How to identify and report health care fraud

CPAs can take these steps to help their clients avoid becoming victims.
By Taylor Knopf

How to identify and report health care fraud
Photo by DNY59/iStock

Navigating the health care system can be daunting, and making sense of insurance claims and billing can be confusing. Add in human errors and targeted fraud schemes, and the whole experience gets even messier.

It's easy to see how both consumers and CPAs might miss obvious cases of fraud amid all the legalese and red tape.

But CPAs can take precautions to help their clients protect against health care fraud, including aiding clients in identifying red flags, coaching them on how to avoid common abuse practices, and informing them of avenues for reporting cases of fraud.

CPAs are well positioned to help clients protect themselves against fraud because they have regular contact with clients and their finances, said Martin Shenkman, CPA/PFS, J.D., who runs Shenkman Law, an estate planning law firm in New York and New Jersey. They can educate clients about fraud and elder financial abuse so clients don't become victims. But first, CPAs need to educate themselves.

"There's a tremendous opportunity for CPAs to step into the role of being a real trusted adviser by reviewing the checkbooks and financial records of clients with health issues and clients who are aging," Shenkman said. "But this is not just bookkeeping work — it's a real value-added service."

Here are some ways CPAs can help their clients avoid becoming victims of fraud.


There are several common billing schemes that dishonest health care providers use to get higher reimbursements.

These include:

  • Billing twice for the same service.
  • Unbundling a single procedure so that it's billed for in multiple parts.
  • Billing for services not rendered to the patient.
  • Upcoding an item on the bill to a more complex procedure than the one provided.

CPAs and their clients should be aware that not all health care billing inaccuracies are fraud. It could be accidental, such as a coding error, which can be corrected by the billing entity.

"Billing procedures can be very complicated and confusing, so honest mistakes are made," said Randy Wolverton, CPA/CFF, who works as a contracted investigator for the FBI in the Kansas City Division's complex financial crimes squad.

Start by contacting the physician practice, pharmacy, or hospital to try to fix the error.

A client who receives a bill for a medical service provided and paid for but that he or she has no recollection of may be a victim of identity theft, Wolverton said.

There are several ways criminals steal personal medical information for identity theft purposes, according to the FBI. For example, criminals will use health fairs — which offer health information and free screenings — to gather patient insurance information when people agree to something like a free blood pressure test. CPAs should advise their clients to closely guard their personal insurance information.


Patients should not respond to unsolicited phone or online offers for free medical services or devices, particularly if asked for insurance information, said Suzanne Shier, J.D., a Chicago-based wealth planning practice executive, chief tax strategist, and counsel at Northern Trust, a global wealth management firm. CPAs should warn their clients of these scams, particularly older clients, who are often targeted with these types of offers.

"Patients should protect their Medicare numbers the same way they would protect their Social Security number," Shier said.

CPAs should urge their clients to cautiously select medical providers. Choose one based on trusted referrals, not free offers.

"Be an initiator rather than a responder," Shier said.


At appropriate times, Shenkman said, CPAs could offer to take control of bill payment in situations where people who are cognitively impaired aren't able to discern the many frauds and scams that exist.

About 25% of the U.S. population lives with a form of disability, and the average American life ­expectancy is 78.6 years, up from 70.8 years in 1970, according to the U.S. Centers for Disease Control and Prevention. That means people are living longer, and more are in need of help from professionals like CPAs to keep them safe from health care (and other) scams.

Though helping clients handle their health care bills may sound simple, not many CPAs currently provide this service, Shenkman said.

By digitizing and tracking health care billing — particularly for clients with complex health issues — Shenkman said CPAs can more easily detect unexpected bills, fraudulent charges, or increased charges for their clients.


When visiting a health care provider (or having in-home health providers), patients should keep track of names, dates, times, and types of procedures so they can more easily compare their own account to the bill when it arrives weeks later, Wolverton advised.

Keeping detailed notes is even more crucial for patients involved in repeated procedures because they build a base for comparing future billing, he said. If patients don't feel up to the task themselves, they could ask a trusted loved one to accompany them and keep records.

"It takes a lot of diligence on the part of the patients to keep track of this stuff," Wolverton said.

As simple a step as the patient, perhaps with the help of a family member, noting each procedure or drug purchase on a calendar can provide valuable information for a CPA to check charges for validity. For example, charges for services that were never provided can be identified in that manner.


If a client suspects he or she is a victim of a scam, CPAs should encourage them to report it, Shier said. This not only helps investigators collect data to prosecute specific schemes, but it also helps to destigmatize fraud reporting. If the client has a care manager, they are required to report such matters if they learn of them. That can protect the client.

"It is not uncommon for people who feel vulnerable to not report incidents of suspected abuse because they somehow feel personally responsible for it," Shier said. "So underreporting is fairly common."

To identify billing errors or fraud, patients, their families, or assisting professionals like CPAs should become familiar with the billing process in order to compare a bill to their own knowledge of what happened.

There are several ways to report suspected health care fraud. When reporting, start by identifying who is paying the bill: private insurance, Medicaid, or Medicare.

Private insurance companies often have their own mechanism for fraud reporting. Medicaid issues are generally reported to the state, which controls Medicaid spending dollars. Each state's department of health and human services or state attorney general's office has ways to report Medicaid fraud, according to the FBI.

Suspected abuse of Medicare — the federal insurance program for people 65 and older — should be reported to the U.S. Department of Health and Human Services Office of Inspector General.

The FBI also has teams that investigate health care fraud and provides dedicated phone lines for the public to report abuse.

The AICPA offers professional training courses for practitioners who want to learn more about fraud, such as a professional certificate in forensic accounting, as well as resources including a detailed quarterly report on health care fraud.

About the author

Taylor Knopf is a freelance writer based in North Carolina.

To comment on this article or to suggest an idea for another article, contact Drew Adamek, a JofA senior editor, at

AICPA resources



  • Essentials of Personal Financial Planning (#PPF1701P, paperback)

CPE self-study

  • Retirement Planning Certificate Program (#166401, online access; #166481, online access and exam; #166470, exam only)
  • Specialized Forensic Accounting Certificate (#167000, online access; #167110, online access and exam)

For more information or to make a purchase, go to or call the Institute at 888-777-7077.




  • Submit a Hotline Complaint, U.S. Department of Health and Human Services Office of Inspector General
  • Medicare fraud reporting hotlines, 800-MEDICARE (800-633-4227) or 800-HHS-TIPS (800-447-8477)

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