Within Medicare, improper payments last year exceeded the estimated annual earnings of roughly 214,000 primary care doctors — the figure amounting to almost $57 billion. No one truly knows how much is lost in total to Medicare fraud, of which certain improper payments make up a part. However much it is, it is much more than it ought to be. Earlier in September, the Centers for Medicare & Medicaid Services announced that it identified 11 durable medical equipment, prosthetics, orthotics, and supplies companies, which sought to break into the lucrative, uncapped trillion-dollar Medicare vault by billing for equipment for the deceased or beneficiaries who never requested or received it. Over the past two years, these suspected fraudsters attempted to siphon off as much as $3.4 billion.
The structure of the federal administrative apparatus fosters mismanagement and conditions ripe for criminal activity, costing taxpayers a quarter to half a trillion dollars in fraud annually. Even so, there are bad approaches and better ones. The CMS is transitioning from the former to the latter, demonstrating that federal agencies can improve welfare program integrity when they prioritize doing so.
By launching its Medicare “Fraud War Room” in March 2025, CMS brought under one roof data analysts, investigators, lawyers, and law enforcement to act swiftly in coordination against suspicious and improper billing and thus to end the inefficiencies of lengthy, costly, after-the-fact recoupments and criminal prosecutions.
Invariably, paying a claim and trying to recover taxpayer money later is less successful and likely consumes more resources than preventing suspicious payments before they leave government accounts. Such is the conclusion the Government Accountability Office has maintained with respect to Medicare for more than a decade, corroborated by its recent estimates of savings from different Medicare fraud-prevention actions. Only recently, however, has CMS committed itself to this proactive approach in earnest.
The agency has chosen to evolve its enforcement strategy — from “pay and chase” to “caught and stopped” — to make greater use of tools it long possessed. For example, these include promptly suspending suspicious payments when warranted — such as payments to roughly 800 Los Angeles-area hospices and home-health agencies — and imposing a nationwide enrollment moratorium on new entrants in these categories to contain fraudulent activity. Using the same tools, the agency clamped down on the DMEPOS fraud scheme, promptly suspending nearly $24 million in payments to two suppliers before the money reached them.
What enables this new “caught and stopped” approach to operate with far greater speed and at Medicare’s scale is CMS’s embrace of advanced data analytics (including machine-learning models) to detect fraud. This technology’s potential is revealed best when applied against high-risk categories, where its use is imperative.
The DMEPOS fraud is once more illustrative. Roughly 90% of the Medicare Fraud War Room’s first-year payment suspensions involved DMEPOS billing, with an improper-payment rate almost four times the average across traditional Medicare. Fraud schemes within this category can scale with extraordinary speed, and individual claims can largely evade traditional claim-by-claim oversight — but not advanced data analytics, designed to expose anomalous patterns suggestive of fraud.
Advanced analytics was likely responsible for finding that none of the 11 suppliers had submitted Medicare claims before 2025, yet in a span of two years, their suspected fraudulent billing reached $3.4 billion. Moreover, the cost of catheters is in the single digits, with a maximum billable quantity capped at 200 per beneficiary per month, yet one Florida DMEPOS supplier bills $6.1 million for catheters for about 500 beneficiaries on one day and another $12.3 million for 777 beneficiaries the following day. It is to detect precisely this sort of misconduct that data-analytic models are designed.
ONE VISIT, TWO BILLS: HOW MEDICARE IS QUIETLY FLEECING AMERICA’S SENIORS
Under the Trump administration, the agency has thus far undertaken more proactive, aggressive, data-enhanced Medicare fraud enforcement, the successes of which are measurable in higher program-integrity savings — 59% higher year-over-year — and a return on investment that rose from $14.60 to $22.30 per dollar spent. Yet, as Brian Blase at the Paragon Health Institute argues, “More vigilance and stronger enforcement are imperative, but lasting reform requires better program design…so that states, insurers, providers, and beneficiaries have incentives to maximize value.”
The program is built upon foundational flaws. A trillion-dollar Medicare program, bloated from decades of past mismanagement and set to expand rapidly in the coming years, requires further comprehensive reform today.
Vladlena Klymova is a Taxpayers Protection Alliance policy analyst.
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[ H/T Washington Examiner ]
