Why Every Healthcare Organization Needs an Internal Investigator
Written By: Dr. Stacey R. Atkins, PhD, MSW, LSW, CPC, CIGE
Abstract
In today’s complex healthcare environment, compliance alone is insufficient to detect and prevent misconduct, fraud, and abuse. Rising regulatory scrutiny, financial pressures, and technological complexity demand a proactive approach that blends compliance oversight with forensic auditing. This article introduces the concept of forensic auditing in healthcare, explains how internal investigators identify and mitigate internal risks before they escalate, and provides a real-world scenario that demonstrates the practical application of forensic principles. As the first in a three-part series aligned with the Certified Internal Forensic Healthcare Auditor (CIFHA) curriculum offered by the American Institute of healthcare Compliance (AIHC), this article establishes why healthcare organizations need internal forensic investigators to ensure accountability, compliance, and integrity across systems and staff.
Introduction
Healthcare organizations operate within one of the most highly regulated industries in the United States. Federal oversight through the Centers for Medicare and Medicaid Services (CMS), the Department of Justice (DOJ), and the Office of Inspector General (OIG) combined with state and accreditation requirements create a multifaceted compliance landscape. As regulatory expectations evolve, organizations must go beyond compliance checklists and adopt investigative capabilities that actively detect and mitigate risk. According to the Office of Inspector General’s 2023 guidance, healthcare compliance programs should include mechanisms for internal investigation and response to suspected violations to ensure early detection and self-disclosure opportunities.
Traditional compliance programs rely on audits and monitoring to identify irregularities and though these methods are proven; these processes are often periodic and limited in scope. Forensic auditing, on the other hand, integrates data analytics, investigative interviewing, and financial tracing to uncover intentional misconduct, hidden patterns, or emerging risks. When integrated within a compliance program, internal forensic investigators bridge the gap between prevention and enforcement.
Defining Forensic Auditing in Healthcare
Forensic auditing combines accounting, auditing, and investigative techniques to identify financial or operational irregularities that could indicate fraud, waste, or abuse. It differs from routine auditing because it assumes concealment, deception, and intent. Forensic auditing emphasizes verification, evidence preservation, and analytical reconstruction of transactions to determine whether misrepresentation occurred. According to the Association of Certified Fraud Examiners’ 2024 Report to the Nations, healthcare fraud remains one of the costliest forms of occupational abuse, with average losses exceeding $100,000 per incident in the provider sector.
Healthcare organizations are especially vulnerable because of the complexity of coding and billing systems, fragmented data environments, and third-party relationships. Forensic auditing in healthcare may involve reviewing claims data, vendor payments, procurement contracts, or physician compensation models. According to CMS program integrity data (2023), more than $60 billion in estimated improper payments were made across federal healthcare programs last year—highlighting the ongoing need for internal vigilance.
Roles, Skills, and Governance of an Internal Forensic Investigator
An internal forensic investigator provides a specialized function within the compliance ecosystem. This professional must possess a blend of analytical, legal, and ethical expertise. Recommended competencies include knowledge of healthcare reimbursement models, coding accuracy, and claims analysis; strong investigative skills such as interviewing, documentation review, and evidence preservation; and familiarity with relevant statutes including the False Claims Act, Anti-Kickback Statute, and HIPAA Privacy Rule.
The investigator’s independence is critical. According to the DOJ’s 2020 Evaluation of Corporate Compliance Programs, the credibility of internal investigations depends on independence, competence, and appropriate resources. Investigators should report directly to the Compliance Officer, Board Audit Committee, or General Counsel to avoid conflicts of interest. Collaboration with IT, Human Resources, and Finance is often necessary for effective data gathering and root-cause analysis.
Training and certification enhance credibility. Many investigators pursue credentials such as Certified Fraud Examiner (CFE), Certified in Financial Forensics (CFF), or Certified Professional Compliance Officer (CPCO). The CIFHA curriculum integrates these skill sets by combining investigative methods with forensic analytics and compliance oversight principles, preparing professionals to handle internal inquiries ethically and effectively.
A Realistic Scenario: The Case of EchoHealth Radiology Network
EchoHealth Radiology Network, a midsize radiology provider, noticed a rise in payer denials and outlier utilization trends within its Magnetic Resonance Imaging (MRI) service line. Routine audits did not reveal significant errors, but a compliance analyst flagged a spike in modifier use for certain spinal studies. The internal investigator initiated a forensic review and uncovered that one radiology group had systematically upcoded imaging services at the direction of a billing manager. Interviews revealed that coders were encouraged to “maximize revenue” by adding modifiers without sufficient documentation.
- The investigator traced the pattern across six facilities, identified more than $1.2 million in questionable claims, and confirmed documentation gaps.
