Fraud, fear and being bilked for billions: Lawmakers growl at Medicare scams

Physicians, patients and accountable care organizations all have a role in fighting fraud that takes Medicare money from beneficiaries who paid for the program, according to congressional testimony from five people with experience rooting out scams.

On April 21, the House Ways & Means Committee convened its Full Committee Hearing on Protecting Patients and Taxpayers: Cracking Down on Medicare Fraud, featuring five witnesses who described how they encountered fraudsters in health care.

Medicare has grown to more than $1 trillion in annual spending, making it one of the largest programs in the federal government, said Committee Chair Rep. Jason Smith (R-Mo.).

“Medicare is not a handout,” Smith said in his opening statement. “It is a benefit earned by Americans who worked their whole lives, paid into the system, and played by the rules. We must ensure it is there for them when they need it. That’s why the reports of the ongoing theft of health care benefits by fraudsters, illegal immigrants, and even transnational criminal organizations that have come to light in recent months are so shocking.”

Smith laid the blame squarely on Democrats, including Gov. Gavin Newsom in California and Gov. Tim Walz in Minnesota. Los Angeles County apparently has become a hotbed of hospice fraud, and federal investigators estimate more than half of the $18 billion spent across several programs has been lost to fraud, he said.

Truly accountable care

The witnesses proffered written testimony that described their experiences — some of which were resolved, but not necessarily good.

Accountable care organizations (ACOs) have good news and bad news around health care fraud, said David Klebonis, president and CEO of Palm Beach Accountable Care Organization LLC. The Florida organization works with 15,000 physicians and other clinicians serving more than 825,000 patients across 30 states.

The good news is that ACOs are detecting hundreds of millions of dollars in Medicare fraud. The bad news is that ACOs are being held accountable financially for fraudulent spending they neither caused nor controlled, Klebonis said.

Palm Beach ACO has submitted 289 suspected fraudulent durable medical equipment (DME) companies to federal authorities since tracking began, supported by nearly 3,000 patient attestations confirming they never received the billed products, Klebonis said. Since 2020, the organization has flagged more than $112 million in suspicious Part B DME billing — yet more than 82% of that suspected fraud has remained charged against the ACO's financial benchmarks.

Klebonis described a consistent pattern among fraudulent suppliers: Recently incorporated entities bill a narrow set of high-reimbursement codes at extreme volume over a short window before dissolving. Products billed without physician orders have included wound dressings, urinary catheters, glucose monitors, orthotic braces and home ventilators, often for patients whose medical records contain no matching diagnosis.

He praised the U.S. Centers for Medicare & Medicaid Services (CMS) Operation Gold Rush, a 2025 enforcement action that blocked $4.45 billion of an estimated $4.49 billion in fraudulent catheter and DME billings, stating that it shows proactive data-driven detection works.

But ACOs remain in a reactive position, absorbing financial losses while awaiting government confirmation that their fraud reports have even been received.

Klebonis urged Congress to shield ACOs from financial liability for confirmed fraud, improve data sharing and feedback from CMS, and expand the existing serious, anomalous, and highly suspect payment policy to account for regionally concentrated fraud patterns.

“PBACO is not asking to be exempt from accountability,” he said. “PBACO is asking to be deputized. The ACOs who detect fraud need to be connected to the tools and information CMS uses so they can prevent improper payments before they happen.”

A clinician and a victim

Lynn Ianni, Ph.D., is a licensed psychotherapist with nearly 40 years of clinical experience. She was locked out of her own medical care for months after a fraudster falsely enrolled her in hospice care.

The trouble began in mid-2024, when she was undergoing physical therapy for a shoulder injury caused by pickleball. At what was supposed to be her final appointment, her provider informed her that Medicare had denied the claim, citing her enrollment in hospice, a program she had never elected, Ianni said.

What initially appeared to be a clerical error quickly revealed itself as fraud. Ianni said the hospice where she was supposedly enrolled was listed on Medicare's own website with a valid national provider identifier (NPI) number, a named CEO and a physical address — but the address led to what appeared to be a strip mall, and phone calls went unanswered. The physician listed with the hospice, a surgeon in Santa Monica, California, told Ianni his identity had been used without his knowledge.

Despite presenting this evidence to Medicare, Ianni said her appeals went unacknowledged for months. She was told the process could take one to two years. Resolution came only after she connected — by chance — with California's Senior Medicare Patrol, an advocacy organization. Six months after the ordeal began, she received a corrected Medicare card with no explanation.

Ianni urged the committee to strengthen fraud detection, improve appeals responsiveness and make the Medicare system more navigable for beneficiaries.

“Imagine being told, in effect, that you are at the end of your life, when you are not, and then being denied access to care because of that error,” Ianni said. “It was not just frustrating. It was terrifying.”

