The Fraud Triangle

Don’t get caught in the storm of noncompliance.

When we read about the prevalence of fraud in the healthcare industry, it brings up many questions. How did they get away with it? Why did they do it? Who else is doing the same thing but not getting caught?

One of the oldest and most basic theories of fraud was developed in 1953 by Donald Cressey. Cressey developed a framework by examining corporate financial fraud known as the “fraud triangle.”

The fraud triangle is made up of three elements: opportunity, pressure, and rationalization. Let’s explore the fraud triangle together.

Opportunity

Opportunity presents itself when there are not sufficient controls and oversight in place. Each organization can be viewed as either a hard target or a soft target.

• A hard target is one that is more challenging because there are appropriate safeguards and preventive measures in place.
• A soft target is one that is seen as an easy mark or is vulnerable for an attack.

An example of a soft target attack is a provider who bills a higher copayment or coinsurance than the patient is responsible for. This type of behavior is easy to get away with if there is no clear oversight or checks and balances in place. Soft target attacks are also carried out by unscrupulous persons granted positions of trust and access permissions they abuse.

Pressure

The COVID-19 pandemic changed the U.S. healthcare industry forever. Patients stopped seeing doctors for several years, only to return with more problems. When combined with other financial impacts the pandemic placed on healthcare organizations, providers were under a great deal of pressure. Some resorted to billing for services they did not perform, upcoding services, or inflating patients’ severity of illness.

Rationalization

People often justify a misdeed by convincing themselves that the victim deserved it or that their behavior is harmless because there is no direct impact to a specific person. Others justify fraud by deeming it necessary to maintain their business. Many fraudsters think they will “pay it back later” or don a “everyone else is doing it” attitude. They may convince themselves that their behavior is temporary, and they will stop as soon as the perceived crisis is over.

Weather Any Condition

Now is a good time to have a discussion with your compliance team on ways you are actively preventing fraud, waste, and abuse at your organization. Openly discuss where there may be opportunity, pressure, and rationalization that could put your team at risk.

Resource:

Akkeren, Jeanette Van. “Fraud Triangle: Cressey’s Fraud Triangle and Alternative Fraud Theories.” SpringerLink, Springer International Publishing, 1 Jan. 1970.

• Author
• Recent Posts

Colleen Gianatasio

Colleen Gianatasio, CPC, CPCO, CRC, CDEO, CPC-P, CPMA, CPPM, CCS, CCDS-O, CHC, AHFI, AAPC Approved Instructor, is a strategic value-based care expert with over 20 years of experience in the healthcare field. She specializes in supporting healthcare programs by ensuring compliance with federal guidelines and appropriate reimbursement processes. Gianatasio is known for driving program integrity and cost savings, increasing provider engagement, and developing innovative coding curriculum. Gianatasio served as president of AAPC’s National Advisory Board for the 2022-2024 term.

Latest posts by Colleen Gianatasio (see all)

• The Fraud Triangle - August 1, 2025
• Feds Crack Down on Upcoding - July 1, 2025
• Be Part of a Positive Change in Healthcare - June 1, 2021