Payment accuracy is a cornerstone of healthcare, ensuring that funds are allocated only for services provided to patients. But the complex nature of healthcare billing can open the door for fraud, waste, and abuse (FWA). With healthcare spending in the United States exceeding one trillion dollars each year, government agencies estimate more than $100 billion may be lost to fraudulent or abusive practices, including schemes in which providers bill for services not rendered.
The Centers for Medicare & Medicaid Services (CMS) considers billing for services that are not provided to be intentional and deceptive, describing it as one of the highest and most deliberate forms of fraud. But to catch such schemes, health plans must remain vigilant against bad actors.
Read on to learn how Cotiviti’s special investigations unit (SIU) uncovered and helped shut down a large-scale provider billing scheme, as well as best practices to identify and prevent future FWA.
Uncovering the scheme
The case began with a tip from an internal health plan client department, alleging the provider was billing for services that were never rendered and failing to properly assess members’ medical needs. Recognizing the potential scope and impact, the case was escalated to Cotiviti’s SIU for data analysis and further investigation.
Cotiviti’s SIU initiated two levels of internal review, which quickly uncovered alarming patterns. The investigators found a 100% error rate in the claims examined, with consistent documentation issues including:
- Missing critical records such as initial assessments, plans of care, and progress notes supporting the need for private duty nursing
- Discrepancies between the number of units billed and hours documented, with no time stamps to verify coverage periods
- Duplicate claim lines submitted by the provider
Throughout the investigation, Cotiviti worked closely with law enforcement, providing detailed documentation of the audit steps and findings, and helping the client comply with subpoenas and requests for information.
Taking action against fraud
In January 2024, nine people associated with the provider were indicted on charges of healthcare fraud, conspiracy, money laundering, and obstruction of justice. Following these initial charges, seven former employees pled guilty in the fall of 2025 to healthcare fraud and conspiracy, revealing a sophisticated scheme.
Participants in this scheme submitted false claims to Medicaid for undelivered services, including falsified supporting documentation to support the fraudulent claims. They also paid the parents and guardians of patients in exchange for signing blank nursing notes that were later used to support fraudulent billing. The amount billed to Medicaid reflected either excess nursing services or nursing services that were not provided at all. The defendants now face significant prison sentences, ranging from three to ten years.
Preventing billing for unrendered services
This case underscores the vital role of thorough, objective case documentation and vigilant investigative practices. To prevent similar schemes, healthcare organizations and SIUs may consider these best practices:
- Maintain organized, detailed records. Every investigative step and document should be recorded, creating a comprehensive audit trail. Doing so will clearly outline the timeline and evidence if and when FWA is suspected.
- Document communications promptly and objectively. Take detailed notes during interactions with providers and document them immediately, ensuring accuracy and objectivity. Avoid opinions or assumptions—focus on facts.
- Anticipate legal scrutiny. All case files may be subject to law enforcement review. Well-organized, unbiased documentation can be instrumental in both responding to investigations and securing convictions.
A concise, well-organized case file is crucial to assisting a law enforcement investigation request for information in the case of FWA, and these practices may be instrumental in making an actionable case. By prioritizing these best practices, healthcare payers can bolster their defenses, protecting patients and the integrity of healthcare benefits.
Webinar: Navigating regulatory changes and FWA schemes in 2026
Stay ahead of potential FWA patterns that may arise in 2026. Don’t miss the final webinar of Cotiviti’s 2025 Payment Integrity Pulse series as Cotiviti’s legal and FWA subject matter experts discuss three potential regulatory changes and the trending schemes found in Cotiviti data that may be affected by these actions.
