Fraud is widespread and not limited to public insurers

One type of fraud that is hard to prevent is when legitimately enrolled care providers bill insurers for services that were never rendered. In some cases, “patients” collude with providers in exchange for kickbacks, as in the case of Texas pharmacist Richard Rose and four co-conspirators who paid individuals to obtain opioid prescriptions that the conspirators subsequently trafficked. In other cases, patients’ Social Security Numbers are stolen and used by providers to bill for services that were never rendered.

Georgetown University policy analyst Natalie Lawson points out that “nearly all Medicaid fraud is perpetrated by providers, not enrollees.” Lawson refers to the federal HHS Office of the Inspector General report in noting that every state has a Medicaid Fraud Control Unit, and that these MFCUs have been instrumental in recovering billions of dollars from perpetrators.

The Health Insurance Portability and Accountability Act of 1996 (Privacy Laws) established health care fraud as a federal crime, as well as mandating the creation of the Health Care Fraud and Abuse Control program, which – along with other programs created over the past 30 years – helps the federal government prevent fraud through data analytics. For example, CMS uses its own Fraud Prevention System on all Medicare fee-for-service claims. “Similar to the fraud detection technology used by credit card companies,” the agency website explains, “FPS applies predictive analytics to claims before making payments in order to identify aberrant and suspicious billing patterns.”

During the Obama administration, federal agencies began working with private insurers and state agencies in the newly created Healthcare Fraud Prevention Partnerships. “To detect and prevent payment of fraudulent billings,” Centers for Medicare and Medicaid (CMS) explains, “HFPP participants exchange information and best practices across the public and private sectors.”

Private insurers are also vulnerable to fraud. Some examples are available in the “hall of shame” list released annually by the Coalition Against Insurance Fraud (InsuranceFraud.org). In 2025, Dr. Jorge Zamora-Quezada, falsely diagnosed patients with rheumatoid arthritis for nearly 20 years, defrauding federal programs as well as private insurer Blue Cross Blue Shield. Zamora-Quezada took nearly $30 million in fraudulent payments from insurers and was eventually compelled to forfeit 13 properties, a jet, and a Maserati. However, no single view of insurance fraud vulnerabilities across public and private insurers exists for the public or the press, limiting public understanding of the issues involved and the credibility of fraud estimates provided without context.

Commercially available products

Consulting and tech vendors are also pitching solutions to the problem of fraudulent patient applications, which can underlie improper payments. One such company is AmeriTrust Solutions, headed by CEO Peter Justen, a serial entrepreneur whose other companies include MyBizHomepage and Washington Capital Partners. AmeriTrust sells application processing systems to health care providers, including hospitals and hospital systems. The company’s enrollment and application software includes Medicaid and CHIP (Children’s Health Insurance Program) packages, but not Medicare.

AmeriTrust’s products are aimed at preventing fraud at the point of individual enrollment, rather than provider-driven fraud. The substantial problem of fraudulent billing for durable medical equipment such as wheelchairs, for example, is not a problem AmeriTrust addresses.

The bulk of AmeriTrust’s customers are rural hospitals seeking a solution for the problem of uncompensated care. “Seventy-five percent of [rural hospitals] are operating in the red,” Justen says. “What happens is Susie comes in and gets care, and doesn’t have insurance, and the hospital either writes it off or chases her for 30 years.”

In states where it has clients, AmeriTrust works with Medicaid agencies to reduce the list of questions applicants have to answer – which can number in the hundreds – to about 20 essential items that the company then uses to fill in the rest of the application via automated queries of state-approved databases like Lexis-Nexis and Equifax. For example, an applicant provides his name, address, and Social Security number; AmeriTrust uses that information to look up his income.

The next step involves the applicant verifying the data that AmeriTrust found. Applicants are free to accept the data in the AmeriTrust-populated fields, or to edit them.

“Here’s where verification comes in,” Justen explains. “Let’s say Susie says she [receives income low enough to qualify for Medicaid], but Equifax tells us [she is employed and receives a salary above the Medicaid threshold]. [If] she submits the application with the lower figure, we flag that information for the state and tell them to look into that. Maybe she’s no longer employed, or maybe she’s committing fraud. We flag the potential for fraud before it happens, so the state can look into it.”

The appeal of the AmeriTrust product for medical providers is that the company “embeds the application process – which takes about 12 minutes – into the appointment-setting process or bedside.” Although “[AmeriTrust] can’t approve them,” Justen acknowledges, if the patient begins the enrollment process at the point of care and end up enrolled by the state, the provider will be paid.

In addition to ensuring that providers of care to legitimate Medicaid applicants receive payment, the AmeriTrust product can help states deny applications that involve enrollee fraud, e.g., individuals who earn too much to qualify for Medicaid, or who are applying in a jurisdiction where they do not actually live, but where benefits are more generous.

Justen estimates that 75 percent of applications processed by his company are “green” – meaning all fields are accurately populated and ready for state Medicaid programs approval – although he says that rates vary from state to state and from county to county. (The company does not yet serve clients in Pennsylvania.)

Fifteen percent of applications are flagged by AmeriTrust as “yellow” (potentially fraudulent), with another ten percent are labeled “red” (high likelihood of fraud). “We tell the state where to look, and what we found,” Justen says. Timelines for state processing of “yellow” and “red” applications vary, depending on the state’s technological sophistication and private sectors.”