How BCBS companies stop fraud before costs rise
You may never see the fraud behind rising healthcare costs, like fake companies or phantom medical supplies. But you feel its impact. It’s estimated that healthcare fraud costs the U.S. tens of billions of dollars each year. Fraud, waste and abuse drive up healthcare costs and pull resources away from patient care, and in the case of programs like Medicare and Medicaid, it wastes valuable taxpayer money. That’s why Blue Cross and Blue Shield (BCBS) companies work every day to stop suspicious activity, protect members and taxpayers and ensure the healthcare system works better for all of us.
Fighting fraud across the Blue System
“Healthcare fraud isn’t a victimless crime. Every dollar lost diminishes affordability and undermines trust in the system,” says Eddie Winkley, who leads fraud prevention for the Blue Cross Blue Shield Association (BCBSA) federal employee program.
The Blue System fighting fraud together
To protect members and taxpayers, BCBS companies are on the front lines of fraud prevention. This work starts locally with dedicated Special Investigations Units (SIUs) that understand community-specific markets and provider patterns, including how billing and treatment trends align with typical patient needs. These highly specialized teams bring together coders, fraud examiners and auditing experts who use data analytics to identify billing patterns that don’t align with patient needs.
BCBSA brings all these efforts together through a national anti-fraud hub connecting all BCBS companies with federal law enforcement and government agencies. This enables intelligence to be shared the moment a scheme is identified. So, when one BCBS company spots a problem, the insight can quickly benefit all.
Together, this helps us flag suspicious billing, conduct reviews before payment and stop fraudulent claims before money is wasted.
Our coordinated approach played a key role in stopping one of the largest fraud schemes ever uncovered — known as Operation Gold Rush. Local SIUs noticed unusual billing tied to durable medical equipment (DME), such as catheters and glucose monitors billed in massive volumes for items that were never requested nor delivered. SIUs shared this information across the Blue System and with federal law enforcement and government partners, directly advancing a Department of Justice investigation. This effort disrupted an international scheme involving $10.6 billion in fraudulent claims and led to criminal charges against 11 people. BCBS companies flagged the activity and halted payments before the money was sent overseas and became unrecoverable.
Inside fraud prevention at Highmark BCBS
Highmark BCBS created a team that works to detect fraud earlier in the process, known as the Provider Validation team. It reviews all claims from out-of-network DME providers before payment, as DME is a well-known area of abuse. Within a year, the team identified 700 bad actors and blocked $30 million in fraudulent claims from being paid.
Additional steps to fight fraud
BCBSA wants to build upon our strong partnership with federal authorities to do even more to stop improper payments without creating administrative burdens or disrupting access to care.
In a recent letter to the Centers for Medicare and Medicaid Services, we emphasize that prevention, data sharing and early intervention are crucial to addressing fraud at scale across federal health programs — including clearer, timelier alerts to help protect these important sources of coverage. One of our most urgent priorities: When the federal government identifies a fraudulent provider and stops paying them, Medicare Advantage and Medicare Supplement carriers should be notified immediately, giving them the information needed to halt payments and prevent bad actors from collecting even after they’ve been flagged.
The reverse is true as well — when plans identify a criminal scheme, we should have the ability to stop payments to better safeguard taxpayer dollars before losses accumulate rather than pursuing costly recoveries after the fact. In the commercial market, we raise concerns about fraud and abuse in the surprise billing arbitration process and recommend safeguards to block ineligible disputes, improve transparency and hold providers and their vendors accountable.
As fraud schemes evolve with the use of advanced technologies, BCBS companies continue to strengthen analytics and front‑end controls to stay ahead of emerging threats. Artificial intelligence is changing the equation — both as a tool for detecting fraud faster and as a risk if deployed without appropriate guardrails. We’re working closely with federal partners to ensure AI is used responsibly on both sides.
When fraud is stopped early, everyone wins. By working together across the Blue System, we can protect benefits, reduce waste and keep coverage affordable.
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