Top Healthcare Fraud Schemes Of 2020

Healthcare fraud, waste, and abuse charges cost healthcare payers an estimated $300 billion every year. The sheer volume and complexity of healthcare claims and medical coding makes clerical errors and outright fraud commonplace in the healthcare sector.

Federal agencies aggressively pursue healthcare fraud investigations with some success. For example, the Department of Justice (DOJ) recovered $1.8 billion in fraudulent or false healthcare claims in fiscal year 2020. However, the amount these investigations recover is a drop in the bucket compared to overall losses. Healthcare payers can’t depend on federal or state regulatory agencies to protect their bottom line. 

A strong payment integrity partner like Alaffia Health can work directly with you to prevent and recover overpayments — and keep your organization up-to-date on healthcare billing fraud trends.

Let’s look back at some of the leading healthcare fraud trends from 2020. 


A recent study shows the use of telehealth services in 2020 increased 38 times over the pre-coronavirus baseline. At the height of the lockdown period, 32 percent of office and outpatient visits occurred via telehealth, before settling down to a 13–17 percent rate by the end of the year. The pandemic drove much of this explosive growth, but a combination of technological advances and regulatory changes made it possible. Many observers expect telehealth to continue growing in popularity in the future. 

This creates additional access to healthcare for many individuals — and greater efficiency for healthcare providers. However, it also creates new possibilities for improper or fraudulent billing. Since telehealth is a relatively new field, many medical billing and coding specialists may be unfamiliar with the different codes and modifiers. There’s also ample opportunity for bad actors to leverage unfamiliarity with telehealth billing procedures in order to commit fraud. 

In October 2020, the Department of Health and Human Services announced the results of Operation Rubber Stamp, a massive healthcare fraud investigation involving $6 billion in fraud losses. Two-thirds of the fraud losses in the investigation were allegedly connected to telehealth. DOJ investigators arrested 345 people for unnecessary testing, useless equipment orders, and improper medication prescriptions. The accused individuals allegedly arranged these procedures through unacceptably brief or sometimes nonexistent telephone consultations.

Lab Testing

In June 2020, the DOJ, in association with law enforcement agencies, arrested 10 people for allegedly operating a pass-through billing fraud scheme through several rural hospitals in the deep south. Conspirators negotiated higher reimbursement rates for in-house testing, then billed private payers $1.4 billion for unneeded laboratory testing. The fraud ring, which included hospital administrators and medical billing specialists, laundered their proceeds through sophisticated means. 

Pain Management 

The DOJ announced charges of healthcare fraud against a New Jersey physician in November 2020, after he allegedly billed healthcare payers for services he did not perform. In many cases, he billed payers for over 24 hours’ worth of his services in a single day. In others, he wasn’t even in the country when he supposedly performed the care he billed for. Investigators allege over $24 million in fraudulent bills charged to healthcare payers.

False Procedures and Prescriptions

The Department of Justice charged six physicians in California with allegedly defrauding healthcare payers of over $48 million. One doctor alone racked up $20 million in fraudulent charges by billing payers for removal of growths and drug injections that he did not perform. Authorities also charged eight physicians in Tennessee and Alabama with fraudulently billing over $41 million worth of unnecessary procedures and prescriptions, including restricted opioids.

A Proven Partner In Healthcare Payment Integrity

$40 million here, $24 million there — federal investigators produce some big numbers. But it’s important to keep your eye on the ball: 

Every year, healthcare payers lose $300 billion (estimated) to fraud, waste, and abuse. 

Regulators help clear bad actors from the healthcare sector. However, the amount they recover is tiny compared to the total amount healthcare payers lose to fraud. A strong payment integrity partner can prevent or recover overbilling from fraudulent charges or clerical errors — and proactively protect your bottom line. 

With our advanced payment-integrity-as-a-service technology platform and expert team of medical fraud detection experts, Alaffia Health is the partner you’ve been searching for. We analyze claims and documentation to prevent or recover overpayments, plus we only get paid when we achieve results. So, set up a call today and learn how we can help you stop future healthcare fraud.