Medical Fraud: How to Spot Patient vs. Provider Red Flags

It starts with a routine bill.

A quick office visit, a follow-up appointment, maybe a therapy session that never actually happened. One line item turns into a dozen. Multiply that by thousands of providers, across millions of claims, and suddenly, you’ve got a multi-billion dollar problem draining the system.

Medical provider fraud doesn’t just impact insurance companies. It drives up premiums, clogs the system, and leaves honest patients and providers picking up the slack.

So how do you spot it?

In this post, we’re pulling back the curtain on the most common fraud schemes, the red flags you shouldn’t ignore, and the right tools you can start using today.

What is Medical Provider Fraud?

Medical fraud generally falls into two camps: patient fraud and provider fraud. While both can be costly, provider fraud tends to have a far larger dollar and scale impact.

Patient Fraud

Believe it or not, patient fraud is less common than provider fraud, but still a headache for adjusters like yourself. Patient fraud usually involves exaggerating or faking symptoms, identity swapping, or participating in staged accidents.

What are some common tactics?
• Malingering: Patients pretend injuries are worse or last longer than they do.
• Impersonation: Using someone else’s identity to receive care.
• Doctor Shopping: Visiting multiple doctors to get redundant or unnecessary prescriptions.

Provider Fraud

Healthcare providers are in a unique position of trust and authority, and unfortunately, some use that to manipulate the system for profit. These schemes are often more sophisticated and coordinated.

What are some examples?
• Billing for services not rendered to gain more from the insurance company
• Charging for a more expensive service than was performed AKA upcharging
• Performing unnecessary procedures
• Kickbacks and referral schemes

The Truth of MRI Fraud Schemes

Radiology fraud, particularly involving MRIs, is a hotbed of deception. Here are a few specific schemes to watch:

Farming Out

Providers who don’t own MRI machines send patients elsewhere, pay a small fee, then bill the insurer thousands as if they provided the service themselves.

Three-Dimensional Padding

Providers bill for high-cost 3D MRI scans while only using standard 2D technology.

Services Not Rendered

If an MRI is billed but never actually performed.

Medically Unnecessary Imaging

Ordering MRIs just to increase billables, sometimes scanning unrelated body parts with no clinical justification.

Red Flags: How to Spot Medical Fraud

Whether it’s a patient or provider pulling the strings, the signs often include:

For Patient Fraud:

• Vague or inconsistent descriptions of injuries
• Delayed reporting of injuries
• Extensive treatment with minimal improvement
• Multiple claims in a short period
• Frequent provider changes

For Provider Fraud:

• Patterns of high billing for certain procedures (especially diagnostics like MRIs)
• Identical or templated medical reports
• Treatment that doesn’t align with injury severity
• Use of unlicensed personnel
• Billing for services on holidays or weekends when facilities were closed

Real-World Examples

The Phantom Clinic Ring

A provider network in California billed insurers for millions in treatments that never happened. Investigators found empty clinics and fabricated patient records. Data analysis revealed billing spikes and non-existent patient signatures.

The Skiing Malingerer

A patient with a back injury filed a claim for permanent disability. Social media showed him snowboarding three months later. Claim denied.

Tools Specific for Medical Provider Investigators

Not sure which investigation tactics work best for uncovering medical provider fraud? Here’s a quick refresher on the most effective techniques and how they help uncover what’s hiding in plain sight.

1. Surveillance

It’s an old-school but effective technique. Tracking claimants outside of appointments can uncover inconsistencies between reported injuries and real-life behavior.

2. Social Media Monitoring

Patients who claim debilitating injuries but post photos of skiing trips? That’s a red flag. Here are some expert tips to comb through public profiles for clues.

3. Independent Medical Exams (IMEs)

Having a neutral physician review a case helps validate or dispute the necessity of treatment.

4. Medical Bill Review

Auditing treatment records and billing codes can catch upcoding, unbundling, and phantom services.

Provide your team with expert resources. Contact our Investigations Department today.

Office of Inspector General. (2025, February). Medicare and Medicaid payments to providers are at risk of diversion through electronic funds transfer fraud schemes. https://oig.hhs.gov/reports/all/2025/medicare-and-medicaid-payments-to-providers-are-at-risk-of-diversion-through-electronic-funds-transfer-fraud-schemes/

U.S. Department of Justice. (n.d.). Health care fraud. Federal Bureau of Investigation. https://www.fbi.gov/investigate/white-collar-crime/health-care-fraud

Office of Inspector General. (n.d.). Special fraud alerts, bulletins, and other guidance. U.S. Department of Health and Human Services. https://oig.hhs.gov/compliance/alerts/

Office of Inspector General. (n.d.). Exclusions program. U.S. Department of Health and Human Services. https://oig.hhs.gov/exclusions/