Healthcare fraud is a significant problem greatly affecting the quality of healthcare services. Manual auditing of insurance claims extends to the delay in finding fraudulent behaviors causing huge financial loss and also putting the patients' health conditions at risk. Since the past decade, the automation of fraud detection using machine learning techniques has become a prominent research topic. Several automated fraud detection systems using machine learning techniques have been proposed so far. However, developing a healthcare fraud detection system that is adaptive to the systematic changes is still missing. Therefore, in this article, we develop primitive sub peer group analysis (PSPGA) for identifying the suspicious behaviors in health insurance claims. PSPGA is inspired by peer group analysis, a popular unsupervised learning technique, which identifies suspicious behaviors based on local pattern analysis. PSPGA distinguishes between the concept drifts and the sudden drifts and flags the sudden drifts as fraudulent. Moreover, PSPGA makes the fraud detection system adaptive to the concept drifts by considering the updates for peer groups over time.
K E Y W O R D Sconcept drifts, healthcare fraud detection, peer group analysis, primitive peer groups, sub peer groups, sudden drifts
INTRODUCTIONFraud is considered as an unlawful benefit gained by profitable organizations or individuals which causes unlawful losses to the carrier organizations. 1 Fraud has become a precarious problem in several domains such as healthcare, 2 banking, 3 insurance, 4 and telecommunications. 5Among these domains, fraudulent behavior in healthcare is not only instigating the rise in the cost of healthcare services but also putting people's lives at risk. 6 The National Institutes of Health defines 'healthcare fraud' as a deliberate misrepresentation of the claims by an organization or an individual that could result in the procurement of illegitimate benefit to them and cause the loss to the healthcare system. 7 Health insurance schemes funded by insurance carriers such as government or private health organizations are supposed to serve the underprivileged and elderly population.However, the huge transactions of healthcare costs tend to be undesirable behaviors by the parties involved in the healthcare system. In the UnitedStates of America, USD 50 billion worth of fraudulent transactions happened out of USD 604 billion in healthcare sector in 2013. 8 In 2018, USD 3.6 trillion was spent on health care in the United States, representing billions health insurance claims. As per the National Health Care Anti-Fraud Association, the financial losses due to health care fraud are in the tens of billions of dollars each year. A conservative estimate is 3% of total health care expenditures, while some government and law enforcement agencies place the loss as high as 10% of our annual health outlay, which could mean more than $300 billion. 9,10 According to the statistics of the Department of Health and Human Services (HHS), 11 the total US M...
