FWA Insights: Identifying adult day health billing schemes

Adult day health (ADH) programs are intended to support vulnerable populations, including older adults and adults who require supervision during the day. But improper billing practices, noncompliance with state age requirements, and potential patient recruitment schemes highlight the need for increased payer vigilance against fraud, waste, and abuse (FWA). In fact, throughout 2025 and into 2026, Cotiviti’s own investigators observed a rise in questionable billing patterns among ADH providers, particularly involving basic and enhanced service levels.

In this edition of FWA Insights, we examine how Cotiviti’s investigators identified outlier providers, what their analysis uncovered, and how health plans can strengthen oversight of ADH billing.

Uncovering outlier ADH billing patterns

With proactive data mining, Cotiviti’s special investigations unit (SIU) initially flagged several ADH providers billing disproportionately high volumes of S5101 (adult day care, per half day) and S5102 (adult day care, per diem) services. Compared with peer organizations, these providers were statistical outliers. Cotiviti escalated its early findings to the client, which agreed that further investigation was warranted.

A preliminary review of claims data found excessive billing across both basic and enhanced levels of ADH services. Cotiviti’s at‑risk estimate from initial analysis totaled over $3 million, prompting a deeper dive into provider behavior, regulatory compliance, and potential abuse of state‑funded benefits.

What Cotiviti’s analysis revealed

Using Cotiviti’s integrated FWA solutions, SIU investigators evaluated two years of professional claims data and conducted comparative analyses to identify concerning patterns. Because modifiers vary across health plans, investigators evaluated code‑modifier combinations alongside utilization to detect abnormalities specific to each provider. 

Key findings included:

• Providers billing adult day services at levels far beyond peers, with modifiers suggesting enhanced care needs.
• Patient populations younger than state‑required thresholds, indicating noncompliance with ADH eligibility rules.
• Geographic patterns suggesting potential recruitment of individuals experiencing homelessness to inflate service volume.
• Possible misuse of enhanced ADH codes, which require strict staffing, supervision, and clinical documentation standards.

Investigators supplemented their claims analysis with external resources, including state heat maps of populations experiencing homelessness, which assisted in identifying environments where patient recruitment may have been occurring.

Case study one: Basic-level ADH service

One provider billed 100% of members under basic ADH services, an immediate red flag. The external heat map tool indicated a notable concentration of unhoused people near the facility. Further analysis found:

• Roughly 70% of members were under age 55, violating state requirements that at least half of participants meet age criteria.
• No prior authorization was required for these services, reducing visibility into clinical appropriateness.
• Patterns consistent with potential recruitment of patients experiencing homelessness to inflate daily attendance and reimbursement.

Given these risk factors, the provider was flagged as a high‑priority audit candidate.

Case study two: Enhanced level ADH services

Another ADH center billed approximately 70% of its members at the enhanced care level, a notable deviation from peer norms. Enhanced ADH services require:

• A minimum of one registered nurse for assessments
• A full‑time licensed practical nurse under RN supervision
• Documented skilled care needs, such as dementia, Alzheimer’s disease, stroke‑related impairments, or chronic developmental conditions
• A 1:4 staff‑to‑patient ratio
• Prior authorization for the service level (in many cases)

Despite these stringent requirements, Cotiviti observed the same age‑compliance issue as the basic‑level outlier: roughly 70% of members were under age 55. The high volume of enhanced‑level claims, combined with clinical and regulatory discrepancies, warranted further medical record review.

Recommendations for mitigating ADH‑related FWA

To help health plans reduce exposure and more effectively detect improper billing within adult day health services, we recommend taking a proactive, analytics‑driven approach. Plans should routinely analyze S5101 and S5102 billing trends to identify providers whose utilization patterns fall outside peer benchmarks, then follow up with targeted medical record audits to confirm whether staffing levels, clinical needs, and age‑based eligibility requirements are being met. This ensures that documentation supports the level of care billed and allows plans to address inappropriate payment behavior before it becomes systemic.

Strengthening provider education is equally important. Clear guidance on the correct use of ADH billing codes, modifiers, and documentation requirements can reduce unintentional errors and improve provider compliance, particularly for enhanced levels of care that carry stricter criteria. Consider incorporating external tools—such as state heat maps—to add helpful context during investigations. These resources can reveal geographic patterns associated with potential patient recruitment or misuse of ADH services, supporting more targeted, efficient, and informed SIU decision‑making.