Common Schemes, Real Harm: Examining Fraud in Medicare and Medicaid
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House Energy and Commerce Subcommittee on Oversight and Investigations U.S. House of Representatives
Follow its sittingsSpeaker 2
That ICE officer said were caused by running into a wall, but medical officials said that the patient's injuries could not have been caused by running into a wall. ICE said that another man who died in ICE custody was attempting suicide, and staff were trying to save him. But we learned later from his autopsy that he was actually suffocated when he was held down by guards in a detention facility. It is lie after lie after lie from this administration, and it's only getting worse. Our children are not safe.
A five-year-old boy was used by federal agents as bait to lure out members of his family and community from their house. The other day, children in Portland were tear-gassed while participating in a peaceful protest. And it's not just happening in cities. Recent video from rural Minnesota shows masked federal agents pulling in front of the vehicle of an observer, getting out with guns drawn and aiming them at the driver. That's just a sampling of the hazards that we've seen.
And these are only the ones that we know about because brave citizens have been out there on the streets recording. I can only imagine how many more abuses are happening away from the cameras. No one is exempt from the tyranny of this administration. And any of my colleagues who think they or their constituents are somehow immune from this administration's flailing faulty better wake up quickly, because it could be your community next. Now, what does all this have to do with fraud?
Don't ask me, ask Attorney General Bondi, who has justified the continued presence of federal agents in Minneapolis, Minnesota, due to the existence of fraud in that state. In a letter she sent on January 24, attorney general Bondi tried to extort Minnesota by seeking voter data and other sensitive records in exchange for relief from federal terror. And in doing so, she referenced the letter sent by the community committee Republicans investigating fraud in Minnesota. It was truly a dark day when this committee's reputation was used to justify the oppression of American communities. Our country was founded by people who stood up to the tyranny of a mad king across the ocean.
But now the tyranny and madness is coming from inside the house, specifically the White House. We have seen image after image and video after video of outrages, abuses, any of which could have scandalized any other administration. But for this administration, there's clearly no bottom and total inability to feel shame. I can assure you that when Democrats are back in charge, we will not sit by silently while the president runs roughshod over the Constitution and the American people. And to the people of Minnesota and other communities who are living in fear, I want you to know that on my side of the aisle, we hear you, we see you, and we will keep fighting for you.
With that, Mr. Chairman, I yield back the balance of my time.
Speaker 1
Thank you. The chair now recognizes the chairman of the full committee, Mr. Guthrie, for five minutes for an opening statement.
Speaker 3
Thank you. Thank you, Chairman Joyce. I appreciate you for holding this hearing, and I really appreciate all of our witnesses being here today. Today's hearing sounds the alarm on the tremendous loss of taxpayer dollars to fraud and the real consequences for patients, providers, and the public trust. Together, Medicare and Medicaid provide health coverage to more than 140,000,000 Americans, including seniors, people with disabilities, low-income families, pregnant women, and children.
These programs are lifelines, not abstract budget figures. When they are exploited and plundered, Americans lose access to care, confidence in the system, and resources intended to improve their health outcomes. Each year, tens of billions of dollars are lost to fraud, waste, and abuse. But financial loss is not only the consequence of these fraud schemes. When providers bill for services never rendered or criminals flood Medicare or Medicaid with fake claims, the system becomes harder to oversee, less responsive to legitimate patients, and financially unstable.
Health care costs rise for everyone, and trust in these critical programs erodes. Operation Gulf Russian illustrates the growing scale of the problem. This recent nationwide enforcement action by the Department of Justice was the largest health care fraud takedown in history. This operation targeted several health care fraud schemes leading to criminal charges against 324 defendants in 50 federal districts and steps 12 state attorneys general's offices across the US. The various schemes involved over, excuse me, 14,600,000,000 in intended loss.
29 of those defendants were charged for their roles in transnational criminal organizations that use stolen identities of over 1,000,000 Americans, spanning all 50 states, to submit over $10,000,000,000 in fraudulent claims to Medicare for durable medical equipment that patients never ordered or received. Many seniors learn that their Medicare or other personally identifiable information has been compromised only after being denied legitimate care. This is not an administrative error. It was organized crime exploiting our nation's health care programs. We must ensure taxpayer dollars are used for quality health care, not siphoned off by criminal enterprises.
Republicans took steps in this in HR one, and we must continue the effort to preserve Medicare and Medicaid for those who need these programs. I look forward to hearing from the witnesses. I appreciate you all taking the time to be here today. And with that, mister chairman, I appreciate this hearing, and I will yield back.
Speaker 1
Thank you. The chair recognized the ranking member of the full committee, Mister Palone, for five minutes for an opening statement.
Speaker 4
Thank you, Mr. Chairman. As anyone who has been around long enough knows, fraud is a very real, persistent challenge. Fraud happens in both red states and blue states. But the word fraud has unfortunately become a convenient excuse for Republicans that just do whatever they want. Their solution to combating elusive claims of fraud in Medicaid was cutting millions of Americans off their health coverage and instead giving money to companies like Deloitte to push eligible beneficiaries off the Medicaid rolls.
Republicans' big ugly bill is cutting $1,000,000,000,000 from our health care system while also stripping health care away from 15,000,000 Americans and closing hospitals and nursing homes all around the nation. And now fraud is being invoked as a justification for federal agents terrorizing communities. The Trump administration is using claims of fraud in state programs, including Medicaid, as an excuse to recklessly deploy Department of Homeland Security, DHS, officials from Immigration and Customs Enforcement, ICE, and Customs and Border Protection in Minneapolis, Minnesota. But it has become clear that this was purely a pretext for the administration to continue targeting the states and cities President Trump views as political adversaries. Instead of providing assistance to Minnesota and other states in protecting federally funded programs from waste, fraud, and abuse, the Trump administration is mobilized to take drastic punitive measures that do nothing to harm the bad actors that perpetrate waste, fraud, and abuse, and instead harm the people who count on these programs for their health care and their livelihood.
In December, the Department of Homeland Security began Operation Metro Surge in Minnesota with the alleged purpose of cracking down on fraud and illegal immigration. Since that time, two innocent Minnesotans, Renee Good and Alex Petty, have been shot and killed by federal agents, and countless more have been terrorized and traumatized. Renee Good was shot multiple times, and federal agents on the scene refused to allow a doctor who was on site to administer first aid. Rather than investigating the shooting, the Department of Justice instead pushed prosecutors to investigate Renee Good and her widow. At least 14 federal prosecutors, as of today, have resigned in protest.
All told, the Minnesota US Attorney's Office, which handles these fraud cases or prosecutions, is at half its strength. Alex Pretty was an ICU nurse who worked at a VA hospital. Video shows he was trying to assist and protect a woman who had been shoved by an agent, where he himself was tackled by multiple agents and then shot by two of them. These are two lives lost in a matter of weeks due to the unjustified invasion of federal forces into an American city on the pretext of addressing fraud, and the Republicans on this committee are complicit. Last month, attorney general Bondi sent a letter to Minnesota governor Tim Walt seeking to extort sensitive health and voter data in exchange for federal forces withdrawing.
In her letter, she cited an investigation by committee Republicans as a justification. Now the department of home and security operations of Minneapolis must cease immediately for the safety of all, and a thorough independent investigation must be conducted into these two murders. It's also time for the Trump administration to begin work with the states and communities that investigate and prosecute fraud. Instead of providing assistance to Minnesota and other states in protecting federally funded programs from waste, fraud, and abuse, the Trump administration has mobilized to take drastic, punitive measures that do nothing to harm the bad actors, as I've said before. It's also, after all, when it comes to taking real productive steps to prevent and punish fraud, the Republicans failed to do so.
Committee Republicans have ignored our request for a hearing to examine Trump's firing of at least 17 inspector generals, including the inspector general of the Department of Health and Human Services. Inspector generals are the very people who work to prevent and detect fraud and abuse in our federal agencies, and Republicans have silently stood by as Trump fired 17 of them. Now Republicans also refused to join us in raising concerns when DoJ pushed out career staff at the HHS office of the inspector general, and they haven't said a thing about Trump continuing to pardon criminals who were convicted of Medicare and Medicaid fraud. If you wanna get serious about waste, fraud, and abuse, start with President Trump and the harm he's doing to our nation. His federal agents are laying waste to our communities.
His actions are making fraud worse, not better, and he is abusing his authority every day. And with that, Mr. Chairman, I yield back the balance of my time.
Speaker 1
A gentleman yields. That concludes members' opening statements. The chair would like to remind members that pursuant to the committee rules, all members' written opening statements will be made part of the record. We want to thank our witnesses for being here today and for taking the time before to testify before the subcommittee. You will have the opportunity to give an opening statement, followed by a round of questions from members.
Our witnesses today are Jessica Gay, vice president and cofounder, Integrity Advantage; Kaylyn Wooten, president, National Association of the State Medicaid Fraud Control Units; Steven Knuckles, chief executive officer, Coastal Carolina Healthcare, the treasurer and former board chair of the National Association of Accountable Care Organizations; and Jessica Tillepman, government contracts advisory council distinguished professor, lecturer in government contracts law practice and policy at the George Washington University Law School. We appreciate all of you being here today, and I look forward to hearing from you. You're aware that this committee is holding an oversight hearing. And when doing so, has the practice of taking the testimony under oath. Do you have an objection to testifying under oath?
Seeing no objection, we will proceed. The chair advises you that you are entitled to be advised by counsel pursuant to the house rules. Do you desire to be advised by counsel during your testimony today? Seeing none, please rise. Raise your right hand.
Do you promise to tell the truth, the whole truth, and nothing but the truth? So help you, God. Seeing the witnesses answered in the affirmative, you are now sworn in and under oath subject to the penalty set forth in title 18, section 1001 of The United States code. With that, we now recognize Miss Gay for five minutes to give an opening statement.
Speaker 5
Chairman Doctor Joyce, Chairman Guthrie, Ranking Member Ploin, Ranking Member Clark, members of the subcommittee. Thank you for having me here today. My name is Jessica Gay. I'm currently the vice president and cofounder of Integrity Advantage, and the president of the Maryland chapter of certified fraud examiners. For over fifteen years, I've partnered with more than 60 payers across Medicare, Medicaid, FEHBP, commercial plans, CHIP programs, conducting fraud, waste, and abuse detection, analysis, and investigation.
The health care industry is about $5,300,000,000,000 spent in 2024, and we estimate as high as $500,000,000,000 of that is FWA. We process nearly 30,000,000 claims a day across well over a thousand payers, with varying rules, coverage determinations, and data elements. Oversight of this magnitude is bound to need attention. FWA is not a victimless crime. Unnecessary services expose patients to real medical risk, while fraudulent billing drains resources intended for those who legitimately need them.
Patient harm occurs through unnecessary or unsafe care for the sake of reimbursement. Overall, patients suffer from reduced access, and we are the patients. The taxpayers are also the patients, you know, in this scenario. Taxpayers, we're paying for it twice. We're paying for the FWA that is on top of the already big spend, as well as the rising costs of our individual health care.
And the honest providers whose reputations suffer as fraud undermines the trust of our health care system. Common schemes in this area, some of which were already addressed, include advanced or implied behavioral analysis services. These are a huge issue across Medicaid fraud, and we see missing records completely, unqualified staff, billing that is inconsistent with authorizations, treatment plans that are not tailored to these members' needs, and excessive services. Non-emergency medical transportation continues to be an issue as well. We have trips to nowhere, inflated mileage, and upcoding to higher services.
