Health care expenditures constitute a significant portion of governmental budgets. The percentage of fraud, waste and abuse within that spending has increased over years. This paper introduces the emerging area of statistical medical fraud assessment, which becomes crucial to handle the increasing size and complexity of the medical programmes. An overview of fraud types and detection is followed by the description of medical claims data. The utilisation of sampling, overpayment estimation and data mining methods in medical fraud assessment are presented. Recent unsupervised methods are illustrated with real world data. Finally, the paper introduces potential future research areas such as integrated decision making approaches and Bayesian methods and concludes with an overall discussion. The main goal of this exposition is to increase awareness about this important area among a broader audience of statisticians.

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I n this paper, we develop a simulation-based approach for two-stage stochastic programs with recourse.We construct an augmented probability model with stochastic shocks and decision variables. Simulating from the augmented probability model solves for the expected recourse function and the optimal first-stage decision. Markov chain Monte Carlo methods, together with ergodic averaging, provide a framework to compute the optimal solution. We illustrate our methodology via the two-stage newsvendor problem with unimodal and bimodal continuous uncertainty. Finally, we present performance comparisons of our algorithm and the sample average approximation method.

Summary Medical prescription fraud and abuse have been a pressing issue in the USA, resulting in large financial losses and adverse effects on human health. The size and complexity of the healthcare systems as well as the cost of medical audits make use of statistical methods necessary to generate investigative leads in prescription audits. We analyse prescriber–drug associations by utilizing the real world Medicare part D prescription data from New Hampshire. In particular, we propose the use of topic models to group drugs with respect to the billing patterns and exhibit the potential aberrant behaviours while using medical specialities as a covariate. The prescription patterns of the providers are retrieved with an emphasis on opioids and aggregated into distance‐based measures which are visualized by concentration functions. This output can enable healthcare auditors to identify leads for audits of providers prescribing medically unnecessary drugs.

In this article, we introduce staffing strategies for the Erlang‐A queuing system in call center operations with uncertain arrival, service, and abandonment rates. In doing so, we model the system rates using gamma distributions that create randomness in operating characteristics used in the optimization formulation. We divide the day into discrete time intervals where a simulation based stochastic programming method is used to determine staffing levels. More specifically, we develop a model to select the optimal number of agents required for a given time interval by minimizing an expected cost function, which consists of agent and abandonment (opportunity) costs, while considering the service quality requirements such as the delay probability. The objective function as well as the constraints in our formulation are random variables. The novelty of our approach is to introduce a solution method for the staffing of an operation where all three system rates (arrival, service, and abandonment) are random variables. We illustrate the use of the proposed model using both real and simulated call center data. In addition, we provide solution comparisons across different formulations, consider a dynamic extension, and discuss sensitivity implications of changing constraint upper bounds as well as prior hyper‐parameters. © 2016 Wiley Periodicals, Inc. Naval Research Logistics 63: 460–478, 2016