Tackling Healthcare Fraud With Medical Licensing

Identity verification in medical licensing is one of the most direct defenses against healthcare fraud. Verifying that providers are who they say they are isn't optional; it's the foundation of a trustworthy system.

Healthcare fraud isn't a fringe problem. It's an industry-wide crisis that costs tens of billions of dollars every year, according to the FBI. At its core, it is an identity problem: impersonation of doctors, patients, and insurers is the mechanism behind most of the losses. When you can't prove who is on the other side of a license, a claim, or a prescription, fraud scales.

Healthcare fraud is difficult to detect. Fraudulent transactions can look legitimate, and given the high costs of services and medicine and the sheer amount of paperwork involved, few transactions arouse suspicion.

Fraudsters exploit the full range of potential medical conditions and treatments to operate at scale, spreading false billings across multiple insurers and public programs like Medicare and Medicaid simultaneously, which increases their proceeds while reducing the chance that any single payer catches the pattern. In some cases, they even use records of deceased patients to fabricate claims.

Key takeaways

• ​Identity-centric fraud: Healthcare fraud is primarily an identity problem, involving impersonation of doctors, patients, and insurers to generate billions in losses.
• ​Licensing as a defense: Strengthening identity verification during the medical licensing process is a critical front-line defense against fraudulent actors.
• ​Automated verification: Proof uses biometric matching and ID scanning to ensure applicants are who they claim to be.
• ​Defensible records: Digital identity reports provide licensing boards with verifiable evidence and fraud-risk scoring for every applicant.

Fraud committed by medical providers

Healthcare fraud actors operate across every level of the system. Here are some of the most common tactics by medical professionals:

Common tactics

• ​Double billing: Submitting multiple claims for the same service to collect duplicate payments
• ​Phantom billing: Billing for services, visits, or supplies the patient never actually received
• ​Unbundling: Submitting multiple separate bills for a single service to inflate the total charge
• ​Upcoding: Billing for a more expensive or complex procedure than the one actually performed
• ​False recordkeeping: Falsifying medical records to justify fraudulent claims, diagnoses, or disability payments
• ​Unnecessary procedures: Ordering diagnostic tests or procedures for financial gain rather than medical need
• ​Misrepresenting non-covered treatments: Billing non-covered procedures as medically necessary covered treatments to obtain insurance payments
• ​Insider access sales: Selling medical system access to outside fraudsters (24% of healthcare employees report knowing someone who has done this)
• ​Kickback schemes: Exchanging referrals for payments, inflating utilization without clinical justification
• ​False diagnosis codes: Inserting fraudulent codes into medical records to generate false disability payments or reimbursements

Fraud committed by patients and others

Common tactics

• ​Patients use other people's health insurance, or allow others to use theirs
• ​Patients create fake bills for services they didn't receive, often using other people's personal information, to bill insurance companies or Medicare
• ​Fraudsters use bogus marketing schemes, convincing people to provide their health insurance ID and personal information under false pretenses, to bill for non-rendered services, steal identities, or enroll victims in fake benefit plans
• ​People impersonate medical professionals to bill for or obtain health services or equipment without a license
• ​People impersonate doctors to collect income from patients, bill insurance companies, or create online personas that generate advertising revenue
• ​People steal doctors' personal information, including Social Security numbers, to forge prescriptions for medications like Oxycodone, sometimes by hacking third-party doctor portals

Prescription fraud

• ​Forgery: Patients forge prescriptions to obtain controlled substances
• ​Diversion: Patients sell their prescription medication on secondary markets
• ​Doctor shopping: Patients visit multiple providers to obtain redundant prescriptions for the same controlled substances

What you can do

• ​Require identity verification at every licensing touchpoint, not just credential review
• ​Use biometric matching and liveness checks to confirm applicants are physically present
• ​Implement fraud-risk scoring to flag anomalies before a license is issued
• ​Create a cryptographic record (such as a Proof Identity Report) for every verified applicant
• ​Connect unverified applicants directly to a live notary for assisted verification

Like real estate fraud, healthcare fraud succeeds because of the amount of money, paperwork, and parties involved. But the financial losses are only part of the story. Healthcare fraud has a human cost: patients subjected to unnecessary or unsafe medical procedures, medical records compromised by identity theft, and legitimate insurance information used to subsidize fraudulent claims that erode coverage for everyone.

Federal enforcement is intensifying. The DOJ's Health Care Fraud Unit has executed national takedowns in consecutive years, and the pressure on organizations to prove the identity of every provider, patient, and biller is only growing.

Combating healthcare fraud through medical licensing

One of the most direct ways to combat healthcare fraud is at the point of entry: the medical licensing system. Medical licensing ensures that only qualified doctors are allowed to practice medicine. Licensing boards verify the backgrounds and qualifications of healthcare providers before they can practice, and anyone with a history of unethical behavior, including fraud, will not be allowed to practice. Providers who don't pass don't practice.

Medical licensing boards also require licensed doctors to follow strict codes of conduct and abide by ethical standards, which serves as a deterrent to fraud. But the system is only as strong as the identity verification behind it.

Proof makes the licensing process more secure and more efficient, verifying medical providers online before a fraudulent actor can enter the system. With Proof, your team places a verification link directly in the licensing workflow. Applicants complete the identity check online through the following steps:

• ​ID scan: Proof scans the applicant's government-issued ID
• ​Biometric match: Proof validates that the person in front of the camera matches the person on the ID
• ​Fraud scoring: The applicant's information is run through Defend, Proof's AI-driven fraud intelligence layer, which scores identity risk across behavioral signals, document authenticity, and network-level fraud patterns
• ​Identity confirmation: If the automated check passes, the applicant signs digitally to confirm their identity

The licensing board receives a Proof Identity Report: a complete, auditable record of every check run, every result returned, and every verification completed.

How medical licensing boards can use Proof

Most healthcare fraud depends on an identity gap: someone pretending to be a licensed provider, a covered patient, or an authorized biller. Closing that gap at the licensing stage means fewer fraudulent actors enter the system in the first place.

Proof integrates directly into existing licensing workflows. Boards place a secure verification link on their application portal, and applicants complete an online identity check. If an applicant cannot complete automated verification, they are immediately connected to a live notary from the Notarize Network, available 24/7 with no appointment required. Notaries on the network are background-checked, NIST IAL2-verified trust agents who can confirm identity in real time and produce a defensible record for the licensing board.

The result is a complete Proof Identity Report that documents exactly what was verified, how it was verified, and when. That report becomes a defensible record, evidence that can hold up in audits, investigations, or disputes.

Identity fraud doesn't stop at licensing, but tighter licensing stops a lot of fraud before it starts. See how Proof helps regulated organizations verify identity at every critical moment.