Home and community-based services also continue to be a big issue. We see falsified state authorizations, round-the-clock services for low acuity diagnoses, including hypertension, and billing for one-on-one when delivering care to many patients in one home. Laboratory services and genetic testing continue to be a problem. We mentioned skim substitutes, which is really a highly targeted area due to excessive units. I've seen payments for secondary payers up to $30,000 for one member, and that's after Medicare already paid their portion.
DME continues to be an issue. These are not isolated issues to one state or one payer. They are discussed consistently across national platforms and anti-fraud forums. Of course, we have a lot of challenges in anything this big, and we could do better. Some of the things that I would recommend is a look at the policy.
I would invite fraud professionals to the table as we design policy, and we think about benefit coverage. We have a different perspective. We tend to think about the holes as a fraud professional. But, generally, we see inadequate state, federal, and plan-level policies that result in inconsistent and unenforceable coverage rules. We need to strengthen our frameworks with clear coverage guidelines and federal defaults in the event that states or plans lack sufficient definition.
We need resources. And I'm not just talking people, whether that's people, process, or technology. Things are changing, the fraudsters are winning. We need to keep up with that, and we need some collaboration there. And, therefore, efficiency between the state, the federal, the commercial players, whether that's through data and joint investigations.
And for those that know me, I'm just bringing up data as the last point, but data is a big issue in health care fraud. We have complicated data and poor data criteria in general. It's very inconsistent and hard to understand, with limited visibility into provider credentialing, sanctions, and improved tracking of rendering personnel. Healthcare FWA harms patients. It undermines legitimate providers.
It drains taxpayer resources and increasingly funds sophisticated criminal networks. With stronger policy, better technology, and enhanced collaboration, we can significantly reduce waste and protect the integrity of our health care system. I'll give you my time back.
Speaker 1
Thank you. Miss Wooten, you are now recognized for 5 minutes for your opening statement.
Speaker 6
Mister chairman, chairman Guthrie, ranking member Clark, ranking member Pologne, and members of the committee, thank you for this opportunity to testify. My name is Caitlin Wooten, and I am testifying as president of the National Association of Medicaid Fraud Control Units, known as NAMFCU. I also serve as director of the Medicaid Fraud Control Unit in Utah, or MFUCU. And with me today are NAMFUCU vice president Edward Kirby, who also serves as the NAMFUCU director in North Carolina, and Barbara Zellner, executive director of NAMFUCU. Chairman Joyce, you recently said ensuring Medicaid program integrity is critical to preserving access to vital health care services for those who need it most.
Every dollar stolen from the Medicaid program by fraudsters is taken from children, pregnant women, the elderly, and people with disabilities. We agree. Medicaid fraud control units are state-based law enforcement agencies established in the late 1970s to address these exact concerns. Our twofold mission is to investigate and prosecute fraud committed by providers against the Medicaid program, and resident or patient abuse, neglect, and misappropriation of patient funds. To address these problems, Mfukus utilize both criminal and civil enforcement actions.
Mfuku actions are often filed in state courts, but Mfuku attorneys may be cross-designated as Special Assistant U. S. Attorneys or SAUSAs, and prosecute in federal court. As a SAUSA, I value the opportunity to partner closely with the U. S.
Attorney's Office and federal agencies such as HHS OIG, FBI, DEA, and others who investigate health care fraud. State program integrities are also critical for identifying and referring provider fraud cases, and numerous state partners refer cases of abuse and neglect. At times, Mfuku cases overlap with cases of abuse and neglect. For example, a Mfuku receives a referral for allegations of resident neglect, and an investigation shows that the resident was indeed neglected. It would not be complicated in that scenario to charge an aide or a nurse for the direct care or lack of care for that resident.
But Mfukus have to dig deeper nowadays and hold higher-level staff accountable for funds being shoveled off to profits rather than resident care, understaffing so prevalent that employees cannot provide adequate care, and other schemes. Only through these complex cases are we able to hold the real perpetrators accountable and improve nursing home conditions. I have been a registered nurse since 1984. It was not until late in life that I became an attorney and started working for a Mifuku. At first, I believe that providers must have gotten into health care for the right reasons, and then gone astray and committed fraud.
While that is likely true for some defendants, what we are now seeing is far more sinister. Companies are being created for the purpose of committing fraud. For example, last year, directors.
Speaker 6
The Western Nnamfuku region met to share fraud schemes and collaborate on ways to combat fraud. Through these conversations, we learned of a substance use disorder fraud that started in Nevada, where multiple people were convicted. Then it moved to Arizona. In Arizona, those providers could not treat patients because they had been excluded by HHS OIG. So instead, they taught others how to commit fraud.
Arizona has charged and convicted many people there, but as we met, we realized it's unusual when we have open criminal investigations to share the name of fraudsters or potential defendants. But we became aware that this environment is now different. We became aware that the only way to get on top of these schemes is to be able to collaborate more openly. As a result, we have collaborated and now have open cases in numerous states. In Utah, we have six open cases with the same parties that were involved in Arizona and Nevada.
Namfuku, Namfuku creates a bipartisan forum for all Mfukus to collaborate and trains Mfuku staff how to identify and prosecute fraud. Namfuku has also coordinated a large number of multistate federal investigations since 'ninety two. These global cases have resulted in over $12,000,000,000 to the Medicaid program. The return on investment is invaluable. In March '5, HHS OIG published the Medicaid Fraud Control Unit annual report and reported a total of 1,151 convictions, 1,042 individuals excluded from federal programs, 493 civil judgments totaling $1,400,000,000. Again, Chairman Joyce and committee members, thank you for this opportunity to testify, and we at Namfuku are proud to be part of the efforts aimed at solving these problems.
Speaker 1
Thank you. Mister Knuckles, you are now recognized for 5 minutes for your opening statement.
Speaker 7
Chairman Guthrie, Chairman Joyce, ranking member Palone, ranking member Clark, and members of the subcommittee. Thank you for the opportunity to testify today. My name is Steven Knuckles, and I serve as the chief executive officer of Coastal Carolina Healthcare, an independent physician-led practice in Eastern North Carolina. I'm also a board member of the National Association of ACOs. I view fraud, waste, and abuse through two lenses: as a rural medical practice where fraudulent billing disrupts patient care, and as an ACO accountable for both costs and quality.
Fraud is not an abstract budget problem. In Operation Gold Rush, authorities stopped a transnational scheme that used stolen identities and purchased DME companies to bill 10,600,000,000 in fraudulent claims. Medicare largely did not pay, but coordination of beneficiary protections fell short. Here are the consequences. First, direct patient harm.
When fraudulent claims appear in a beneficiary's record, legitimate medically necessary items can be delayed or denied because coverage appears exhausted. For example, one of our patients needed therapeutic diabetic shoes, but Medicare records showed shoes had already been provided by an out of state supplier, which our patient never received. The supplier was no longer operational, and the patient ultimately had to pay out of pocket for the shoes. That is the harm. Legitimate care denied because fraudulent billing contaminated the record.
Second, increased cost to the health care system. When CMS follows Department of Justice guidelines and pays suspected fraudulent claims into escrow while an investigation proceeds, supplemental insurers are required to pay those claims. The Operation Gold Rush indictment indicated that Medicare supplemental insurers paid roughly $900,000,000 to DME companies involved. Those costs are passed along to beneficiaries through higher supplemental insurance premiums. Third, hindering the growth and adoption of value-based care and ACOs.
ACOs are charged with improving quality while managing the total cost of care. Yet in traditional Medicare, ACOs and treating clinicians do not have the same practical tools that Medicare Advantage plans use to prevent fraud, such as prior authorization, prepayment review, and supplier controls. Instead, ACOs operate in a pay and chase environment. We can identify and report suspected patterns, counsel patients, but we often see the same billing continue for months with no visibility into enforcement. This uncertainty is especially serious for ACOs and two-sided risk, where we repay CMS if spending exceeds the benchmark provided.
My practice is in the 100% risk, ACO reach track. In 2025, we identified 6,300,000 suspected fraudulent DME claims from six companies. In our Arizona market, these claims were more than $1,000 per beneficiary per year. That's triple the national average for DME from just a few years ago. Yet we don't know if these claims were paid, held in escrow, or whether we will be held financially responsible for them.
That uncertainty undermines confidence in the model and discourages participation in value-based care. And if organizations like ours are forced to exit, we would have to end successful programs that have rooted out fraud, reduced wasteful spending, and likely our community average over time would revert back and would roughly increase 25% in our market. Even after Operation Gold Trust Gold Rush, fraud continues to harm Medicare beneficiaries, ACOs, and taxpayers. My written statement highlights several ways where my colleagues at other ACOs have seen ongoing fraud over the past year, including concerning spikes in durable medical equipment billing and misuse of skin substitutes. To improve coordination and beneficiary protection after detection, we recommend the following.
First, close the reporting feedback loop, acknowledge reports, provide case status, and notify impacted ACOs and secondary payers when high-confidence fraud is detected. Second, create a rapid notification and beneficiary-friendly or record correction process. Third, strengthen DME supplier integrity. One simple way to do this would be to require surety bonds as a way to accomplish this. Lastly, hold ACOs harmless for fraud outside their control by excluding fraud, waste, and abuse from expenditures.
ACOs are willing to reduce wasteful spending and deliver better care, but we need timely information and aligned accountability so that fraud is stopped before it harms patients and those trying to do the right thing. Thank you.
Speaker 1
Thank you, Mr. Knuckles. Miss Tillepman, you are recognized for five minutes for your opening statement.
Speaker 8
Thank you. Chairman Joyce, ranking member Clark, chairman Guthrie, ranking member Polonge, and the members of the subcommittee. Thank you for the opportunity to testify today. My name is Jessica Tillettman, and in addition to leading the government procurement law program at GW Law School, I also teach a course on anti-corruption and compliance. I begin every semester with a simple reminder.
No system is immune to misconduct. And when programs are large, complex, and responsible for trillions in public spending, the risk of abuse increases. That understanding shapes the oversight architecture of Medicare and Medicaid. These programs assume misconduct will occur, and are designed with multiple layers to address this persistent challenge. Inspectors general, the Government Accountability Office, the Department of Justice, whistleblower incentives, and state fraud control units overlap by design.
That structure avoids a single point of failure and creates multiple detection and enforcement channels to give the government the best chance of preventing, detecting, and mitigating fraud. But redundancy only helps to deter fraud when three other conditions are present. The oversight bodies coordinate, they have stable capacity, and they are credibly independent. When any one of those breaks, the system becomes slower, more fragmented, and easier to exploit. The evidence shows the system can deliver results when it is appropriately resourced and coordinated.
Last year, the False Claims Act recovered $6,800,000,000, more than 5.7 of which was from health care. And the 2025 national health care fraud takedown, 324 defendants were charged in schemes involving alleged intended losses exceeding $14,000,000,000. Those results reflect important enforcement work, but they also illustrate a recurring pattern. We tend to focus public attention on episodic, high-profile surges. Those surges can be valuable, but they do not substitute for the routine controls that prevent everyday losses.
In my experience, many of the most important solutions are, frankly, not that glamorous. Robust data infrastructure, risk-based screening and verification practices, and the implementation of open GAO and IG recommendations. That is also what sustains public confidence, because people trust systems that apply rules consistently and do the basics well. With that frame, I wanna highlight three areas where the system remains particularly vulnerable. First, there are well-known verification gaps in enrollment and prepayment screening.
Programs must balance access and program integrity. The solution must be risk-based. Stronger front end controls where feasible, and targeted post payment tools when they're not. Technology is also part of the verification story. Advanced analytics and AI can strengthen detection and verification, only with strong data infrastructure, transparent governance, and meaningful safeguards.
