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With the exponential rise in government and private health-supported schemes, the number of fraudulent billing cases is also increasing. Detection of fraudulent transactions in healthcare systems is an exigent task due to intricate relationships among dynamic elements, including doctors, patients, and services. Hence, to introduce transparency in health support programs, there is a need to develop intelligent fraud detection models for tracing the loopholes in existing procedures, so that the fraudulent medical billing cases can be accurately identified. Moreover, there is also a need to optimize both the cost burden for the service provider and medical benefits for the client. This paper presents a novel process-based fraud detection methodology to detect insurance claim-related frauds in the healthcare system using sequence mining concepts. Recent literature focuses on the amount-based analysis or medication versus disease sequential analysis rather than detecting frauds using sequence generation of services within each specialty. The proposed methodology generates frequent sequences with different pattern lengths. The confidence values and confidence level are computed for each sequence. The sequence rule engine generates frequent sequences along with confidence values for each hospital&#x2019;s specialty and compares them with the actual patient values. This identifies anomalies as both sequences would not be compliant with the rule engine&#x2019;s sequences. The process-based fraud detection methodology is validated using last five years of a local hospital&#x2019;s transactional data that includes many reported cases of fraudulent activities.

A Sequence Mining-Based Novel Architecture for Detecting Fraudulent Transactions in Healthcare Systems