What Industry Leaders Can Do To Combat Healthcare Fraud
Paulina Wierzbicka | Executive Director of SNAH Healthcare Software Management.
The U.S. Department of Justice has launched an investigation into UnitedHealth Group, the nation's largest health insurance provider, over allegations of Medicare fraud. According to an article from The Wall Street Journal (registration required), the investigation focuses on suspicions that UnitedHealth engaged in upcoding. This is a practice in which insurers record diagnoses that allow them to collect larger reimbursements from Medicare.
While UnitedHealth has denied any wrongdoing, the implications of a probe like this stretch far beyond one corporation's reputation. It brings attention to what I see as a deeply flawed healthcare system, one that is riddled with loopholes, obscured by bureaucracy and increasingly out of reach for the average American. This system has the potential to leave patients behind and inflate the cost of care for everyone.
The Real Price Of Upcoding
Medicare Advantage, a program originally designed to offer a cost-effective and flexible alternative to traditional Medicare, can be exploited. Through upcoding, insurers can extract billions in overpayments from the government. In fact, while the billing codes may make patients look sicker on paper, the services they receive likely remain unchanged.
The U.S. Department of Justice has said that healthcare fraud, waste and abuse could cost over $100 billion annually. A study from RAND (via Axios) also suggested than billions of dollars of hospital payments in 2019 were made due to an increase in upcoding. Money lost to fraud could be going toward better treatments, staffing or innovation.
The Costs To Patients
Statistics like these underscore to me how broken the U.S. healthcare system has become, especially for those who need it most. Patients are drowning in complexity. They must navigate multiple apps just to schedule appointments, understand their coverage or check medical records. Each insurance company seems to have its own labyrinth of portals and billing procedures.
Transparency is another issue: Pricing for procedures varies wildly and is often hidden until the bill arrives. Meanwhile, insured individuals may be hesitant to seek care due to expensive co-pays, high deductibles, unpredictable out-of-pocket charges, surprise bills and bureaucratic hurdles. The system isn't just failing—it's actively discouraging people from getting the care they need.
The Relationship Between Fraud And Healthcare Costs
In 2024, medical inflation rose to 3.3%, outpacing general consumer inflation. Fraud like upcoding doesn't just skim money off the top—it sets inflated benchmarks that could drive future cost increases. When insurers game the system, they can distort payment models and inflate the entire marketplace.
Every fraudulent claim becomes part of the data used to set next year's rates, creating a feedback loop where today's deceit has the potential to become tomorrow's financial burden. I believe this is one reason why healthcare in America continues to grow more expensive and less accessible, especially for vulnerable populations.
Resistance To Reform
There are solutions. A number of tools and platforms are available that can help streamline administrative processes, integrate billing systems and improve transparency. (Full disclaimer: My company offers a platform like this, as do others.) These tools have the potential to reduce inefficiencies and curb fraudulent practices.
But real change is hard to achieve. Why? The U.S. healthcare system was worth trillions of dollars (by spending) as of 2023 and in my experience, is affected by a mix of corporate power, slow-moving politics and rules, as well as a focus on making money. Even the best new ideas often struggle to make progress in Washington or with major insurance companies.
What Industry Leaders Can Do
If wrongdoing in this case is proven, I believe it could lead not only to fines and stricter oversight, but also to a shift in how Medicare Advantage is monitored and paid. Regardless of the outcome, industry players can take a few important steps to support change:
• Strengthen oversight. Fraud shouldn't take years to detect. If you're building tech in this space, partner with regulators and integrate real-time fraud detection into your infrastructure. AI, automation, pattern recognition—use the tools we already have to flag abuse before it spirals. This isn't about compliance. It's about responsibility.
• Reform payment models. I think we need to stop paying for codes and start paying for care. This shift starts at the top. If you're leading a hospital system, an insurer or a healthtech platform, ask yourself: Are we rewarding results or rewarding manipulation? Build systems that measure outcomes. Incentivize recovery. The future belongs to leaders who put value over volume—and mean it.
• Enhance transparency. Patients shouldn't have to play a guessing game. They should know what care costs, what's covered and what to expect. Leaders should stop hiding behind complexity and start leading with clarity. Publish your pricing. Share your audit data. Make it simple. Trust isn't something you demand. It's something you earn.
• Protect whistleblowers. Fraud isn't usually uncovered by audits—it's exposed by people. However, those people won't speak up unless you make it safe for them to do so. If you lead a healthcare company or tech platform, your culture should encourage integrity, not fear. Protect your whistleblowers. Back them. Because the real signals that something's wrong rarely come from the outside—they come from within.
• Support innovation. We don't need more apps. We need real solutions. Innovation has to scale. It has to simplify care, close gaps and put patients first. If you're in a position to build or fund the next generation of healthcare tools, focus on what actually reduces friction and improves access. Anything else is noise.
Healthcare fraud isn't just a financial crime—it's a betrayal of public trust. It can jeopardize care that the elderly have earned, inflate premiums for working families and drain critical resources from an already strained system.
We have a rare opportunity to examine the dark corners of a healthcare system that too often prioritizes profits over patients. Whether lawmakers, regulators and industry leaders seize this moment or squander it could help determine whether the U.S. healthcare system sinks further or finally begins to heal.
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