But the same tools that help in the fight against fraud can also be used for it. In the 2025 national health care fraud takedown, DOJ charged defendants who allegedly used AI-generated audio to fabricate beneficiary consent, underscoring how quickly bad actors adapt. Second, some services are harder to validate because they lack the built-in controls of facility-based care. Telehealth has no physical presence. Home health care occurs in private homes.
Durable medical equipment is shipped directly to patients. In these settings, a single encounter may generate multiple claims, and verification is increasingly difficult. Third, managed care distributes program integrity responsibility across states and plans. More than 70 percent of Medicaid beneficiaries receive care through managed care arrangements. When responsibility is diffuse, accountability depends on clear referral pipelines and feedback loops.
Audits have flagged gaps in referrals, coordination, and follow-through, and those gaps are not confined to any one state. These vulnerabilities highlight a deeper oversight challenge. Fraud, waste, and error are often treated as interchangeable, but they are not. Fraud is a legal conclusion requiring proof of intent. Recklessness can trigger False Claims Act liability.
Improper payments may result from documentation gaps or administrative errors. Each of these issues is important, but each requires a distinct remedy. When every error is labeled fraud, we risk misdiagnosing the problem and applying the wrong solution. I'll close with this. Medicare and Medicaid already have robust oversight structures.
The question is whether those structures are functioning as designed. Deterrence requires redundancy, coordination, stable capacity, and credible independence. Thank you. I look forward to your questions.
Speaker 1
I thank you all for your testimony. We will now move to the questioning. I will begin and recognize myself for 5 minutes. Mister Knuckles, beyond durable medical equipment, ill-intention providers are increasingly turning a profit by ordering expensive wound care supplies, also known as skin substitutes. Why are skin substitutes vulnerable to fraud and abuse?
Speaker 7
That's a great question. I think the main reason that we've seen so much fraud in this is the large profit margins that providers have made when they utilize these products. Under the FDA clearance, the prices are not set by Medicare, and they have increased substantially. We and the ACO community have brought this issue up to CMS and to others multiple times. We've asked for local coverage determinations to come in on this.
The good news is that Secretary Oz has a decisive program that he implemented starting January 1. And from the industry observers that I've talked to and other providers, I believe this problem is solved.
Speaker 1
So you referenced that what happened January 1 was moving to skin substitutes to have a flat rate, with the goal of reducing the fraud that had driven the high costs. Again, can I ask you for the record to reiterate? Do you believe that this reform will reduce fraudulent or excessive billing for these services for skin substitutes?
Speaker 1
Miss Gay, are there fraud, waste, and abuse risks in state Medicaid programs when providers are allowed to self-attest to becoming a rule?
Speaker 5
I do believe. I will say most of my experience is not working directly with the states, but with managed care organizations and Medicare Advantage plans. But I do think that there needs to be additional oversight in our self-reporting across the board for eligibility, both for provider participation as well as member eligibility.
Speaker 1
Do you think that there's an increased risk of fraud in state Medicaid programs that provide services that are billed hourly, such as personal care services or adult day care?
Speaker 1
New York's consumer-directed personal assistant program is under scrutiny due in large part to the increases in spending and the lack of provider oversight. In CDPAP, individuals hire their own caregivers, including immediate family members who are paid through a fiscal intermediary to provide assistance with daily living activities. In one case, a man signed up to be a personal caregiver for 10 relatives. To get away with this scheme, this man's brother posed as their mother, a recipient of Medicaid Home Care Services herself, and other welfare benefits. However, there's a little detail that was missed.
She lives in Bangladesh, and she lived in Bangladesh for the entire time. This man was eventually caught and convicted for his crimes. Miss Gay, are you aware of other state Medicaid programs or similar programs designed to CDPAP for personal or home care services?
Speaker 1
What are the issues that you have identified with how this program and the category with that structuring has opened the door to so much overt fraud?
Speaker 5
I think one of the things that we see that might be helpful, so oftentimes these personal care services are being rendered by somebody that doesn't have an MPI. An MPI is your national provider ID that you were supposed to use to bill. When you are setting up care for my mother, I don't have one of those IDs, and that billing goes under a TIN for an organization that I might be working with. So there's a discrepancy or a challenge, I guess, in how we look at that claims file data, and there's also disparate data sources. So if I am working through one MCO for one member and another MCO for another member, they can't see that I'm rendering services to multiple members, nor can they potentially see that it's me rendering those services at all.
So there really is some data issues. I think our system was initially more designed for providers and practitioners who were billing services. And now that we're extending those services with good intention, we're creating other limitations in our ability to fight back.
Speaker 1
Miss Wooten, the HHS office of inspector general has recently begun a targeted review of fraud, waste, and abuse in Medicaid nonemergency medical transportation programs. In some cases, we have seen these nonemergent medical transportation providers bill for impossible amounts for the daily service, such as scores of unique trips that cover thousands of miles in a single day, which we know is unachievable. What aspects of these programs open the door to fraud?
Speaker 6
Because, thank you. Because individuals are performing services where there are, you know, you're not in a hospital where there are administrators overseeing the program and knowing if the services occurred, yet you will operate on a basis of trust. And we do see a great deal in the area of nonmedical or nonemergency transport. We see them billing for group rates or individual rates when groups are being transported. We see them billing for toll fees and other charges that were never incurred.
We see ghost trips. Patients were never involved. And I think it is because they're a one-on-one type service or one on a small group that it's difficult to oversee.
Speaker 1
Thank you. My time has expired. I now recognize the ranking member, Miss Clark, for her five minutes of questioning.
Speaker 2
Thank you very much, Mr. Chairman. I wanna thank all of our witnesses today. Your testimony really centers us where we need to be, where we are in a climate that we could actually get something done around this. However, federal immigration agents are terrorizing communities and children across the country. There are reports of school buses being pulled over while transporting students and being followed stop after stop to and from the school.
Families are avoiding public spaces, keeping their children home from school, and missing doctors' appointments. This experience of living in terror as kids can follow children through adulthood. Hardworking Americans and immigrants are afraid to go to their jobs, restaurants, and grocery stores. Businesses, particularly now in Minneapolis, are struggling to make ends meet due to the pervasive fear that has gripped their community. All of this is due to the actions of an administration trying to justify its brutality, particularly against immigrants and minorities, as a response to fraud.
First, on 12/31/2025, post on True Social, president Trump said, much of the minis Minnesota fraud up to 90% is caused by people who came into our country illegally. Low lives like these can only be a liability to our country's greatness. Send them back where they came from. Second, on 12/19/2025, deputy chief of staff Steven Miller appeared on Fox News and said, we should not be shocked. When you import a population whose primary occupation is pirate, then they're going to come here and steal everything we have.
Third, on 01/06/2026, a post on X by the Department of Homeland Security stated, the largest DHS operation is happening right now in Minnesota. Potus Trump and Secretary Nome have rallied DHS law enforcement personnel to keep Americans safe and eradicate fraud. We're not leaving until this problem is solved. I ask for unanimous consent for these three documents, the 12/31/2025 Truth Social post, the transcript segment of the 12/19/2025 Fox News interview, and the Steven Miller 01/06/2026 DHS post on X to be entered into the record. Mister Chairman?
Speaker 2
Thank you. Miss Tillepman, one of the things that both you and Miss Wooten raised in your testimony is the importance of whistleblowers in rooting out fraud. I'm deeply concerned that whistleblowers will not come forward if they think that the federal government is going to use their allegations as part of an agenda that terrorizes immigrant communities. Why is it important for potential whistleblowers to have confidence that the federal government will use their allegations and evidence to root out fraud, rather than cynically use it to advance a partisan agenda?
Speaker 8
I think I actually turned it off. Mhmm. Whistleblower instructions whistleblower regimes depend on confidence and comfort that when credible allegations are reported, that they'll be kept confidential, that the individual will be secure, and that they believe that a response will be taken in relation to their reporting. So those are important across the board, whether it's a government employee or it's a private citizen.
Speaker 2
Thank you. Miss Wooten, similarly, it is important for whistleblower staff confidence in the intentions of the federal law enforcement. What happens when that confidence is lost?
Speaker 6
As with any whistleblower, they need to be comfortable coming forward, telling the truth, and helping with the issue, not being focused on side issues. And those whistleblowers are vital because they often have inside information, whether they're transnational or not. They bring in information they may have seen firsthand with a provider. They may have experienced fraud, and we need all whistleblowers to feel safe to come in and report those frauds so we can work with them to investigate.
Speaker 2
Again, I appreciate all of your expertise, and I thank you for testifying today. I have one last document to enter into the record. This is the statement from the family of Alex Pretty, issued after Alex was murdered in cold blood in the streets of Minneapolis. It says, Alex was a kind-hearted soul who cared deeply for his friends and family. Also, the American veterans for whom he cared as an ICU nurse at the Minneapolis VA Hospital.
Alex wanted to make a difference in this world. Unfortunately, he will not be with us to see his impact. I ask for Humana's consent for this statement to be entered into the record. So ordered. I yield back.
Speaker 1
General lady Yields, the chair now recognizes the gentleman from Idaho, Mr. Fulcher, for his five minutes of questioning.
Speaker 9
Thank you, Mr. Chairman. And to the panel, thank you for your input today. I'd like to say that I enjoyed it, but not necessarily enjoy is the right word, but we need to hear it. And, it's important information. So, thank you.
Question for Missus Gay first. I'm from the state of Idaho. Sometimes, may not be the first state you think about when there might be fraud, but that is the kind of basis of my question. Have you noticed any trends where states might get targeted or regions might get targeted as a function of potentially them having a lower barrier for entry, or maybe perceived as not being as likely to be audited?
Speaker 5
Absolutely. Fraud, we talk a lot in the industry how it can be regionally generated. It tends to start in one particular area. And then, I don't know if they're all hanging out talking to each other or how that spreads, but it does tend to start in certain populations and then branch out from there based on controls. But, certainly, flying under the radar could be something.
Speaker 9
Not surprising. I'm gonna go to, Miss Wooten here next, but either Miss Wooten, Miss Kay, if you have a comment. What if the bad actor is foreign? Is it a foreign actor? How much of that?
Or do you see that? And if so, what kind of a challenge does that bring to potentially pursuing that fraud if it's perpetrated by a foreign actor?
Speaker 6
Certainly, states have seen both fraud cases perpetrated by foreign and by US citizens or people in the US. And from our perspective, as being a Medicaid fraud control unit, it makes no difference. We look at the difference. We look at allegations, try to identify, is there something we can do about them? Is the dollar amount something we can pursue?
You know, are we going to be able to get value back for the Medicaid program? Do we have the laws in place to prosecute whatever type of fraud is referred to, and we move forward with that investigation?
Speaker 9
Specifically, the laws are kinda what I was trying to get some clarification on. It's more gray pursuing a foreign actor. Or is it, are the laws in place necessary, the tools you need?
Speaker 6
The tools are in place if the bad actor is in their or your own state. Right? We can use our state laws and go after that person. Victims are also at risk when people commit fraud, and we work regardless of what their background is or what the risks are. I think there are state laws that we can follow and hold people accountable.
Speaker 9
Okay. Thank you for that. Mrs. Gag, back to you if I may. What are some common fraud schemes that you run across?
Just top two, three, maybe.