- Because the issue was identified internally, EchoHealth voluntarily disclosed the overpayments, retrained coding staff, and implemented a pre-billing review process. The early forensic response protected the organization from potential False Claims Act liability, demonstrated good-faith remediation, and reinforced a culture of compliance and accountability.
Key Benefits and Return on Investment
According to the Government Accountability Office (GAO, 2023), proactive detection and response programs can reduce fraud-related losses by as much as 40 percent. The presence of an internal investigator also promotes a culture of transparency and reinforces the ethical tone of leadership. Internal forensic capacity delivers benefits such as early risk identification, reduced penalties through self-disclosure, improved internal controls, and measurable cost avoidance. Organizations that invest in forensic auditing capability often discover that the savings from avoided regulatory penalties and recovered funds exceed the cost of the program itself.
- From a compliance culture standpoint, the visibility of an internal investigator acts as a deterrent.
Employees are more likely to report concerns through proper channels when they see issues being addressed promptly and professionally. This aligns with the OIG’s emphasis on maintaining effective lines of communication and timely corrective action in healthcare compliance programs (OIG, 2023).
Challenges, Limitations, and Mitigations
Despite its value, integrating forensic auditing within compliance presents challenges. Resource limitations are common, particularly for smaller providers. Legal considerations such as maintaining privilege and confidentiality require coordination with counsel. Data analytics and automation can introduce false positives that distract investigators from genuine issues. To mitigate these challenges, organizations can start with pilot programs, outsource complex investigations as needed, and establish clear investigation protocols aligned with OIG and DOJ standards.
Another challenge involves maintaining staff trust. Employees may perceive investigations as punitive rather than corrective. Compliance leaders can address this by communicating the purpose of forensic reviews as a means of protecting both the organization and its workforce. Transparency, education, and post‑investigation feedback sessions can reduce anxiety and improve cooperation.
Alignment with CIFHA Goals
Certified Internal Forensic Auditor
This article—the first in a three-part series—introduces an essential component of the CIFHA curriculum: the intersection between compliance and forensics, embodied in the role of the internal investigator. The next two articles in this series will continue to build upon this foundation:
- Article 2: “10 Common Mistakes in Internal Investigations—And How to Avoid Them” will draw directly from the CIFHA course section on Accepting the Investigation. It will offer practical insights into how investigators can recognize and avoid common sources of bias, procedural missteps, and compliance pitfalls that compromise investigative integrity.
- Article 3: “From Findings to Action: Writing an Objective, Defensible Investigative Report” will focus on the analytical and reporting phase—how to synthesize data, present factual findings, and communicate results effectively and ethically. It will demonstrate how the course equips participants to transform raw information into defensible, actionable reports that withstand regulatory and legal scrutiny.
Together, these articles trace the natural progression of the investigative process—from recognizing the need for internal forensics, to conducting unbiased inquiries, to articulating findings that drive organizational accountability and improvement.
Conclusion
Healthcare organizations that embed forensic auditing within compliance are better positioned to detect misconduct, preserve integrity, and demonstrate proactive risk management. According to the DOJ and OIG, organizations that identify and correct issues internally are viewed more favorably in enforcement actions. Internal investigators serve as both a safeguard and a strategic asset—protecting financial integrity while promoting an ethical culture. As healthcare continues to evolve, forensic auditing will remain a cornerstone of mature compliance programs that prioritize transparency, accountability, and continuous improvement.
About the Author-Dr. Stacey R. Atkins, PhD, MSW, LMSW, CPC, CIGE
Dr. Adkins is a Compliance Specialist working as a team member in the Education Department of the American Institute of Healthcare Compliance. Her career spans leadership roles with the Office of the State Inspector General, Department of Behavioral Health and Developmental Services, and HRSA, among others.
References
- Office of Inspector General (OIG). (2023). Compliance Program Guidance for Hospitals.
- U.S. Department of Justice (DOJ). (2020). Evaluation of Corporate Compliance Programs.
- Association of Certified Fraud Examiners (ACFE). (2024). Report to the Nations on Occupational Fraud and Abuse.
- Centers for Medicare & Medicaid Services (CMS). (2023). Improper Payments Data.
- Government Accountability Office (GAO). (2023). Fraud Risk Management Framework.
- Health Care Compliance Association (HCCA). (2024). Best Practices in Internal Investigations.
- Office of Inspector General (OIG). (2023). General Compliance Program Guidance.
- U.S. Department of Health and Human Services (HHS). (2024). Health Care Fraud and Abuse Control Program Annual Report.
- Compliance Week. (2023). The Rising Role of Forensic Auditing in Healthcare.
- Deloitte. (2024). Internal Investigation Trends in the Health Sector.
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