Fraud 

Health insurance fraud is a pressing issue, posing significant challenges for providers and consumers. It leads to higher premiums, drains resources, and ultimately compromises the quality of care for genuine policyholders.

With the advancement of technology in recent years, health insurance providers now have an arsenal of tools to verify identities and mitigate fraud risks.

This blog will walk you through the multifaceted problem of insurance fraud, explore various types, offer practical prevention tips, and highlight the role of cutting-edge identity verification tools in protecting against fraudulent activities.

Why Insurance Fraud is a Major Problem    

Insurance fraud isn’t just about exaggerated claims or pretending to be someone else. It’s a widespread problem that drains important resources, makes it more expensive for companies to operate, and increases the cost of insurance for people.

Economically, it’s a big deal. Some estimates say that fraud could consume around 10% of the healthcare industry’s annual spending. That’s billions of dollars lost to dishonest activities annually, a cost everyone involved in healthcare must deal with.

The impact of insurance fraud doesn’t stop there. Companies must sort through suspicious claims, often spending money on advanced fraud detection systems.

For people who have insurance and don’t commit fraud, it results in higher costs, potential delays, and more hoops to jump through when they need to submit legitimate claims.

Fraud damages the trust between companies and customers, shaking the foundation of the healthcare system. It’s crucial to tackle this issue directly.

Common Types of Insurance Fraud   

Insurance fraud takes many forms, each with its challenges and strategies for detection and prevention. Here are the common types of insurance fraud that necessitate a robust identity verification process as a preventive measure:

1. Identity Theft 

This fraud occurs when someone uses another individual’s personal information, such as their name, insurance details, or social security number, to make insurance claims or receive benefits they are not entitled to.

This can result in unauthorized use of insurance benefits, leaving the victim with unwarranted bills or depleted insurance benefits. Detecting and preventing identity theft involves a stringent verification process and uses technology to monitor for unusual behavior patterns that might indicate fraudulent activity.

2. Eligibility Fraud 

In this scenario, individuals or entities manipulate their information to qualify for insurance coverage they’re not eligible for.

This could involve lying about income, employment status, health conditions, or other key factors that insurers use to determine eligibility.

Tackling eligibility fraud requires thorough background checks, cross-verification of submitted information with other databases, and regular audits to ensure compliance with policy terms.

3. Provider Fraud 

Healthcare providers, such as doctors, clinics, or hospitals, commit this type of fraud by billing insurance companies for procedures that were never performed or by inflating the cost of the services provided.

Additionally, providers might perform unnecessary procedures to bill for more services. Fighting provider fraud requires sophisticated analytics to identify outliers in billing patterns, on-site audits, and strong legal frameworks to penalize fraudulent behavior.

4. Prescription Fraud 

This involves obtaining prescription drugs for non-medical purposes, such as recreational use or resale. It can be done by forging prescriptions, doctor shopping (visiting multiple doctors to obtain multiple prescriptions), or even conspiring between patients and unscrupulous healthcare providers.

Combating prescription fraud requires coordination between pharmacies, healthcare providers, and insurers. It involves monitoring prescription patterns, implementing prescription drug monitoring programs, and educating healthcare providers about prescription fraud risks and signs.

Each type of insurance fraud undermines the financial stability of insurance programs and compromises the integrity of healthcare and other insurance systems.

Addressing these issues demands a multifaceted approach, including using advanced technology, regulatory oversight, public awareness campaigns, and strong penalties for those caught engaging in fraudulent activities.

Tips to Combat Insurance Fraud   

Preventing insurance fraud starts with thorough due diligence. Here are practical steps providers can take to verify the identity of applicants and safeguard against fraud:

  1. Confirm the Individual’s Existence: Ensure the applicant is a real person by checking against trusted data sources.
  2. Verify Social Security Number (SSN): Check if the SSN provided matches the individual’s name and other personal details.
  3. State Residency Verification: Confirm that the applicant resides in the state where they are applying for benefits, preventing jurisdictional fraud.
  4. Identity Authenticity: Investigate if the identity is genuine or has been fabricated.
  5. Check Against Deceased Individuals: Ensure the identity does not belong to a deceased person, a common tactic in fraud schemes. You can verify this information using an SSN Validator.
  6. Location Consistency: Verify that the person lives in the state of coverage application, eliminating out-of-state fraud attempts.
  7. IP Address Analysis: Determine the device’s location used in the application process, which can reveal discrepancies and potential red flags.
  8. Biometric Verification: Use biometric checks to ensure the applicant matches the identification provided.

Implementing these strategies can significantly reduce the risk of fraud.