Speaker 5
Yeah. I mean, I think some of the biggest ones, as I already mentioned, but the applied behavioral analysis is a huge scheme that we continue to see across particularly Medicaid, nonemergency transportation. I mean, we see labs. We see a lot of the home and community-based services, and these are a broad range, and they vary based on the state, what their regulation is, what services are covered. That takes up a lot of our case time right now as an organization, working with these home and community-based, because these are not practitioners.
These aren't physicians who are rendering services. So we see non-licensed individuals. It's very hard for us to know what's actually happening. And for myself and my organization, we see per data per health plan and not necessarily aggregated data across a kind of
Speaker 9
That part of my next question. What's the trigger? What are some of the indicators? You see, what are the red flags?
Speaker 5
Yeah. I mean, some of the indicators are impossible days when we're looking at that, feels impossible, and I'm just looking at one health plan in an area. I'm not considering all the other services that provider may be rendering. So Impossible Day is a big one. Outlier analysis is a huge tool of ours.
Speaker 9
Okay. So I'm gonna go to missus Wooten, but, again, either one of you if you have input on this. But how are these schemes evolving, changing? What do you more sophisticated, less sophisticated, more blatant. How are these schemes changing over time, and how are we tracking that?
Speaker 6
Throughout the time I've been with Medicaid fraud, what we see changing most is, as I mentioned, these are not, for the large part, providers who are just doing a fraudulent act now and then. These are people who are committed to committing fraud. They're working on it. We see that fraud schemes cross state lines far more than they used to. That's why we need to collaborate to find out what's going on.
Anytime we hear of a fraud, each state goes back, sees what they can find, and then we collaborate. I think that it's difficult as we've put in some provisions into health care that are beneficial, like electronic medical records and different devices that make it easier for a provider. It's also more difficult on our end to be able to see if it is a legitimate document because electronic medical records can print off an amazing medical record that looks like a full service was done. Whereas in the past, if you'd had to write out that note, you might have seen what was really performed.
Speaker 9
Thank you. Thank you for your input, feedback. Mister chairman, I yield back.
Speaker 1
The gentleman yields. The chair now recognizes the gentlewoman from Colorado, Ms. Gett, for her five minutes.
Speaker 10
Thank you so much, chairman, and I want to thank everybody for coming today. All of us are concerned about fraud in Medicare and Medicaid. I when we do these markups of these bills and we have these debates, so frequently, people talk about fraud in these programs as if it's the beneficiaries who are committing the fraud. So, Ms. Wooten, I would like to ask you, what is the percentage of fraud in Medicaid that's carried out by providers versus the fraud that's carried out by the patients themselves?
Speaker 6
Thank you. I appreciate that question. Medicaid Fraud Control Units, and thus, NAMFUKU, we only have the authority to pursue provider fraud unless the fraud is perpetrated in collaboration with a recipient.
Speaker 10
Right. But how much of the fraud would you say is committed by the providers versus the patients?
Speaker 6
I couldn't speak to the amount for the individual exactly, but I would say far more is committed by providers, and the large dollar amounts are going to the large types of providers.
Speaker 10
The large types of providers, yes. And, you know, states like all of our states are constantly on the lookout for fraud. And, miss Gay, I would agree with you. In Colorado, what we're finding lately is a lot of that fraud is from transportation. Just last week, there was a huge coding discovery in Colorado that showed that some people were getting $650 for transportation under Medicaid versus what should have been $65. Last spring, Colorado's official actions uncovered a ring that improperly charged Coloradoans millions of dollars for nonemergency transportation, resulting in blocking $25,000,000 in fraudulent payments.
And, I'd like to put in the record a Denver Post article from 06/21/2026. No damn thanks. So, Miss Tillman, you said that adequate fraud investigation requires coordination on all levels of government. Is that correct?
Speaker 10
And one of those levels is the federal government. Is that also correct?
Speaker 10
Now, at the federal level, the Department of Health and Human Services Inspector General was one of at least 17 IGs terminated in the first days of this administration. So, miss Tilman, I would also suspect that you and probably the rest of the panel would agree that when you're gonna hire inspectors general, they need to be qualified for the job, and they themselves need to be not committing fraud. Is that right?
Speaker 10
Of course. Now, the inspector general who used to be there was a respected professional who honorably served in HHS for over 2 decades. He was replaced by Thomas March Bell, who was once forced out of a Virginia state government job for misspending taxpayer dollars. And I would ask unanimous consent to put into the record this Washington Post article dated 06/17/1997 about Mister Bell.
Speaker 10
Thank you. Now, Miss Telleman, about how many fewer employees are at the HHS Office of Inspector General now than there were at the beginning of this administration?
Speaker 8
Well, I don't have the exact number. I believe in the OIG's office, it is in the dozens at least.
Speaker 10
It's about 200. And I would ask unanimous consent to put a New York Times article, dated 01/09/2026, into the record.
Speaker 10
That's a loss of more than 10% of the employees in the office responsible for keeping watch for waste, fraud, and abuse in HHS. So, Ms. Wooten, I want to ask you, are states and Medicaid fraud control units better to detect and respond to fraud when the HHS IG office is fully staffed and well-resourced?
Speaker 6
Certainly in all areas of fraud to research it. We need a team of individuals who can work together to do that. And when there's a shortfall on one side or the other, we collaborate and make sure that we find the resources we can use to combat fraud.
Speaker 10
Thank you. Last month, Department of Justice prosecutors who were leading the fraud investigations in Minnesota that the chairman talked about resigned in protest after they were directed to investigate the widow of Renee Good who was murdered by ICE agents in Minnesota. And just yesterday, an additional 8 prosecutors in the Minnesota US attorney's office left in protest, leaving the office with fewer than 20 staffers. And so, mister chairman, if everybody's going who's supposed to be doing this enforcement's gonna leave, I don't think that it's gonna help very much to try to investigate waste, fraud, and abuse, and I yield back.
Speaker 1
General lady yields. The chair now recognizes a general lady from Tennessee, Doctor Harsberger, for her five minutes of questioning.
Speaker 11
Thank you, Mr. Chairman, and thank you to the witnesses for being here today. I'll start with Miss Wooten. Are civil and criminal penalties sufficient to deter repeat offenders who commit Medicaid fraud?
Speaker 6
They are if we can find the scope of fraud that we're looking for. Unfortunately, you're sometimes finding the tip of the iceberg, but then we can prevent that fraud from continuing, and that helps. There are also penalties. I think the HHS OIG exclusion doesn't allow them to bill Medicare or Medicaid. Sometimes it's more impact on a provider than a civil or a criminal fine. Yeah.
But we try to use all of the tools as we combat fraud.
Speaker 11
Is there evidence that repeat offenders can enroll as providers in Medicaid programs in other states after enforcement actions? And if so, why?
Speaker 6
If the enforcement action has excluded them on the HHS OIG exclusion, you would at least have remedies if they attempted to practice because they are not allowed to bill government programs. It's more difficult if there are prefiling resolutions, and those are not public or criminally in a criminal database.
Speaker 11
Absolutely. Do Medicaid fraud control units communicate and share information with one another to identify repeat offenders and recurring schemes?
Speaker 6
Absolutely. We meet regularly. We meet with multiple mafukus. We also met with federal partners. Three weeks ago, I was with CMS, DEA, FBI, OIG, all trying to get on top of this.
And we even conduct training specific to certain types of fraud, and teach nurses, auditors, investigators, and attorneys how to combat fraud.
Speaker 11
There has to be red flags, and people know if you've been in the healthcare industry.
Speaker 11
I guess this is Missus Gay or Miss Wooten. Is physician participation or authorization required to perpetrate Medicaid or Medicare fraud schemes? Miss Gay?
Speaker 5
If the proper controls are put into place, then yes. But oftentimes, those controls are skirted in some way or another.
Speaker 6
I would say another role of the mafukus, besides investigating and prosecuting, is we make program recommendations to the state Medicaid agency. And often, those are, to say, we believe this code or this practice may open doors to allow fraud, and we make program recommendations on how that can be improved. So we're trying to solve the future, not just correct the past. Totally.
Speaker 11
Are all providers that commit fraud doing so willingly, or are there physicians who unknowingly participate in these schemes? Because not every physician or provider who's in charge of something knows what is being billed.
Speaker 6
I think that's a difficult part of a Mofuku investigation. You're trying to figure out who is culpable and who maybe didn't understand. Right? It's shocking sometimes when a physician will say that they didn't understand the billing, but they seem to understand the service in getting through med school and everything else. But there are certainly innocent victims who got caught up in these schemes.
I would say, particularly in nursing homes, many of those staff members and providers want to do a great job, and they're unaware that the money's being siphoned off to investors. Yeah. Or to the other.
Speaker 11
Given that physicians are meant to examine and know the patient before authorizing orders, how many providers or do you have a percent of these providers who unwillingly know about these, really, that authorize the fraudulent orders for, say, DME or testing?
Speaker 6
That's a great question, and it's difficult sometimes because if a name appears on an order, it appears they've ordered it, and it takes boots on the ground to go out and interview them and say, here's your, is this your signature? What have you done here? Right? Oh my gosh. And all of the programs where there's no oversight in house, I owned a home health agency for many years.
Speaker 6
And there's a lot of trust. It goes into sending your staff into a home, getting a doctor's order from someone who is not in the home at the same time. So there are avenues that they can be, and we try to study what's required in different types of health care so that we can figure out where could you commit fraud.
Speaker 11
We could use AI models to kind of, I mean, there's a million ways to do it, but thank you. Miss Gay, what aspects of current telehealth regulations can be exploited by criminals to perpetrate Medicare or Medicaid fraud? Because I we'll be controlling the, you know, changing the rules on telehealth pretty soon and extending those things. So where do we need to look at for the loopholes?
Speaker 5
Yeah. I think we reduced barriers to care during COVID, and I'm not sure that all of those went back up. And some of that is for the convenience of many of us. We've probably experienced telehealth and been pleased that we didn't have to go out for those services. But when we reduce those barriers, oftentimes we do open it back up to fraud.
Speaker 11
Across state lines. You know? I think that was a big deal when we did that for COVID, and, I can see how. Absolutely.
Speaker 5
And if I may, about rendering providers, you know, one of the things that when I was talking to my team about, like, the, so many solutions that we'd like to bring up, we have often talked to rendering providers, and they have no idea that they are complicit in a particular scheme. And sometimes these are retired providers. There is not any type of feedback loop to somebody with a current MPI saying that you've been billing under these TINs. So when we look at DME or labs or those such things, they really don't have any indication until they get a letter either from an organization like mine or Miss Wooten to say, what do you mean, and how do you mean? And so that is absolutely like an area that's frustrating.
Speaker 1
The general lady yields. Votes have been called. We will recess the hearing and reconvene 10 minutes after the last vote. The subcommittee now stands in recess.
Speaker 1
The committee will now come to order. The chair now recognizes the chairman of the entire committee.
Speaker 1
Oh, I'm sorry. Mister Tonko from New York for his five minutes of questioning, as soon as we let him get seated.
Speaker 12
Thank you, mister chair, and sorry to be a little delayed here. Let me be clear. We all support rooting out fraud, but that's not what has been happening under the Trump administration. Instead, today, Republicans are attempting to use fraud claims to legitimize the Trump administration's lawlessness in American cities. While the resulting harm might be unprecedented, this strategy is not new.
This whole congress, Republicans have levied massively overbroad allegations of fraud to justify their deeply unpopular policies. Republicans have stretched the word fraud beyond recognition. One way they have done so is by conflating things like routine administrative errors or improper payments, with illegal and deceptive behavior. Professor Tellepman, can you walk us through the difference between improper payments and fraud, please?
