---
# System prepended metadata

title: proposal - health care fraud detection

---

# proposal - health care fraud detection
## problem statement1
Telehealth is a grey area. Due to lack of data sample, a regional insurer cannot effectively detect fraud from a remote region hospital, E.g. a NY-based insurer received a claim from TX-based hospital. 


How can different insurers share the data to help each other detect fraud? This NY insurer wish to have more data sample from TX, hopefully from some TX based insurers.


## problem statement2
how to help third parties, e.g. FBI, patients, journalists, to detect fraud?



# health care fraud is real 
##  common fraud types 
Healthcare sector is strictly regulated to prevent fraud, yet fraud cases are not uncommon. a general term for fraud is  FWA (fraud, waste, abuse), that covers more misbehaviors. 
BFI listed common types of these frauds [Health Care Fraud — FBI](https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/health-care-fraud) among these, the fraud committed by med provider are:
-   **Double billing:** Submitting multiple claims for the same service
-   **Phantom billing:** Billing for a service visit or supplies the patient never received
-   **Unbundling:** Submitting multiple bills for the same service
-   **Upcoding:** Billing for a more expensive service than the patient actually received

And some frauds involves prescriptions:
-   **Forgery:** Creating or using forged prescriptions
-   **Diversion:** Diverting legal prescriptions for illegal uses, such as selling your prescription medication
-   **Doctor shopping:** Visiting multiple providers to get prescriptions for controlled substances or getting prescriptions from medical offices that engage in unethical practices

## telehealth challenge and COVID
During the COVID-19 pandemic, telehealth fraud became easier. According to FBI:
>  With telemedicine fraud, dishonest medical providers and companies usually conspire to order unnecessary equipment, medicine, or tests for patients.   Even though the patients might never receive the things prescribed, Medicare or private insurance companies still get big bills for them. And the doctors who sign off on these fraudulent orders typically get illegal kickbacks from the equipment or medicine companies, to boot.

## health care fraud cases 
Most false claims coming form healthcare fraud schemes. Justice Department Recovers Over $2.8 Billion, $3 Billion, $2.2 Billion from False Claims Act Cases in Fiscal Year 2018 2019 2020 

### largest one in 2021 (telemedicine)
 Creaghan Harry, 53, of Highland Beach, Florida organizes a healthcare fraud and illegal kickback scheme through multiple telemedicine companies. The scheme resulted in over $784 million in false and fraudulent claims to Medicare. Harry and co-conspirators allegedly solicited illegal kickbacks and bribes from durable medical equipment (DME) suppliers and marketers for orders of DME braces and medications. Harry’s telemedicine companies then provided orders to DME suppliers that fraudulently billed Medicare, which ended up paying more than $247 million for the claims, 
 
### an evil case in 2019
Texas rheumatologist guilty of falsely diagnosing patients with life-long diseases – and treating them with medically unnecessary and toxic medications – as part of a $325 million healthcare fraud scheme.


More healthcare fraud cases can be found here [Medicare Fraud News and Resources for Healthcare - RevCycleIntelligence](https://revcycleintelligence.com/tag/medicare-fraud)

### pharmaceutical companies healthcare fraud
in addition to healthcare provider, pharmaceutical companies also involve in the fraud scheme. they usually marketing the effect of drug falsely and pay doctors kickbacks. Wikipedia has a [List of largest pharmaceutical settlements - Wikipedia](https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical_settlements) big companies like GlaxoSmithKline, Pfizer, Merck, Johnson & Johnson are all listed, the settlement amount could be as high as billions. 


# Who cares? 
 - government 
   - FBI
   - CMS Centers for Medicare and Medicaid Service
 - insurance company
 - employer
    - employer has health plan as a part of employee health benefits

 
#  Current solution: Healthcare Fraud Analytics Industry
Fraud detection and prevention systems are software applications used to provide analytical solutions for fraud incidents and help identify or prevent future occurrences. North America was the dominant region for fraud detection solutions in 2016. the market size is expected to see two digits growth in next 5 years. [Fraud Detection and Prevention Market Size Worth $75,139.66 Million, Globally, by 2028 at 16% CAGR - Exclusive Report by The - Bloomberg](https://www.bloomberg.com/press-releases/2022-01-13/fraud-detection-and-prevention-market-size-worth-75-139-66-million-globally-by-2028-at-16-cagr-exclusive-report-by-the)

Typical use case of this systems is that insurance payers analyze insurance claims on-premise. As demonstrated in this article [Fraud Detection in Healthcare. Identifying Suspicious Healthcare](https://towardsdatascience.com/fraud-detection-in-healthcare-1801bf19d36c), it shows the dashboard of claims used for anomaly detection: 
![](https://i.imgur.com/tv8NsZS.png)


The key players in this market are ACI Worldwide, Inc.; BAE Systems Plc; Fair Isaac Corporation; Fiserv, Inc.; IBM Corporation; NCR Limited; Oracle Corporation; RELX plc; SAP SE; and SAS Institute Inc.


# Insurance company market share 
Health insurance markets are generally local, i.e., different companies dominates different local markets. 
![](https://i.imgur.com/GStqpFk.png)

from: [Health Insurance Competition and Commercial Market Share in Three New York Metro Areas (markfarrah.com)](https://www.markfarrah.com/mfa-briefs/health-insurance-competition-and-commercial-market-share-in-three-new-york-metro-areas/)


At national level, the market share is diversified. There are no super dominant insurance company - the largest one has around 15% market share. An over estimation is 100s of insurance companies. Due to this situtaion, insurance companies can detect health fraud more effectively when they share their data. 

![](https://i.imgur.com/LLUHSwt.png)