4 Verification Tools to Combat Insurance Fraud   

Health insurance providers are increasingly turning to technology to strengthen their defenses against insurance fraud. Various verification tools can significantly enhance their ability to detect and prevent fraudulent activities.

Here’s a closer look at these tools, which are also offered by Searchbug, a company that specializes in data verification solutions:

1. People Search API 

The Searchbug Advanced Person Search API, designed as a compact Skip Trace report, excels in identity verification by providing comprehensive and current contact records across the US.

It draws on high-quality data sources to deliver detailed profiles, including full names, aliases, addresses, phone numbers (wireless or landline), birth dates, and dates of death. When available, it also supplies relative information.

This API sets the standard for contact information services, making it an essential tool for businesses prioritizing accurate identity verification and access to extensive contact details.

2. SSN and Last Name Match API 

For health insurance verification, Searchbug’s SSN and Name Match API allows for cross-referencing an individual’s name with either the full nine digits or just the last four digits of their Social Security Number (SSN) against comprehensive data sources.

When a health insurance provider inputs a name and an SSN—full or last 4 digits—into the system, the API compares this information against its database to locate a corresponding record. A match between the provided SSN segment and name with a database record confirms the individual’s identity.

This capability is essential for ensuring that applicants or claimants are accurately identified, facilitating secure and accurate health insurance operations, even without requiring the full SSN, thus enhancing privacy and security.

3. Criminal Records API 

The Searchbug Criminal Records Search API is a streamlined tool allowing insurance providers to uncover any criminal records linked to an applicant quickly and easily.

This search can reveal comprehensive details such as jurisdiction, charge type, offense details, disposition type, sentence, probation details, and any convictions. Such thorough information aids insurers in effectively evaluating each applicant’s risk level.

To perform a search, input the applicant’s name, location, and date of birth. This precise method ensures accurate matching and relevant results, helping to streamline the assessment process.

4. Background Check API  

The Background Check API from Searchbug streamlines and automates the process of conducting thorough background checks.

It delivers extensive and detailed reports covering a wide range of information crucial for evaluating the risk profile of both new and existing policyholders. The results provided by this API encompass:

  • Personal Details: Vital information that helps verify an individual’s identity.
  • Current Property Details: Insights into property ownership, which can be an indicator of financial stability.
  • Address History: A comprehensive look at past addresses, aiding in verifying residency and movement patterns.
  • Connections: Information on neighbors and relatives, which can be useful for establishing a broader context around an individual’s background.
  • Phone Number History: Historical data on phone numbers can assist in tracking identity consistency over time.
  • Email Addresses: A record of email addresses that could be pivotal in understanding an individual’s online presence and activities.
  • Criminal Records: Access to any criminal records indicating a propensity for fraudulent behavior or other risks.
  • Financial Records: Details on bankruptcy filings, liens, and judgments that shed light on an individual’s financial health and responsibilities.
  • Social Media & Web Links: Links to social media profiles and other web presences offer a deeper view of the individual’s personal and professional life.

With the Background Check API, insurance providers gain access to a wealth of data, allowing them to make more informed decisions faster and more accurately.

This tool is an essential asset in the fight against fraud, providing a comprehensive overview that aids in identifying potential risks and red flags.

These four identity verification tools integrate seamlessly into the application processes, providing real-time data and insights to make informed decisions.

Benefits of Using Identity Verification Tools   

The adoption of identity verification tools offers numerous advantages:

  • Enhanced Accuracy: Reduces human error in the verification process.
  • Speed: Provides instant verification results, streamlining the application process.
  • Fraud Prevention: Significantly lowers the risk of fraudulent activities through rigorous checks.
  • Cost Savings: Minimizes financial losses associated with fraud, ultimately benefiting providers and policyholders.
  • Trust and Reputation: Strengthens trust in the provider and enhances their reputation for security and reliability.


At Searchbug, our dedication to social responsibility drives us to help combat and prevent insurance fraud. It is a critical step in preventing insurance inflation that affects both businesses and policyholders.

That’s why we’re offering free API credits for our identity verification tools, including the People Search, SSN and Name Match, Criminal Records, and Background Check APIs.

This initiative allows health insurance providers to try our high-quality data services without any upfront costs. To start, visit www.searchbug.com and contact us for your free API credits.

If you find our data meets your standards, we hope you’ll consider making Searchbug your go-to data partner. There’s no obligation, no commitment, and you can discontinue the use of our services at any time.

This is our way of supporting the industry in the fight against fraud, ensuring you have access to high-quality verification tools risk-free. Join us today!