Speaker 8
Yes. And thank you for the question. Improper payments, all fraudulent payments are improper, but not all improper payments are fraudulent. And, in fact, when we see the data points, if you have over $90,000,000,000 of improper payments, about 77% of that is administrative error and not actual intentional fraud.
Speaker 12
Alright. Thank you for that. And in your testimony, you shared that treating improper payments as fraud, quote, distorts reality. Why is it important for Congress to treat improper payments as distinct from illegal fraud, and what are the consequences of not treating the two separately?
Speaker 8
One of the biggest consequences is that labels drive remedies. So if you label everything as fraud and you don't make the distinction, you'll be directing scarce resources toward the wrong conduct.
Speaker 12
And one consequence of distorting claims of fraud in Medicare and Medicaid is that it undermines the public's belief in the integrity of federal programs. How can using the term fraud as a catchall mislead the public, and why is that so damaging for public confidence in government programs?
Speaker 8
So, again, ultimately, you wanna make sure you are crystal clear with the labels that you're using, because if the taxpayers are led to believe that 100% of their taxpayer dollars are going towards fraud, it causes them to lose confidence and faith in the government operations.
Speaker 12
And, professor, you also shared that oversight of federal programs must remain credible and durable across administrations, and that failures can diminish public confidence in oversight findings. How can instability at agencies responsible for monitoring fraud undermine the public's confidence in the integrity of government programs? And why is that indeed harmful?
Speaker 8
Ultimately, we wanna see stability in how federal programs are being operated, because it makes them credible and makes them more capable, and it also ensures that they have the capacity to adequately address these issues. If taxpayers believe that some of these things have been disrupted, that, again, would cause the belief that them to lose confidence in their government operations and the spending of taxpayer dollars.
Speaker 12
I thank you for that. You know, I thank all of our witnesses. You know, we need to ensure that the public does not lose confidence in the ability of federal programs to help them and their families. Obviously, these programs are rooted in a sense of mission, that they are there to serve people truly in need. And, if we're to destroy that by lack of confidence or other dynamics, we, in fact, lost the battle to do well to the program.
That means preserving the mechanisms that ensure good governance, and making certain that fraud allegations are indeed levied accurately and responsibly. With that, mister chair, I yield back.
Speaker 1
The gentleman yields. The chair now recognizes the chairman of the entire committee, Mr. Guthrie, for his five minutes of questioning.
Speaker 3
Thank you. Wow. I'm just sitting here trying to think we're splitting hairs over the word fraud, when what's going on with Minnesota? What's going on in Los Angeles? Gosh.
That doesn't undermine confidence in the system. Nothing else does. And do we not call it fraud because it might undermine confidence in the system? It's, you know, 14,000,000,000 being taken. People's identity being stolen on Medicare or seniors.
So when they go to get the product that they desire, that they deserve, they can't get it because somebody's gotten paid for it under their name. I mean, my goodness. We're gonna try to redefine the word fraud and not include that. I'm not sure why we're sitting here. It's just dumbfounding.
So, miss Gay, the things that you've seen that we're talking about in Minneapolis that's happened in Minnesota and what happened in Los Angeles, is that would you define that as fraud? Aren't these people purposely setting up fake accounts so they can get money and not serving anyone? I think that would have to be fraud. I don't think that's improper.
Speaker 5
Interestingly, so I can never we don't use the f word often is what I say in my line of work because I'm not law enforcement or, you know, can't, you know, speak for the law. However, it is hard not to see fraud when there is very clear intent. Proving that intent is often what is difficult.
Speaker 3
K. So, miss Wood, in your organization, you have people that are police. You have your law enforcement. So what would you define these, what you're seeing in Minneapolis and what we've seen with the Somali population particularly, and in Los Angeles with domestic medical women? Would you define that as fraud?
Or is there some kind of law school term we need to use to try not to call people fraud when they're being fraudulent.
Speaker 6
Yeah. Given that the information I have about those states is what I've read in the news. It's difficult to address those exact investigations. However, Medicaid fraud control units look at fraud, and we call it fraud. We do not have the authority to look at waste and abuse.
We are specifically designated. People refer to us as a case, and they say, here's a credible allegation of fraud, or we data mine and find what appears to be an outlier. We only pursue investigations if we think they're credible. But we do learn from other states. And, the schemes that we see there, we see schemes in our own states where it's definitely fraud.
Companies, like I said before, set up with the sole purpose of committing fraud. Substance use disorder providers who never had a real provider provide services, even though they're so desperately needed. But I think in this conversation, we're fortunate that we focus on fraud. We call it fraud. We prosecute and litigate fraud.
Speaker 3
So it's fair. Had a physician one time show me that he had Medicaid money, Medicare money reclaimed because he didn't put the time down. He did the service. Although he did the service, he just didn't have the paperwork absolutely correct. That's not what we're talking about.
That's absolutely not what we're talking about here, is it?
Speaker 3
We're talking about foreign entities in some cases setting up dummy accounts to take money out of the Medicaid and Medicare system, which seems like everybody in this room would wanna get rid of because it takes money away from people who really deserve it. And I understand why we're splitting hairs on a definition, when we have this kind of crime going on. So would you like to talk about Miss Gaytu as well? People setting up these entities just to take money from the taxpayers?
Speaker 6
Yes. And I'd wanna say, we do see some of those frauds you're describing. We also see domestic individuals stepping in who are not appropriate. They're not providers, and they're billing Medicaid and Medicare. We see it across the gamut, but it harms the system.
Speaker 3
So how do they set up systems to get money if they're not providing care?
Speaker 3
I mean, I ask that rhetorically because I know they do it. So what are they doing?
Speaker 6
Okay. So you set up a company. You don't necessarily have to be a health care provider to own a company, a home health agency, a substance use disorder clinic, a nursing home. And then maybe some of the people at the lower level are doing what they think they're supposed to do as services. But the reality is those lower-level people don't know what the Medicaid regulations are and the Medicare regulations are.
And so the people who are supposed to be billing and knowing the process and who signed the provider agreements, there are no therapists involved in some of these behavioral health schemes.
Speaker 3
So what are you seeing? I mean, we're now, it looks like that's what this hearing turned into, trying to define what fraud is. And I think fraud should be prosecuted.
Speaker 5
Absolutely. And so our role, so most of the work that I do is directly for the MCOs and MA plans, and they work then with law enforcement to refer these and to get the official stamp of the fraud.
Speaker 3
Do you see more fraud in states and Medicaid, particularly that don't have MCOs or Medicaid managed? If it's just bill for service Medicaid or Medicare, do you see more fraud in that versus when the private insurance market is trying to chase?
Speaker 5
of And not the plans committing the fraud. Let me be clear. But we see a lot in the states that we're working with. That is, through the managed care organizations, and the difficulty to stop those. But it is many of the cases that we are working now are with law enforcement and are being prosecuted for such things.
Speaker 3
Thank you. Well, I'll see my time's expired. So thank you for your time. Appreciate it.
Speaker 1
Gentlemen Yields, the chair now recognizes the ranking member of the committee, Mister Pologne, for his five minutes of questioning.
Speaker 4
Thank you, Mr. Chairman. The terror and violence we're witnessing in Minneapolis is the extreme result of congressional Republicans' unwillingness to hold the Trump administration accountable, and the use of fraud as a justification for every cut to programs is really getting old. Today's hearing is yet another attempt by Republicans to convince the public they're generally concerned about fighting fraud, even though they've been silent. While the very individuals responsible for fighting fraud were fired, pushed out, or resigned in protest. But let me go to Ms.
Tillettman. You say in your testimony that overstating fraud has the potential to, quote, stigmatize program participants. Could you talk about the risk to programs and program participants when fraud is overstated or action against fraud is taken preemptively?
Speaker 8
Yes. Thank you for the question. First, I also want to just be clear. There is definitely a lot of fraud out there. But the reason that we wanna be clear about our labels, again, is because different things have different consequences.
Fraud can result in imprisonment. False claims that can result in substantial financial liability. And then, of course, some of the other types of things including improper payment should have greater resources than directing being directed to oversee those processes to result in fewer improper payments. So the risk to that and the risk to the integrity of the entire system happens when we're not appropriately directing the appropriate remedies to the appropriate act.
Speaker 4
And then what, when fraud is exaggerated or overstated, how might that impact the efforts of investigators and prosecutors who are trying to root out actual illegal fraud?
Speaker 8
So, again, we have finite and scarce resources within the federal government, state governments, and, of course, all the actors across the entire landscape. And so you wanna make sure you're being efficient with taxpayer dollars and how you're directing those resources.
Speaker 4
And then, well, thank you. But in the case of Minnesota, the Trump administration is withholding as much as billions of dollars in funding that the state relies on to provide health care to residents, and it appears poised to take similar action in many other states. They're doing that despite the numerous improvements that Minnesota has been implementing to prevent and prosecute fraud across the board, and this is only going to end up hurting Americans who need care. Already, the White House has directed federal agencies to review nearly all federal funding for 14 states and DC that supported Vice President Harris in the 2024 presidential election. So, Miss Tilton, again, what are effective approaches that can be taken to prevent and prosecute fraud without unfairly punishing Americans who rely on those programs?
Speaker 8
So, you know, ultimately, what you wanna do is look at things from an institutional level. We know that fraud occurs in all, you know, 50 states, and then the territories as well. And so the goal is to make sure that we're not seeing what's behind us. We're so focused on some aspects that we don't look at the entire system as a whole. So that would be critical as to make sure we're accounting for all of these risk areas, which, by the way, are in all states, so that we, again, we're not misdirecting resources.
Speaker 4
Well, thank you. Miss Wooten, in your testimony, you refer to federal, state, and local partnerships as vital. Could you talk about how partnerships and collaboration, rather than hostility, between federal and state partners could help fight fraud? It's about a minute and a half left.
Speaker 6
Okay. I can speak to the partnerships. They're invaluable. And, examples would be, as fraudsters are no longer staying within one state, they're crossing state lines. We have limited jurisdiction as a state prosecutor, state investigator, and we rely on those federal partners, whether it's the FBI's health care task force, whether it's the HHS OIG.
They are able to take what we can provide, the resources we have. They can also cross state lines, and we can involve other states in that. So they are critical. State partners are invaluable in the area of patient safety and protection because they are the ones who get complaints of abuse, neglect, and exploitation. And we work those cases as well more at the state level.
Speaker 4
Well, thank you. I just think we're at a dangerous moment in our country. The committee of Republicans are amplifying the Trump administration's reckless rhetoric targeting Minnesota and Los Angeles. And I don't think fraud is a partisan issue. It just doesn't happen in blue states.
We should all want to go after actual fraudsters. However, using the facade of fraud prevention as a weapon to hurt people who did not vote for President Trump is really unconscionable. And the Trump administration must be held accountable, and the Republican majority should not be providing the administration with excuses for harming even more Americans, in my opinion. But I yield back, Mr. Chairman.
Speaker 1
The gentleman yields. The chair now recognized Mr. Allen for his five minutes of questioning.
Speaker 14
Thank you, Chair Joyce, for holding this important hearing on fraud in Medicare and Medicaid. I thank the witnesses for being here to testify. It's critical we examine how bad actors use Medicare and Medicaid to manipulate the system, and that it has negative impacts for beneficiaries and taxpayers alike. My hope is we can look for solutions on how to prevent this in the future. Mr.
Knuckles, as an accountable care organization, you are incentivized to lower health care costs for Medicare patients. What impact do fraudulent claims have on an ACO's ability to make health care more affordable for seniors?
