Which is an industry-specific fraud indicator in healthcare?

• A. Channel stuffing in healthcare
• B. Upcoding or phantom vendors
• C. Inventory obsolescence
• D. Duplicate accounts

Answer: (B)

In healthcare, fraud signals often come from how services are billed and how payments flow to vendors. Upcoding means billing for a higher-level service than was actually provided, inflating reimbursements from insurers or patients. Phantom vendors are fake suppliers used to generate invoices for goods or services that never occurred, diverting funds through a fraudulent payment trail. These patterns are directly tied to the healthcare payment system and its billing codes and vendor networks, making them clear indicators of fraud in this industry. Other options describe broader business issues rather than healthcare-specific fraud signals: channel stuffing is a general sales tactic, inventory obsolescence is an operations risk, and duplicate accounts point to internal control or identity problems rather than industry-specific fraud indicators.