The Rising Threat of Long-Term Care Fraud

Long-term care (LTC) fraud has rapidly evolved from a niche concern into a major industry challenge. According to the Coalition Against Insurance Fraud (CAIF), LTC claim payments are expected to climb to $40 billion annually within the next decade. That sheer volume of dollars flowing into home care, assisted living, and caregiver services significantly widens the target for fraud.

Long-term care itself covers a broad range of services that help individuals with chronic illnesses, disabilities, or cognitive impairments perform everyday activities. These services can include in-home caregiving, assisted living, skilled nursing, adult day care, and even support with instrumental activities of daily living like meal prep, transportation, and medication management. Because much of this care is delivered in private homes or loosely regulated environments, it creates opportunities for inflated billing, fabricated services, and organized caregiver schemes.

Why Long-Term Care Fraud is Growing

Long-term care fraud isn’t just happening, it’s accelerating. A survey of the long-term care industry found that fraud, waste, and abuse are already embedded in the line. As the Society of Actuaries (SOA) put it:

It would be naïve to believe that fraud, waste and abuse haven’t found their way into this industry.

LTC sits at the crossroads of high-dollar claims, limited oversight, and a vulnerable population. Even though many states have insurance fraud bureaus, the SOA points out that LTC remains relatively new ground for fraud detection, especially compared to auto, workers’ comp, or health lines. That means oversight is still catching up, and fraudsters know it.

Example:

In a published case study, an insured claimed 16 hours of home health care per day. On paper, everything looked legitimate. It included caregiver signatures, service logs, and receipts. However, a deeper review revealed that the “receipts” were exact duplicates, submitted repeatedly to justify inflated, nonexistent caregiving hours.

This type of fraud thrives in long-term care precisely because so much of the service occurs behind closed doors, with limited third-party verification and high-dollar reimbursements at stake. It’s a reminder that even documentation that appears complete can mask significant billing manipulation.

Long-Term Care Fraud Red Flags

As long term care fraud expands, recognizing the early warning signs becomes essential.

Hours That Don’t Match Reality

Claims for 24-hour or near round-the-clock care may look plausible on paper but often fall apart under scrutiny. The Office of Inspector General (OIG) has repeatedly found discrepancies between billed hours and what caregivers could realistically provide, noting that unverifiable home-health visits are a recurring problem in federal audits. CMS improper-payment reviews have similarly flagged cases where claimed hours did not match observed activity or scheduling records.

Higher Level Services Billed for Basic Care

Upcoding, which is billing for “skilled nursing” when custodial or companion care is delivered, is one of the most common healthcare fraud schemes. CAIF highlights upcoding as a major driver of excessive healthcare spending, including in elder care and home-care settings. The Department of Justice has also settled multiple cases involving home-health agencies that billed for nursing services they were not licensed or staffed to provide.

Services Never Delivered or Exaggerated

Phantom visits, inflated hours, and fabricated shifts are classic LTC fraud tactics. OIG audits have documented home-health cases where services were billed but no corresponding documentation, GPS timestamps, or beneficiary confirmation. These schemes thrive in LTC because much of the care occurs behind closed doors without third-party witnesses.

Duplicate or Recycled Billing Records

Another common red flag is documentation that looks copy-and-pasted: identical handwriting across “different” caregivers, reused templates week after week, or receipts that appear manufactured. CAIF’s long-term care fraud resources note that recycled documentation is frequently used to justify inflated hour counts or repeated visits that never occurred.

Unusual Provider Behavior

Aggressive marketing, promises of free care, and caregivers enrolling seniors with little or no assessment can signal fraudulent intent. CMS and OIG have issued multiple alerts about high-pressure or deceptive marketing practices, especially when targeting older adults, noting that such tactics often correlate with elevated fraud risk across healthcare programs.

Sudden Spikes in Claim Activity

A facility or provider that historically billed modestly but suddenly begins submitting significantly higher hours, more caregivers, or more complex services should be reviewed. National Health Care Fraud and Abuse Control (HCFAC) reports show that abrupt billing spikes are one of the earliest indicators investigators look for across healthcare fraud cases.

Third Party Marketers and Unsolicited Enrollements

Fraud rings frequently target seniors directly through seminars, door-to-door outreach, or facility visits. During Operation CARE, the OIG documented how fraud groups visited senior facilities, collected Medicare or Medicaid numbers, and used them to bill for unnecessary or nonexistent services. While the operation focused on government programs, the same recruitment tactics increasingly lead to questionable long-term care claims in the private market.

Weak Documentation and Lack of Medical Necessity

Strong LTC claims depend on accurate assessments, care plans, and service logs. Missing, inconsistent, or vague documentation is one of the strongest early warning signs. CAIF emphasizes that poor documentation is a major enabler of undetected LTC fraud and overbilling.

Vulnerable Insureds

Older adults, particularly those with cognitive impairment, are more susceptible to manipulation by caregivers, providers, or even family members. This dynamic mirrors trends highlighted by CAIF and OIG, which both note that populations with diminished capacity appear disproportionately in confirmed fraud cases.

Financial Motivation and High Coverage

A sudden claim shortly after increasing coverage, or during a period of financial strain, may signal opportunistic fraud. This pattern is well-documented across other insurance lines, including life, health, and disability.

Want to stay ahead of the rising threat of LTC fraud? Reach out to us today.

Check out our sources:

“Background.” Comprehensive Error Rate Testing (CERT), Centers for Medicare & Medicaid Services, www.cms.gov/data-research/monitoring-programs/improper-payment-measurement-programs/comprehensive-error-rate-testing-cert/background.

“Common LTC Fraud Schemes Targeting Vulnerable Seniors.” InsuranceFraud.org, Coalition Against Insurance Fraud, insurancefraud.org/long-term-care-fraud-schemes/.

Delta Group. “Uncovering Fraud in a Long-Term Care Claim.” Case Study, Delta Group, www.deltagroup.net/case-studies/uncovering-fraud-in-a-long-term-care-claim.

“Long Term Care Scams.” InsuranceFraud.org, Coalition Against Insurance Fraud, insurancefraud.org/long-term-care-scams/.

Office of Inspector General, U.S. Department of Health and Human Services. Medicare Home Health Agency Provider Compliance Audit: HRS Home Health. 2025, oig.hhs.gov/reports/all/2025/medicare-home-health-agency-provider-compliance-audit-hrs-home-health/.

Office of Inspector General, U.S. Department of Health and Human Services. Notices: Medicare Improperly Paid Acute-Care Hospitals for Inpatient Claims Subject to the Post-Acute-Care Transfer Policy Over a 4-Year Period. Report No. A-09-23-03016, Sept. 2023, oig.hhs.gov/reports/all/2023/92303016.pdf.

“2023 Medicare Fee-for-Service Supplemental Improper Payment Data.” Centers for Medicare & Medicaid Services, Nov. 2024, www.cms.gov/files/document/2023-medicare-fee-service-supplemental-improper-payment-data.pdf.