Speaker 7
Thank you, representative Alan, for that question. So, as an accountable care organization, you know, we are responsible for the cost. Medicare shares with us the claims that they pay on behalf of our patients that are assigned to us by the program. So if our spending, you know, overshoots the budget, we have to pay Medicare back. In the current program they're at, we're at 100% at risk.
So, we talk about the risk and harm to the taxpayers. In this case, the risk and harm is to provider groups like us that are trying to do the right thing. We're trying to, you know, give higher quality care, and we're trying to reduce wasteful spending. We work within our community to do that. And so if these fraudulent claims are paid out and we don't have control over it, we report it to the federal government.
More of us are gonna leave the program. We've been able to reduce costs in our community by 25% over a group from where we were in the past, compared to the counterfactual. If these claims keep going out and we're held accountable for claims for fraud over which we have no control, then we'll have no choice but to leave the program, and cost for the overall entitlement programs are gonna go up. And so we want to keep those costs low. Thank you.
Speaker 14
Okay. Great. Thank you. Miss Wooten, from my understanding, it's not uncommon for fraudsters to target Medicaid to commit fraud, to take advantage of vulnerable populations such as the homeless or those with substance abuse disorders. How does Medicaid fraud harm these patient populations?
Speaker 6
In so many ways, it's difficult for many of the patients in those populations to seek services for what can be a very difficult diagnosis, to let people know that you're truly an addict. And when they don't receive the services they need, not only is Medicaid wasting money paying for them, but that person still needs the treatment at the end. So it becomes neglect as well. So it's a very difficult population to work with, and we have difficult laws federally that make it difficult to get some of the medical records without jumping through hoops, but we need to because this population needs to be treated.
Speaker 14
Good. Thank you. Miss Yeh, in your experience, can fraud be prevented if the government and regulators lowered information barriers and increase scrutiny on certain providers?
Speaker 5
Absolutely. Yeah. I think, there's a gap in our credentialing process, across the board as far as, you know, letting practitioners into programs, and keeping up with the screening. It's a big job, but most organizations that I work with are screening their providers once every three years. And that's just not often enough to deter the bad players out there.
Speaker 14
Mhmm. Well, obviously, you know, we have news coming out on this every day. And, you know, the public is really discouraged about the way people are using these programs in a fraudulent and abusive way. So we got to get to the bottom of it, and I thank you for your work. And, certainly, Congress needs to help you in any way we can.
Thank you, and I yield back.
Speaker 1
The gentleman yields. The chair now recognizes a gentleman from Texas, Mr. Crenshaw, for his five minutes of questioning.
Speaker 13
Thank you, Mr. Chairman. Thank you, everyone, for being here. Miss Gay, when we talk about Medicare and Medicaid, you were not talking about just paperwork errors. Right? We're talking about really actual people being harmed, whether those are seniors, kids, or they're disabled.
And your experience when it comes to fraud and federal health care programs, you know, it's not a victimless crime. Is it directly harms beneficiaries? So I mean, just drawing on your experience across Medicare, Medicaid, and the commercial plans. Why is it that Medicare and Medicaid are so much more vulnerable to fraud than private insurance? It look.
Fraud is a crime, also a waste. You know? I like to differentiate between these two terms. Sure. Both.
Speaker 5
Yeah. Yeah. I mean, I think, one, there's just scope and span. Medicaid, particularly, is difficult because each plan has varying regulations and guidance, as well as benefit coverage determinations. So it gets more difficult at the state level.
There's a saying, you know, if you've worked for one Medicaid plan, you've worked for them all. And so that certainly offers some challenges there. I think there's also, I don't know. Personally, I can say I don't often read my EOBs, but I think, you know, that goes down too in certain populations where they don't have access to a computer, they don't even mail these EOBs out. We've talked a little about the homeless population.
Where would that go? I'm not exactly sure. So do you even know what's being billed under your Medicaid or Medicare number? It's just a difficult process to wrap around. It's complicated from a data standpoint.
Speaker 13
the more we waste on people who really are not even eligible for it in the first place, the less space there is for people it's designed for. That, that's a, you know, that doesn't get said enough. And I guess my next question, I mean, who really bears the brunt of the harm? You know, is it the system? I mean, yeah, a little bit.
Right? Because the taxpayers are on the hook, so the system is hurt. But it's also really the patient, you know, for all the reasons we just stated. Right?
Speaker 13
There can their care become delayed or we we've heard providers just won't even take Medicaid anymore. Now, you know, so what's the solution here? I mean, some argue stronger oversight would just actually threaten access to care. But based on your experience, what actually happens when act to access when fraud is not controlled? And gets to, you know, again, who bears the brunt of this?
Speaker 5
Yeah. I mean, I think there's certainly the patient arm harm attribute. You mentioned, you know, not getting the care that you need, and Miss Wheaton brought up, you know, sued treatment facilities, and we dealt with some cases with ACA enrollments. And by the time we verified with CMS that those were eligible recipients, the health plan was already on the hook for 1,000,000 to $3. Were these patients even receiving the care? In some cases, yes.
In other cases, they had no idea that they were in a facility for such treatment. And I think to Ms. Wooten's point with having that stigma, now you have somebody that doesn't even have that challenge, but that is now on their record. And even worse, those that do that are getting subpar treatment at a very exorbitant rate, and still not getting better.
Speaker 13
Yeah. I mean, and this gets to in my time left, you know, what asking y'all what the solutions are. I mean, how do you tackle fraud, waste, and abuse in a way that helps the patients and the taxpayer? And I guess anybody can answer that question. Maybe, Miss Wotton, you know, since given your role in the National Association of State Medicaid Fraud Control.
What's, and maybe it was, what are some of the worst two questions. What are some of the worst examples you've seen? And then, again, like, how do we fix this? And that goes to anybody.
Speaker 6
I think one example I would use as a nurse that was most shocking to me was hospice fraud. You have individuals who need this care at the end of life, that is so valuable. But we see hospice schemes where patients are enrolled. They may be in a facility enrolled. They don't even know they're put in hospice.
But hospice is not just a billed service. Hospice declares that they are terminally ill. It discontinues the treatments they need for preventive care. And if they don't even know they're on hospice, essentially, their health care plan has been changed just because somebody is trying to defraud Medicaid. That is, in my mind, the most egregious.
But I worry a lot about nursing homes right now because, as we're all aging, especially me, the facilities are not, in a way, always that verifies that patients or residents in that situation are going to get the care they need. And it becomes terrifying, because people need care. We need patients to feel safe going to their providers, and most providers are amazing. But we've got to be able to share these schemes so that somebody knows what's being billed on their behalf. And I think in Medicaid, not having explanations of benefits makes it very difficult for them to be part of the conversation and solution.
Speaker 13
So an explanation, I'm out of time. So but an explanation of benefits seems like a solution kinda rabbit hole that we should dive into at a later point. Thank you.
Speaker 1
The gentleman yields. The chair now recognizes a gentlewoman from Texas, Miss Fletcher, for her five minutes of questioning.
Speaker 15
Well, thank you, Chairman Joyce, and Ranking Member Clark, for holding today's hearing. Thank you to our witnesses for your time today. Like many of my colleagues, I'm also in two hearings at the same time. But I appreciate you being here and to follow along with several of the things I've heard, which I wanna get into in just a minute. But I do wanna note that this subcommittee has an important job.
And our purpose on the Oversight and Investigation Subcommittee is to protect our communities, to protect the rights of our citizens, and to make sure that what we see in the executive branch and beyond is not overreaching and certainly is not violating the rights of Americans. And I think it's fair to say, in face of the lawlessness that we are seeing across the country right now, that this Congress as a whole has failed to conduct necessary oversight over the last year, ceding Congress' authority to the executive branch and rubber stamping the president's agenda even when it's unlawful and even when it's unconstitutional. And I'm concerned from some of the comments that I've heard from this hearing already today, as I've been following it, that this hearing is designed to support the Trump administration's use of claims of fraud in state programs, including Medicaid and Medicare, to recklessly deploy ICE agents to cities and states, to cut necessary funding, and to make fraud prevention and detection more difficult rather than less difficult. And, there's a lot to say there. There's a lot going on, but we have limited time.
So, certainly, I understand that the Medicaid system in states and the Medicare system are not without real challenges, substantive challenges, and that there is an opportunity for real fraud to occur. And, certainly, we know that it has occurred. You know, in administration after administration, there have been professionals whose sole job it is to monitor, oversee, and root out fraud and abuse, to prosecute cases against those who are committing it. And what we've seen is that early on in this administration, the Trump administration fired most of those people who are responsible for doing this work. So we know that to detect this fraud, we really need experts in the field.
We need responsible nonpartisan investigations, and that's just not happening in this administration, and it's not happening in this Congress. So, we have limited time, of course, and I do wanna get to a couple of questions for Miss Tillepman. In your testimony, you mentioned the risk of resource management, or mismanagement when we don't have reliable data to look at, when the incidence of fraud as it is defined are inflated. And so can you just talk a little bit more about how it leads to a misuse of resources, and so that you can have just a long time to answer sort of the second part of, like, how does that interfere with our job here in terms of proper oversight and reform, and what are the things that we should be thinking about, looking at, and asking for so that we can properly utilize resources and properly conduct oversight?
Speaker 8
Thank you for the question. So, you know, ultimately, oversight is only going to function well if it is, you know, independent, well resourced, highly capable, and then there's a coordinated effort amongst all the individuals that are responsible for rooting out fraud, waste, abuse in the system. So that's the baseline expectation. The loss of data, data is everything. I think you've heard this already from several of the other witnesses today that data quality is a problem, and that's actually been something that's been highlighted by both the IG and GAO, routinely.
So that's an issue that needs to be addressed. And the final thing I'll say is there's a very great starting point for Congress right now, and which is all the many unimplemented GAO and IG recommendations. And so, when necessary, even providing some sort of timeline to the agencies for completing some of those unimplemented recommendations. And so there's a whole long list, but there's an easy place for people to start, and it's written down and available right now.
Speaker 15
Well, thank you. I think that's extremely helpful, and we have limited time here. So the other thing I wanna ask is one of the things we saw at the very beginning of this administration last year was the efforts from Elon Musk and others to go through and cut personnel. Can you talk within the fifteen seconds we have left about how those recommendations from Jio can be implemented if we're firing the people who are responsible for doing?
Speaker 8
The work? So, certainly, I think most of us can all get behind the idea of efficiency. But, ideally, when we're dealing with oversight processes, we want to make strategic and more targeted cuts. And so since a lot of this was through buyouts, rifts, and other mechanisms, incentivized retirements, I think if it's not as targeted as it could be, that necessarily doesn't reach the efficiency we would hope when we're dealing with employment issues involving the federal government.
Speaker 15
Well, thank you so much. I've gone over my time. Mister chairman, I yield back.
Speaker 1
General lady yields. The chair now recognizes a gentleman from Alabama, Mr. Palmer, for his five minutes of questioning.
Speaker 16
Thank you, Mr. Chairman. This is something that I've worked on almost from the first day in congress, on the budget committee, working to get the budget committee to include in the budget accounting for improper payments and the reduction of that. I just looked at a report that indicates that the GAO says that the fraud could be between 233 to 521,000,000,000 annually. And that's a stunning number considering that we budget on ten-year windows that you're talking $2,300,000,000,000 to $5,200,000,000,000 plus interest because we're operating in deficit. We're borrowing that money to send it out improperly or in some cases, fraudulently as we're seeing played out in states like Minnesota and California and other places.
