Remaining on guard for fraud in a time of crisis

As government agencies rapidly respond to COVID-19, they may also experience shifts in claims patterns and increased potential for fraud, waste and abuse.

By | 3 minute read | May 26, 2020

woman at home on laptop

As government agencies respond to the COVID-19 crisis, health and human services enters a new environment of delivery and funding mechanisms. In a time of crisis, destabilization and change, criminals often look for opportunities for fraudulent activity.

Medicaid and the Children’s Health Insurance Program (CHIP) provides health coverage to millions of Americans.1 While these benefits may vary by state, there are several areas of coverage and benefits related to COVID-19.2

What areas are likely to see significant changes with COVID-19 and potentially become more vulnerable to fraud, waste and abuse? In my opinion, these are a few examples:

Routine care and pharmacy. As focus shifts to immediate capacity for COVID-19, clinical resources on the front lines are delaying non-essential appointments and services. Healthcare providers are refilling routine prescriptions without seeing patients for face-to-face visits.3

What to watch for? Unusual, out-of-policy shifts in pharmacy claims volume, especially for controlled substances. Medical transportation claims with no related provider visit. Non-emergency medical and dental visits should decrease.

Home health and telehealth. As more individuals remain in place, we have seen a shift in home health care for at-risk individuals. Expansion of telehealth through use of 1135 waivers will facilitate an uptick in the use of telehealth services for routine care.4 State Medicaid programs can cover telehealth, and COVID-19 is accelerating adoption by state agencies.

What to watch for? Compliance with new telehealth policies and guidelines, which may differ from state to state. Electronic visit verification can help maintain the integrity of home health claims. Monitor mental health providers who continue to provide in-person group therapy during the pandemic.

 Lab services. Lab services are a mandatory benefit and are covered in all states5, and there is an influx of orders related to COVID-19 increase.

What to watch for? Watch out for additional unnecessary tests being added to standard COVID-19 orders. Pay special attention to the respiratory panels billed in conjunction with COVID-19.

 Durable Medical Equipment (DME) claims.States may remove prior authorization requirements from some DME supplies. Demand for certain DME supplies, such as masks and gloves, will increase substantially.

What to watch for? DME suppliers marketing kits of materials – such as masks, gloves and hand sanitizer – to vulnerable populations. Check for an increase of DME supplies for which prior authorization has been removed.

 New HCPC/CPT Codes.New codes have been established for COVID-19 testing. Whenever new codes are established, and written policy is limited, monitoring the utilization of these codes will be very important.

What to watch for: Special attention may be needed for cases in which providers performed the COVID-19 test without a prior flu test, excessive testing in a region where the number of cases was low, or where tests were not readily available, or multiple tests given after a positive result has been received.

Routine dental services.Early in the pandemic, several states restricted dental services to emergencies only, but recently many states have relaxed mandates to allow treatment if dental conditions could worsen. Broadly written policies leave a lot of room for individual interpretation.

What to watch for? Billing for dental services that are not essential and can be delayed without running an undue risk of harm. This can also apply to other routine services, such as speech therapy and vision exams.

 Newly enrolled providers. With the loosening of provider enrollment guidelines, new providers have entered the provider community with less strict enrollment guidelines.

What to watch for: Newly enrolled providers whose income rises quickly – monitor these providers for at least one year.

These are just a few examples of service areas that could be affected by the COVID-19 crisis. Claims flow and budgets can reflect these and other unusual shifts in this unprecedented public health moment. I believe our state agencies will be agile and diligent about protecting the integrity of Medicaid, as the healthcare delivery system adapts to the changing urgency and types of patient needs COVID-19 presents.

The global health community needs all of us to fight COVID-19. We’re ready to help.

Learn how IBM Watson Health can help governments take on the impact COVID-19 is having on their communities.



  2. Ibid
  3. DEA Diversion Control Division Guidance, March 20, 2020 “The Controlled Substances Act and DEA’s implementing regulations prohibit the refilling of schedule II-controlled substances. … With respect to schedule III through V controlled substances, which can be refilled under the CSA, some states have issued orders allowing pharmacies to dispense early refills of prescriptions.”