The surge in hospice fraud

The surge in hospice and home health fraud is a systemic failure of patient protection with consequences that extend far beyond California into national Medicare payment policy, said Sheila Clark, president and CEO of the California Hospice and Palliative Care Association. The organization represents more than 250 hospice and home health providers.

Fraudulent actors are enrolling Medicare beneficiaries in hospice without informed consent, using stolen identities and paying patients in exchange for their Medicare numbers. The schemes, she said, exploit gaps between state licensure, federal certification, enrollment screening and claims monitoring. Scammers are sophisticated enough to cycle beneficiaries across multiple providers to maximize billing while evading detection.

Clark said California's explosive growth in hospice providers represents a national warning sign. Because fraudulent claims and cost reports are incorporated into the data the Centers for Medicare and Medicaid Services uses to set national payment rates, she argued that corrupted data distort federal policy for the entire Medicare program.

She called on Congress to take seven specific actions, including strengthening front-end provider screening, using existing federal enrollment suspension authorities earlier, creating a federal process to promptly correct fraudulent hospice enrollments without requiring the fraudulent provider's cooperation, and excluding fraud-distorted data from national payment and quality-reporting systems.

It can be confusing and frightening for families trying to understand what happened when a loved one is fraudulently enrolled in hospice services, Clark said. She encouraged lawmakers to consider the “dual perspective” of systemic and individual consequences.

“Fraud does not only injure the individual beneficiary,” she said. “It poisons public confidence in the benefit, undermines legitimate providers, and forces honest organizations to operate in a system where criminal conduct can distort the rules under which everyone else must function.”

Clark also cautioned against attributing billing activity from outside vendors, such as DME suppliers, to hospice providers who neither initiated nor controlled that spending.

Pay first, ask questions later

Modern health care fraud has grown in scale, complexity and speed beyond anything previously seen, and the structure of traditional Medicare makes it inherently vulnerable to exploitation by sophisticated criminal organizations, said Christopher Deery, director of financial investigations at Independence Blue Cross. He is a certified fraud examiner who oversees fraud, waste and abuse investigations for the Philadelphia-area health plan serving nearly 3 million members.

Fraudulent networks increasingly recruit patients through deceptive telemarketing and artificial intelligence-driven social media campaigns, then bill Medicare for services never provided. Beneficiary data, he said, has become among the most valuable information traded on the dark web, Deery said.

He also pointed to the results of the 2025 Operation Gold Rush as confirmation that transnational criminal organizations are purchasing legitimate medical supply companies and using them as fronts to bill Medicare for catheters, glucose monitors and other DME never delivered to patients. In 2025 alone, his team initiated more than 200 investigations and referred 68 cases to law enforcement.

He said traditional Medicare's largely after-the-fact payment structure, with claims paid first and recovered later — sometimes never — creates delays that allow fraud to scale before intervention occurs. Data-sharing restrictions among private payers, CMS and law enforcement further slow response times.

Deery urged Congress to pursue at least three reforms:

• Shifting Medicare toward proactive, prepayment fraud monitoring
• Strengthening coordination and intelligence sharing between government agencies and private payers
• Improving oversight of the NPI system, which fraudsters exploit through identity theft, fake credentials and the purchase of numbers from legitimate providers.

TrumpRx: Real prescription drug price reductions or not?

President Donald J. Trump’s most-favored-nation (MFN) drug pricing agreements lack transparency, so the new TrumpRx discount platform has failed to deliver promised savings, said Kristi Martin, who was chief of staff and senior adviser to the CMS deputy administrator and director of the Center for Medicare from October 2021 through November 2024. Meanwhile, growing vertical integration among pharmacy benefit managers poses a mounting threat to Medicare program integrity.

Martin praised drug-pricing reforms enacted under the Inflation Reduction Act, approved during President Joe Biden’s term. It included a redesigned Medicare Part D benefit, drug price negotiation and inflation rebate requirements. Those have generated nearly $19 billion in savings over two years, and she urged Congress to expand and preserve those policies.

Martin testified that the Trump administration announced agreements with 16 drug manufacturers on MFN pricing in late 2025, but has refused to release the terms of those agreements. Details disclosed by manufacturers themselves through earnings calls and Securities and Exchange Commission filings suggest the agreements are narrow in scope and have produced no demonstrable price reductions.

She described TrumpRx, the federal website launched in February 2026, as essentially a printable coupon platform, noting that many of its listed prices are higher than those available through existing commercial discount services and are inaccessible to Medicare and Medicaid beneficiaries. She also raised concerns about conflicts of interest involving the platform's ties to a private company affiliated with the Trump family.

“I urge this Committee to address the serious concerns about the Administration’s opaque MFN agreements and the implementation of TrumpRx,” Martin said. “As I have highlighted, there is a lack of transparency, questionable consumer savings, and potential conflicts of interest associated with these initiatives. Unlike the statutory, accountable reforms enacted through the Inflation Reduction Act, these efforts have not demonstrated clear or measurable benefits.”