One of the things on the Medicare side and the Medicaid side that should be, in my opinion, fairly easy to address, that is the failure to verify eligibility. That's one of the biggest reasons that payments are going out fraudulently. Director Wu Tan, is that something you think that we can fix?
Speaker 6
So as I mentioned earlier, the Medicaid fraud control units only have authority to pursue provider fraud and fraud committed in collusion with a recipient. But we do partner, when we have cases that involve that collusion, we work with the recipient fraud and try to solve that angle as well. But our primary focus is on provider fraud.
Speaker 16
Would that include making sure that terminated Medicaid providers are no longer enrolled in multiple Medicaid programs across state lines?
Speaker 6
Absolutely. And a lot of that work is done through various state program integrity units, where they're looking for waste, abuse, and whether or not they have a case to refer for fraud. So those efforts are going on, and they're critical.
Speaker 16
How about authorizing state auditors to access certain personal data like taxpayer identification numbers to eliminate duplicative enrollments in Medicaid?
Speaker 6
There needs to be a system to identify duplication, for sure, whether it's Medicaid numbers or other numbers, but for sure, that needs to be done. Nobody benefits when fraud is committed or when money is wasted.
Speaker 16
Well, I do think, and I think we would have bipartisan agreement on this, that Congress could do a whole lot more in writing our laws and direct the guidance much better to help states ensure that they can manage the money without as much fraud and waste. One of the other things that I've been focused on, I've had many discussions with Gene Didero, the Comptroller General about this, is antiquated data systems. We have federal agencies that their data systems are antiquated, they don't communicate. That is another source of improper payments. What would you suggest on that?
Speaker 6
I would suggest that we need to find a way to be able to use all of the data as we're investigating and deciding whether fraud has occurred. An example of that, if a provider has submitted claims for services that exceed a 24-hour day, we call that an impossible day. But often, we're limited to the Medicaid data we can get from our own states, and then we work with HHS OIG to get Medicare claims data, and that makes the data even more suspicious. But there's got to come a day where we can be able to use third party payers and private payers, because those impossible days would just be so blatant. Nobody would question that it's fraud.
Speaker 16
Well, one of the suggestions been made is, for the treasury department that operates, that do not pay business center. For them to be able to do their prepayment verification Medicaid and assist, reducing improper payments and fraudulent activities, and to have some way to collaborate with the states on that. I don't know if the states have access or the training necessary to use a resource like the do not pay system.
Speaker 6
And maybe access is even the bigger issue. We have separate systems. We do the best we can with personnel to tie those systems together. But I think, as I said, any time that we could have more access and more education on tools that would help us all combat fraud, it would be invaluable.
Speaker 16
We need to do audits on a more regular basis. And one of the suggestions I made to General Dodero is that rather than be punitive in our actions toward agencies with high and proper payment rates, that maybe we think about if they can reduce their improper payment rate, that we use the savings to bring their data systems in the twenty first century, which is kind of a novel idea. I yield back.
Speaker 1
The gentleman yields. The chair now recognizes a gentle lady from Massachusetts, Miss Trehan, for her five minutes of questioning.
Speaker 17
Thank you, mister chair, and thank you to the witnesses today. I have to say there is a perverse irony in today's hearing. Republicans tout their big bill as a fraud crackdown, while President Trump quietly pardons major Medicare and nursing home fraudsters involving tens of millions of dollars stolen from taxpayers. Look, no one disputes that fraud, waste, and abuse exist in our health care system. We see it in Medicare Advantage, where insurers upcode diagnoses that don't exist to inflate payments and pad shareholder profits at taxpayer expense.
But when it comes to the real fraudsters, this administration has granted impunity. Last May, President Trump granted clemency to Lawrence Duran, who stole $87,000,000 from Medicare. In November, the president pardoned a nursing home operator after just three months of a three-year sentence despite stealing from taxpayers while neglecting elderly residents in his care. Professor Tillepman, what message is sent to fraudsters when the president of the United States pardons people convicted of serious Medicare and Medicaid fraud?
Speaker 8
Thank you for your question. Well, I can't speak to any particular case. I can simply say that one of the features of enforcement is the importance of deterrence. And so, certainly, when individuals are considering whether or not they're going to commit fraud, they will look to whether or not the government is actively enforcing its laws, and they will look to some of these cases. And it might be a factor, in deciding whether or not the system could be credible or reliable.
But, again, I wouldn't speak to a specific case.
Speaker 17
Thank you. I note, I appreciate you stating the obvious. This claim that Republicans are serious about fighting fraud just doesn't appear to hold up in practice. The big ugly bill doesn't target fraud. It cuts health care for Americans while delivering tax breaks to the wealthiest in our country.
Instead of going after large-scale fraud schemes, Republicans imposed complex work reporting requirements that force states to build costly new infrastructures. The government accountability office has found states spending anywhere from $10,000,000 to more than $270,000,000 just to set up and run these systems. In Georgia, when the state imposed these red tape requirements on its residents, more than 80% of spending went to administration and system upgrades rather than patient care, with enrollment falling, and little to no impact on employment. And the real winners, I think, are clear. I mean, just days after the bill was signed into law, the CEO of Equifax publicly celebrated it as a profit opportunity.
While eligible patients face new paperwork barriers, private data vendors stand to make millions administering requirements we already know don't work. Professor Tillettman, rather than investing in fraud enforcement, says Medicaid work requirements rely heavily on private companies to build and run verification systems. What oversight risks does this pose when the rules are vague and taxpayer dollars are flowing to contractors with limited public accountability?
Speaker 8
Well, I think, ultimately, the whole goal of an entirely effective oversight system is to prioritize your money by risk. And that works not only for the federal government or state governments, but also for private entities who make risk-based decisions. So, I would recommend to anybody looking on how to reform a system to look where your biggest risks are, and then focus your enforcement and attention activity there.
Speaker 17
That seems logical. And, you know, we've run this experiment. Work reporting requirements haven't reduced fraud. They haven't meaningfully increased employment, and they've drained millions into administrative systems instead of care. If the goal is actually protecting taxpayer dollars, what guardrails would work without pushing eligible people off their coverage?
Speaker 8
So I think it looking at it from an institutional perspective, again, I think one of the recommendations I had was the many unimplemented recommendations by GAO and I and the IG. One of the bigger areas we see, and especially it's been touched upon today, with n c MCOs is the diffuse responsibility and ensuring that when weaknesses are identified, like lack of referrals or lack of feedback loops or lack of training at the state and local level, that we follow-up on those recommendations to address some of those weak points within the system.
Speaker 1
The general lady yields. The chair now recognizes the vice chairman of the committee, Mr. Balderson, for his five minutes of questioning.
Speaker 18
Thank you, Mr. Chairman. Thank you all for being here today. My first question is for Mister Knuckles. Are Medicare and Medicaid beneficiaries provided with clear, actionable information on how to detect and report suspected fraud?
Speaker 7
Not by organizations like us, but it is available, you know, online if they go to the right websites.
Speaker 18
Okay. What information can be shared with them that would allow for better detection and reporting of suspected fraud?
Speaker 7
I think that, in my experience, Medicare beneficiaries have done a good job reporting fraud when they see it. The real question is what happens after they report it and see it in the actions that take place or don't take place.
Speaker 18
Thank you. Next question is for Miss Gay. My understanding is the timeline from the moment fraud occurs until it is identified and resolved is far too long. How long does it typically take for a fraud examiner to identify suspected fraud in a post-payment review?
Speaker 5
We see an average case take about a year. By the time we do conduct the data analysis, your investigation, conduct member surveys, request records, review those records, and then give the appropriate appeal time frame. It's usually between nine months and a year before we have really credible allegations of fraud, at which point we can pull in our law enforcement partners. It can happen sooner than that in a great case. Sometimes it is as soon as we get it, it is glaring.
Other times, it takes even longer as we try and peel back the networks of who owns what and what is connected.
Speaker 18
Miss Connor, I was gonna follow up with it. How long does it take to then investigate the identified fraud?
Speaker 5
Once it's identified as fraud, that goes to law enforcement, and I back off.
Speaker 18
Thank you. My next question is for Miss Wooten. As the leader of the state Medicaid fraud control unit, how quickly are you able to identify instances of fraud? And then a follow-up would be, how successful are these units at recovering fraudulent payments once they have gone out the door?
Speaker 6
The speed of an investigation and a prosecution depends on many issues. And if it's a, if a patient calls in and they say, my provider did not see me, and I found out they billed, that can go very quickly if we're just looking at one provider. In the scheme that I described in my written testimony with behavioral health, we don't want to just get the one patient, one provider situation. We're trying to find out, are there related companies, how high in the organization does it go, because that's where the true fraud and a lot of money is. Those can take a long time.
And I'm sorry. Will you repeat the second question?
Speaker 18
I can. And how successful are these units at recovering fraudulent payments once they have gone out the door?
Speaker 6
So we, of course, diligently try. Unfortunately, some of these fraudsters have spent the money, or the money has gone elsewhere, and it's difficult to track. But we work closely with our single state agencies, our Medicaid programs, to let them know that if we no longer need, say, a law enforcement exception for payment suspension, if we think we're going to do some kind of an operation that be jeopardized if the provider becomes aware of the investigation, then we ask them to give us a little time to do that. But once the provider's aware we're looking at them or we've done everything we need to do, we can notify the Medicaid program that we no longer need that exception. And if they can suspend payments, those payments could come in much better.
We can get much more back.
Speaker 18
Thank you. Well done. Follow-up to also Mrs. Wooten. Are fraudsters using emerging technology such as artificial intelligence to deal with these Medicaid fraud schemes?
Sheen?
Speaker 6
Yes. We see that evidence across the nation, and we've been bringing in speakers on that topic to try to educate us. It's frightening as you watch presentations on how quickly an MRI or an X-ray can be altered, and we need to be able to determine which is the correct one. So we're trying to combat fraud with tools, but we need more tools.
Speaker 18
It's a great point. And, I mean, I will ask you. I mean, are you all doing anything to adapt to figuring out this AI piece and the progenant with that?
Speaker 6
Yes. It varies by state how much we've been able to use it, but these presentations are showing us how we could use them to look at medical records and at least identify that they're cookie-cutter records, that every patient there has the same diagnosis, same treatment. And I think that will be able to be done sooner rather than later. But we may, you know, we're going to have to have more resources to be able to combat fraud where they're altering images or falsifying surgeries or that kind of a thing. But our association, like I said, is committed to learning this, and we've been bringing in speakers for about the last 3 years.
Speaker 1
The gentleman yields. The chair now recognizes a gentle lady from Washington, Doctor Schreyer, for her five minutes of questioning.
Speaker 19
Thank you, Mr. Chairman. Thank you, madam ranking member, and thank you to all the witnesses for being here today and for your work. I'm really happy that this committee is taking on the issue of fraud, an issue that we all want to crack down on. Fraud and abuse hurts patients, honest providers as we've heard a lot today, and the taxpayer, and this is not a partisan issue. But right now, it is being weaponized by this administration only against blue states.
I'm sure you have noticed it is being used as a pretext for cutting funding to 14 states, all of which happen to be run by Democrats. Criminals should be prosecuted whether they are in red states or blue states, and we have heard over and over again in this hearing from all of you that it happens everywhere. It happens in red and blue states. And so I just wanna say that I am tired of the weaponization. I am ready to work with my Republican colleagues on common-sense ways to improve oversight so that we can truly root out fraud everywhere.
