FWA Insights: The top fraud schemes of 2025

Throughout 2025, federal and state authorities uncovered schemes involving everything from unnecessary lab tests to fraudulent telehealth services and hospice care. These cases highlight the evolving tactics bad actors use to exploit vulnerabilities—and the urgent need for payers to stay vigilant. While the methods vary, the goal is the same: profit at the expense of patients and payers.

In our latest edition of FWA Insights, we break down three major categories of FWA—lab testing, home health and hospice, and telehealth—with real-world examples from 2025 and recommendations for mitigating these risks.

FWA in lab testing

Lab testing fraud remains one of the most pervasive forms of healthcare fraud, largely because of the high reimbursement rates for certain tests and the ease of exploiting billing codes. Bad actors often target tests like urine drug screens and respiratory pathogen panels, submitting claims for services that were never performed or were medically unnecessary. These schemes frequently involve kickbacks, falsified documentation, and coordination among multiple entities, including labs, physicians, and sometimes home health agencies. The financial impact is staggering, with some cases reaching hundreds of millions of dollars, and the ripple effect includes increased premiums and reduced trust in legitimate providers.

Here are three major examples from 2025:

• $500M COVID-19 testing scheme: Two people billed Medicare, Medicaid, TRICARE, and private insurers for COVID-19 tests that were never conducted, using patient insurance data collected under the guise of “free” testing.

• $15M respiratory pathogen panel fraud: A South Carolina man allegedly billed Medicare for unnecessary respiratory pathogen panel tests, many of which were never ordered by a physician—and some for patients who had already died.

• $12M hospital lab fraud: Texas hospital executives submitted false claims for urine drug tests, claiming patients were treated in their facilities when no such services occurred.

Health plans can reduce lab testing fraud exposure by verifying valid CLIA certification, monitoring for outlier billing patterns, and flagging impossible day scenarios or weekend testing that defy operational norms. In addition, data mining for providers billing both presumptive and definitive tests on the same date—or using a single definitive code for all patients—can uncover improper practices. These steps help ensure testing aligns with Centers for Medicare & Medicaid Services (CMS) and CLIA regulations and is medically necessary, protecting plans from inappropriate claims.

Home health and hospice fraud

Home health and hospice programs are designed to provide compassionate care for vulnerable populations, but they have become prime targets for fraud. These schemes often involve enrolling patients who do not meet eligibility criteria, billing for services never rendered, or inflating the level of care provided. Providers engaging in these practices exploit the complexity of regulations and the difficulty of verifying services delivered in home settings. Beyond financial losses, these schemes can harm patients by diverting resources away from legitimate care and eroding trust in critical programs.

• $87M hospice fraud: Three women in Texas allegedly enrolled patients without terminal diagnoses, billing Medicaid and Medicare for hospice care while delivering only basic supplies like adult diapers.
• $8M lab and home health kickback scheme: A Massachusetts lab allegedly conspired with a home health agency and physician to submit false claims for unnecessary services and tests.
• $7.3M group home double billing: A Minnesota man allegedly billed Medicaid for personal care services never provided and concealed ownership of a prohibited business by using a family member’s name.

FWA schemes in home health and hospice care are growing more sophisticated, requiring payers to strengthen detection capabilities. Integrating advanced technology—such as machine learning—into both prepay and postpay solutions, combined with human expertise, enables proactive identification of suspicious patterns before claims are paid. This approach not only helps prevent and manage fraud but also reduces the burden on special investigations units, ensuring resources are used efficiently while safeguarding plan integrity.

Telehealth fraud

Telehealth has dramatically improved access to care, but its rapid expansion has also created new opportunities for fraud. Common schemes include billing for services not rendered, approving unnecessary tests, and leveraging telemarketing to generate fraudulent claims. Bad actors often exploit relaxed regulations introduced during the COVID-19 pandemic, as well as the difficulty of verifying virtual encounters. These schemes not only drain healthcare resources but also undermine confidence in telehealth as a legitimate care delivery model.

• $6.6M cancer genetic testing scheme: A Louisiana physician allegedly approved genetic tests for Medicare patients via telemedicine without ever evaluating them, receiving kickbacks for approval.
• $2.7M telehealth genetic testing fraud: A UK citizen allegedly ran a telemedicine company that submitted false Medicare claims for genetic tests, receiving over $600,000 in reimbursements.
• $11K psychotherapy fraud: A Miami psychotherapist, previously convicted of a $70M fraud, billed Medicaid for telehealth sessions despite being barred from federal programs.

While recent audio-only coding updates provide an added safeguard, health plans must remain vigilant against improper telehealth billing. Ensuring accurate documentation, including the correct place of service, is critical to prevent overbilling, underbilling, or impossible day scenarios. Plans should also review all 2025 CPT and HCPCS code updates and confirm that medical records fully support billed services. Because telehealth documentation can involve nuanced details that technology alone may miss, thorough audits and careful scrutiny are essential to mitigate FWA risk.

Cotiviti’s recommendations for mitigating FWA

To effectively combat fraud, waste, and abuse, payers must take a proactive, data-driven approach. Advanced analytics and predictive modeling allow organizations to identify anomalies in billing patterns and flag high-risk providers before fraudulent claims are paid. Moving beyond retrospective audits, integrated payment integrity programs enable prepayment interventions that catch errors early, reducing administrative burden and preventing improper payments before they occur.

Equally important is a holistic view of data and strong collaboration with providers. Cross-channel monitoring—combining claims, clinical, and telehealth data—helps uncover patterns that span multiple service types, strengthening detection capabilities. At the same time, educating providers on compliance requirements and best practices fosters transparency and reduces inadvertent errors. Together, these strategies empower payers to stay ahead of evolving fraud schemes and protect both financial resources and patient care.

Webinar: Navigating regulatory changes and FWA schemes in 2026

Dive deeper and stay ahead of potential FWA patterns that may arise in 2026. Don’t miss our latest on-demand Payment Integrity Pulse webinar as we discuss key regulatory changes and the trending schemes found in Cotiviti data that may be affected by these actions.