Feature Engineering for Healthcare Fraud Detection

The nature of the problem: medical fraud and abuse

(Revised on February 22, 2022)

The U.S. Department of health and human services in a pamphlet Avoiding Medicare Fraud and Abuse: A Roadmap for Physicians states “most physicians strive to work ethically, render high-quality medical care to their patients, and submit proper claims for payment,” yet “the presence of some dishonest health care providers who exploit the health care system for illegal personal gain has created the need for laws that combat fraud and abuse and ensure appropriate quality medical care.”

Medical Fraud

Unfortunately, medical fraud and abuse do exist. Medical fraud happens when a physician knowingly submits false claims or makes misrepresentations. For example, a fraudster physician may collude with a pharmacist to add more expensive medicines to the prescription claim without the awareness of the patient. Then this false drug prescription claim is submitted to the insurer for reimbursement.

Let’s see the following headline news: “Medical Imaging Companies CEO Sentenced to 5 Years in Prison for $250 Million Health Care Fraud Run Via State Workers’ Comp System”:

SAN DIEGO — The CEO of several Southern California-based medical…