But other than when it's politically convenient, this administration has also made it harder to investigate Medicare and Medicaid fraud. Just four days into his presidency, President Trump illegally fired 18 inspectors general. We've talked about these are the very people responsible for rooting out fraud and abuse in federal programs, and they are independent, nonpartisan officials. And president Trump fired them in favor of his highly political and highly ineffective doge would slash programs indiscriminately. And one of the IGs that he fired was the highly respected, highly experienced HHS inspector general who oversaw and was in the process of doing a lot of crackdowns on this type of fraud.
And then, of course, about a year later, he was replaced by Thomas Bell, who himself has a very concerning history of misuse of taxpayer dollars. This is hardly the right man for the job. So if we want to root out fraud, I suggest for this committee that a great place to start is Medicare Advantage, because that is where a lot of the really big dollars are being wasted. Medicare Advantage is the type of Medicare plan that contracts with private insurance companies, as you know, to deliver care. This is a public-private partnership, that was initially championed by Republicans as a great way to use the private market to save money, to administer health care.
They thought more efficiently, but it turns out it just has not saved Americans money. It allows massive insurance companies like UnitedHealth Group to swindle the taxpayers by making their patients look sicker than they actually are, so they can make more money per patient, and we taxpayers end up footing the bill. In fact, 2024 inspector general report found that taxpayers spend billions of dollars in overpayments to Medicare Advantage companies each year based on unsupported diagnoses for MA enrollees. That was a quote. Professor Toitman, thank you for being here today.
And I really appreciate your comments on the record of enforcement of rules being a great deterrent for other fraud. I think that's an important lesson, and also a very obvious lesson for anybody in here who is a parent. What specifically more do you think HHS could be doing to strengthen accountability for managed care plans like Medicare Advantage?
Speaker 8
Thank you for your question. So, and I feel like I've said this a few times, there are some unimplemented recommendations from the GAOING that relate to that plan in particular. There's a long list. You can go online. They have actually a tracker that identifies them, but I think would be the most useful in terms of oversight.
There is one thing I will raise, though, particularly because so much of the recoveries from this year's False Claims Act were related to health care, and a big priority has been managed care from FCA enforcement. Right now, there's an Eleventh Circuit case on appeal, challenging the constitutionality of the key TAM components of the False Claims Act, which is a huge driver, $5,300,000,000, of these False Claims Act recoveries. So congress... It would behoove Congress to pay close attention to the outcome because if the Ketamra later whistleblower provisions and incentives go away, I think we're gonna see significantly reduced, anti fraud, or not anti fraud, but, false claims act activity.
Speaker 19
I really appreciate those comments. I will keep a very close eye on that case. Sounds like it will have gigantic ramifications. Thank you. I'll yield back.
Speaker 1
The gentlelady yields. The chair now recognizes the gentleman from Georgia, Mr. Carter, for his five minutes of questioning.
Speaker 20
Thank you, mister chairman, and thank you all for being here. I'll preface my remarks by telling you that, professionally, I'm a pharmacist, and I have dealt with hospices in my career. In fact, one of my businesses was entirely dedicated to hospices and nursing homes and personal care homes. So I've got a lot of knowledge, a lot of experience. And I will tell you during the nineties, I serviced the only hospice in Savannah, Georgia.
And it seemed like overnight they proliferated and exploded. And all of a sudden we had twelve, thirteen, fourteen, and fifteen. And I always wondered what happened there. What, how did this happen? Now I'm not saying that they were all committing fraud, but what I am saying is that they called on the fact that they could make a lot of money.
And then we saw the proliferation of it. And I'm concerned about what's happening, what I've heard is happening, particularly in California where the state auditors have reported an unprecedented surge in home health and hospice fraud. My wife's a physical therapist, and she worked in home health as well. So I'm this is why I ask, and I appreciate you letting me weigh in on to this committee, mister chairman. So this is why I'm very interested in this.
But in a shocking example, auditors found that 112 hospice providers were operating out of a single physical address. A 112. Holy cow. As a result, hospice agencies in LA County alone likely overbilled Medicare by over $105,000,000 in just one year. Let me tell you, there's a special place in hell for people who commit fraud with hospice.
Special place. This is something we've got to look at, and it looks like it's not just an isolated problem. It looks like it's a problem in a lot of different places. And that's why I wanna ask you, Miss Wooten. Have you seen instances of copycats where fraudsters see a successful fraud scheme happening in one location, so they try to replicate the same fraud elsewhere?
Speaker 6
Absolutely. We definitely see replicated fraud schemes, and hospice is an excellent example. I share your concerns about home health and hospice because I owned a home health agency for many years. And I didn't even choose to be a hospice because there were specialized agencies that could handle that part, and we would refer to them under the right circumstances. What we now see, though, hospices who are admitting patients who are not terminally ill, patients who don't know they were put on hospice, patients who maybe aren't getting treatments that they need because the hospice philosophy, as you know, is for comfort care, not for treating illnesses.
So, in our state, we have seen the same thing in Utah, that the hospices have exploded. Now I'm not saying they're all fraudulent either, but absolutely, fraudsters learn from fraudsters, and it's an area we have to investigate.
Speaker 20
Do you share this information with other states whenever you find out that there's a certain scheme going on? Absolutely.
Speaker 6
That is the value of NAMFUKU, our national association. All 50 states and the three territories work together to share schemes, and we talk more openly than I think we had to even several years ago, because we need to know who are these people and how do we get on top of it? How do we collaborate? We teach training programs. Right now, we have a group over at our main office who are preparing on nursing home fraud, and they're creating a curriculum to teach Mfukus how to identify that.
Speaker 20
Let me shift gears here. I wanna talk about something else that I'm interested in, that's skin substitute pricing and cost. Over the past two years alone, Medicare Part B expenditures for skin substitutes have skyrocketed from roughly 400,000,000 in 2022 to more than 10,000,000,000. Hear me. 400,000,000 in 2022 to more than 10,000,000,000 in 2024.
That's a staggering 640%. Again, they see this happening, man, like buzzards just coming together. So I introduced the skin substitute access and reform act, and this targets runaway pricing and inappropriate prescribing through program integrity reforms that target the top 3% of providers generating nearly two thirds of the Medicare skin substitute billing, with program integrity reforms and setting a payment rate at a sustainable level that protects patient access. I'm concerned, and mister Knuckles, I'm gonna ask you this one, I'm concerned that the approach of setting a very low payment rate without specifically targeting problematic providers may be harming patients. From your perspective, does an artificially low reimbursement rate risk restricting access for legitimate patients and providers?
Speaker 7
Thank you very much for the question, Representative Carter. From where I sit on the business side of things, I can tell you that no one will give skin substitutes. Patients will not receive skin substitutes based on the current regulations that were passed by the Secretary and the HHS.
Speaker 7
Whether it's comparable or better than existing treatments, you would have to ask a physician.
Speaker 20
Don't wanna swing that pendulum too far. I mean, we gotta correct it, but you gotta be careful not to swing it too far. So would a more targeted program integrity approach be a better way to do it?
Speaker 7
I don't know that I'm qualified to say that because I just I don't know. I know this the current program will cease almost all skin substitutes from being.
Speaker 20
Exactly. And, see, again, I don't want that to happen, and I don't think anybody wants it to happen. We ought to be targeting those bad actors and how we can get to them. Thank you, mister chairman, again, for letting me sign on to this, and thank y'all for being here. I yield back.
Speaker 1
The gentleman yields. The chair now recognizes a gentleman from California, mister Mullen, for his five questions, five minutes of questioning.
Speaker 21
Thank you, Mr. Chair. Thank you all for being here today. At face value, fraud and government programs are an important topic for this subcommittee to consider. We have a responsibility to ensure federal programs under our jurisdiction are being implemented as intended by Congress and that federal dollars are going to communities that need assistance. However, we cannot discuss health care fraud without discussing the deeply troubling actions by this administration in the name of addressing fraud.
The Trump administration has deployed ICE agents to Minnesota under the guise of at least partially addressing Medicare fraud. We have all seen with our own eyes that this mission is leading to the killing of American citizens and to terrorizing innocent families. But what is the majority on this committee chosen to do? While American citizens are being executed by their own government on American soil, they open an investigation into Minnesota's Medicaid program. Miss Wooten, CMS has specified in its comprehensive Medicaid integrity plan that individual states are empowered to best address program integrity challenges, with CMS supporting.
Yet the federal government is attempting to take the lead on fraud allegations in Minnesota, out of nowhere. Miss Wooten, do you believe we can get better outcomes in Medicaid fraud investigations and enforcement actions when local, state, and federal agencies closely collaborate? And why would that be the case?
Speaker 6
That collaboration's critical because fraudsters are not just in one state doing one particular fraud. They travel from state to state, and the states don't have the tools to cross state boundaries. We don't have the authority to prosecute or investigate in those states. We collaborate closely with federal partners. They are integrally involved with us.
In fact, HHS OIG pays 75% of everything we do, so we can collaborate. So we need to put all the tools we possibly can in this toolbox to combat fraud. That would include state, federal, and local partners.
Speaker 21
I do appreciate that. In your experience leading fraud in guest investigations, could you tell us, does the Department of Homeland Security typically play any role in investigating Medicaid fraud?
Speaker 21
So-called fraud is also being used by this administration as a catchall excuse to cut health care spending and punish states that didn't vote for the president. In HR one, the Republicans' big ugly bill, they cut $1,000,000,000,000 in health care spending to supposedly address waste, fraud, and abuse. But when you look past their messaging, this bill is stripping 15,000,000 Americans of their health care coverage, and giving a tax break to corporations and billionaires. There are also countless examples of this administration freezing or canceling federal dollars for political reasons. Just a month ago, the Department of Home, Department of Health and Human Services froze child care and family assistance grants going to five states with Democratic governors, including my home state, California.
They claim it was to ensure program integrity and fiscal responsibility, but families relying on these programs are hurt in the process. So, Miss Tillepan, as you highlighted in your testimony, fraud on some level is inevitable, but well-resourced oversight can successfully detect and address widespread issues. So my question is, is unilaterally freezing billions of dollars in assistance a smart, targeted way to address fraud, especially when it comes at the expense of ripping essential health services away from beneficiaries? And what are some more effective approaches?
Speaker 8
Thank you for your question. I haven't examined that. Those specific states, particularly in preparation for this hearing. But I will say this. Ultimately, once you are completely shutting down programs, whether it's cutting off contractors from their access to contracts, shutting down spending in certain areas in a kind of blanket way.
It can may be able to stop any type of fraud, but it can also harm innocent individuals as well. And so what we typically would say is you'd want to have a response that's proportional to what you're detecting. And while I wouldn't be able to say without examining those particular states what that is, generally, when we see either fully excluding from a program, completely ceasing funding something, or, again, kicking certain contractors or companies out of a system, usually, that is the nuclear option. And so, ultimately, again, people I usually like to recommend a scalpel instead of a sledgehammer.
Speaker 21
Thank you for that. I just wanna wrap by saying I'm deeply concerned about the weaponization of allegations of fraud to enact a political agenda. And, I know that my colleagues on this side of the island, I will not stop calling out that hypocrisy. And, mister chair, I appreciate the time, and I yield back.
Speaker 1
The gentleman yields. Seeing there are no further members wishing to ask questions, I would like to thank our witnesses again for being here today. I ask unanimous consent to insert in the record the documents included on the staff hearing documents list. Without objection, so ordered. Pursuant to committee rules, I remind members that they have 10 business days to submit additional questions for the record.
I ask the witnesses to submit their response within ten business days upon receipt of the questions. Members should submit their questions by the close of business on Wednesday, February 18. Without objection, the subcommittee is adjourned.
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