Home health fraud has been in focus in recent months, with the moratorium on provider enrollment taking center stage amid the latest efforts to prevent fraud. As CMS and state regulators increase scrutiny of home health and hospice payments, many organizations are still approaching fraud, waste, and abuse (FWA) as a compliance issue. But retrospective audits and documentation reviews alone are no longer enough to address increasingly sophisticated fraud schemes—organizations must evolve to stay one step ahead.
New FWA schemes in home health
Since the pandemic, the expansion of home-based and virtual care options has improved patient access but has also created new opportunities for financial abuse. FWA disproportionately impacts vulnerable Medicare and Medicaid populations while diverting resources away from legitimate care, putting a strain on the entire system. Home health, hospice, personal care services, and behavioral health have become some of the highest-risk areas for improper payments due to a convergence of factors, including: limited direct oversight of care, vulnerable patient populations, and attractively high reimbursement rates. This can make fraud schemes easier, such as upcoding for services rendered, billing at an improper provider credential level, and overbilling for time spent with patients.
AI and automation are also creating opportunities for bad actors to accelerate fraud activities. Fraud schemes can now scale faster and appear more legitimate than in the past, in ways that are designed to slip through conventional billing editing systems. Such instances include AI-generated or cloned medical records, telehealth encounters that are difficult to authenticate, and manipulated electronic verification systems. Organizations must be increasingly diligent about understanding the fraud landscape and what’s being targeted to catch issues upfront.
The shift from reactive to proactive
Traditional fraud oversight often relies heavily on post-payment audits and recovery efforts, which identify patterns that emerge over time. Unfortunately, by the time this suspicious activity is identified and addressed, funds have often already left the system with little chance of recovery.
While post-pay audits and compliance programs remain essential, they cannot be the industry’s only line of defense. Payers are increasingly moving from retrospective recovery to proactive payment accuracy and prepayment prevention strategies with the goal of preventing improper payments before they occur.
Technology is one of the industry’s strongest tools to aid in this process, allowing payers to get ahead in fraud prevention. There are four key areas where technology can enable organizations to identify and mitigate suspicious claims prior to making any payments.
1. Advanced AI-backed analytics. Using AI, large amounts of claims data can be analyzed more efficiently to identify subtle but abnormal utilization patterns that the human eye might miss, detecting schemes more quickly. These systems can also identify providers whose billings differ significantly from peers, flagging possible upcoding or excessive utilization.
2. Automated claims-editing systems. Automatically cross-referencing claims against CMS policies, payer policies, and correct coding guidelines prior to payment helps reduce manual administrative burden and uncover indicators of fraud. This could include things like incorrect procedure codes, incompatible diagnoses, and missing documentation.
3. Cross-payer data aggregation. Fraud doesn’t happen in a silo, so catching it shouldn’t either. Technology opens up the potential for better industry collaboration, extending across payers and lines of business to uncover larger fraud schemes that transcend a singular provider.
4. Enhanced provider education. Often, instances that can first appear to be fraud end up being coding errors from a lack of training. Working with providers can go a long way toward streamlining claims processes on the back end, such as giving coding guidance and proactively communicating policy updates and documentation expectations before claims are submitted.
A proactive payment integrity strategy
Home health fraud is not just a regulatory problem—it’s a payment accuracy challenge that requires earlier, more proactive intervention. When FWA increases, health plans often respond by tightening controls, ultimately impacting providers and patients as well.
However, as fraud schemes continue to evolve, particularly in home health and hospice, the industry can no longer rely on retrospective audits and recovery efforts alone. Compliance will always remain an essential part of program integrity, but lasting progress against fraud will depend on a broader shift toward proactive payment accuracy strategies that identify risk earlier, prevent improper payments upstream, and protect resources for legitimate patient care. As technology progresses, establishing a proactive approach allows payer organizations to focus resources more effectively while reducing unnecessary provider abrasion.
Learn how health plans can move beyond reactive pay-and-chase models and build a sustainable, partnership-driven strategy to stop waste and abuse before claims are paid. Read Cotiviti’s new white paper on the benefits of a partnership-driven approach to waste and abuse prevention.
About Erin Rutzler
Erin Rutzler, AHFI, CFE, CHC, CPC, senior vice president of payment integrity operations at Cotiviti, provides strategic direction and oversight of Cotiviti’s FWA, Coding Validation, and dental solutions. Serving as the company’s primary subject matter expert in investigations and FWA for compliance, client training, sales, and marketing activities, she regularly represents the company at industry conferences such as the National Health Care Anti-Fraud Association’s (NHCAA) Annual Training Conference (ATC).