FWA Briefs

Find news and solutions for healthcare payers and providers. Recognize and avoid potential fraud, waste, and abuse scenarios. Real-time clinical claim editing are analyzed to maximize provider reimbursements.

Detecting Healthcare Fraud, Waste, and Abuse

  • by Steve Nesnidal, MD, CPC, AHFI
  • Jul 30, 2019, 09:42 AM

The themes of blatant healthcare fraud include a wide variety of dastardly approaches. Many seem monotonously repetitive, with occasional twists and turns, but a few others can be quite ingenious. Some fraudsters bill for services that were never rendered, in some cases by using fraudulently obtained provider and/or beneficiary numbers (and in so doing also committing identity theft). At times, a sham of the fraudulently billed service is actually attempted, although the procedure is invariably medically unnecessary. Other times, the beneficiaries may be tricked into receiving the services (perhaps lured in by a TV commercial or by a fraudulent practitioner with the promise of ‘free services’). Occasionally, the beneficiary willingly participates. Sometimes these “services” are provided by the actual billing provider, but in other cases they are enacted by a fraudulent proxy provider. The variations seem to span the gamut, but consistent among them is one ultimate goal--to obtain fraudulent insurance payments in volume for unsubstantiated healthcare services. 

The optimal approach to successfully detecting fraudulent activity varies depending on the theme. It is not possible to detect some fraud themes using claim level analytics solely; some fraud can only be detected the level of medical record audit. Still, more insidious fraudulent themes require detail that can only be obtained from direct individual interviews of parties involved. Even if detection of fraud can occur at the claim level, often an examination of the individual claim fails to reveal any clearly invalid data element. This is not surprising, as such an approach won’t generally produce the intended yield--a fraudulent payment from insurance. Even if the individual claim looks “clean”, pertinent analysis of the cumulative claim data associated with a given provider, provider group, or beneficiary can reveal key outlying fraudulent patterns. 

In a past OIG case, for example, a fugitive purchased a healthcare service company which in the previous year billed less than $100,000 total to Medicare for a specific procedural group. Within the first three months after he purchased the company, his company billed over $2,000,000 to Medicare for that same procedural group. The referring providers never prescribed these services and the beneficiaries never received them. In this case, neither were even aware they were billed at all. At the payer level, the individual claims likely appeared valid, otherwise they would not have successfully generated this volume of payments. This scam was only detectable by examination of the trends and patterns among this volume of claims, after they were stratified by procedure, by provider, studied over time, and then compared to data obtained from similar parameters in a previous time frame.

A key step in the fight against Fraud Waste and Abuse (FWA) in healthcare is the detection of an aberrancy of significance--some atypical pattern that you would not normally expect to see within a batch of legitimate claims. Although isolated errors are consistently made in claims submission, tools which can help see beyond them and isolate patterns that are suspicious for fraud on a grand scale, or at least waste or abuse of a significant scope, can prove valuable. Context4 Healthcare's Payment Integrity Solution offers four different FWA Reports which can help detect various FWA patterns of concern:

  • One report (Most Frequent Procedures Rank Professional Claims) ranks the top 10 most frequently occurring procedure codes.
  • A second report (Highest Charge Procedure Professional Claims) ranks the 10 procedure codes having the highest total charge amounts.
  • A third report (Most Frequent E/M Encounters Rank) ranks the top 10 most frequently occurring E/M Procedure Codes.
  • Our fourth report (Provider/Provider Specialty) isolates all claims performed by a given Provider by NPI or a given Provider Specialty (by taxonomy code groups)

These reports help detect atypia amongst a volume of claims by analyzing the data using different parameters. They allow review of the procedures performed at highest frequency or those with the highest charge amounts in the batch. The fourth report drills down on the subset of claims associated with a specific provider NPI or specialty taxonomy. By using one or a combination of these reports, they can help you distill a significant, unusual pattern worthy of further FWA audit.

Aside from data mining reports for aberrancies, our Payment Integrity Solution also includes a significant series of individually designed FWA edit rules, each designed to flag a unique commonly occurring fraudulent billing theme. One of these edit rules analyzes Procedures by Specialty, focusing on those specialties found historically to be elevated disproportionally in healthcare fraud cases.1,2 It is designed to identify outlier procedures not typically performed by 24 different Provider Specialty Taxonomy groups.

Prompt and efficient detection is key to defend against today’s adaptive and often insidious FWA themes. Our FWA reports and edits are valuable tools that can improve your current fraud detection processes and reduce the resources you need to find and investigate possible fraudulent activities. Once a vital FWA pattern of significance is detected within the claims data by the FWA analytics tools of our Payment Integrity Solution, a focused audit can isolate the medical record details necessary for legal analysis. Call or email our staff if you would like more information about how Context4 Healthcare’s Payment Integrity Solution can help your business defend against Fraud Waste and Abuse.



  1. https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2718092
  2. https://www.beckersasc.com/asc-coding-billing-and-collections/6-major-healthcare-fraud-cases-costing-millions-in-2016-9-key-statistics.html

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