Rampant Fraud Corrupts the Health Care System, Dr. Oz Says

WASHINGTON—Fraud is pervasive in the medical industry and undermines the integrity of the entire health care system, Dr. Mehmet Oz said on April 28.

Oz is administrator of the nation’s largest health care system, the Centers for Medicare and Medicaid Services, which spends about $1.7 trillion on medical services each year.

“The reason [fraud is] so corrosive is it corrupts the very foundation of the system,” Oz said. “It’s not just the numbers and the dollars.”

Oz detailed the problem at a forum conducted by Paragon Health Institute, a Washington-based think tank.

Fraud, wasteful spending, and abusive billing practices cost Medicare and Medicaid about $100 billion per year, Oz said.

Yet Oz and other speakers said the true cost of medical fraud is its impact on society.

Emboldens Criminals

During the COVID-19 era, the government suspended some checks on the federal health system to ensure that Americans didn’t lose coverage during the national emergency.

Enrollees in Medicaid and Obamacare were automatically reenrolled each year, and new rules allowed some people to be enrolled in Obamacare plans with no out-of-pocket premiums.

Those policies became opportunities for fraud, Oz said.

“COVID taught a lot of bad people that you can steal from the federal government and you can get away with it,” Oz said.

Brian Blase, president of Paragon, said that unscrupulous insurance brokers signed up millions of people without their knowledge, particularly in plans with no premiums.

America’s Health Insurance Plans, the trade association for health insurance companies, has disputed that claim. However, 24 states had more enrollees in Obamacare zero-premium plans in 2024 than they had qualifying residents, according to data from Paragon.

Oz pointed to what appear to be fraud schemes by organized crime groups with ties to the Chinese regime operating through senior care centers in New York City.

“These are actually places where you congregate people and educate them on how to scam the system,” Oz said. The scheme involves buying patients’ Medicare numbers, which are then used to send fraudulent claims to the government.

Enlists Providers

Fraud schemes involving hospice care have involved providers in defrauding the taxpayers, Oz said.

One-third of all registered hospices in the country are located in the city of Los Angeles, and they multiply by enlisting doctors to falsely certify that patients have less than six months to live, Oz said.

“Doctors know there’s a black market for allowing their licenses to be used to sign people up for hospice, claiming that they’re going to die in six months … [but] knowing that they’re not going to,” Oz said.

“When you see these kinds of problems happening, then you realize that doctors and nurses participating in these programs have sold their souls.”

Hospitals participate in the legal scheme to increase their income by inflating prices through lobbying governments to levy a tax on them, Sen. Ron Johnson (R-Wis.) told attendees.

The Medicaid provider tax is a legal loophole that allows states to tax medical providers, then repay the money through increased Medicaid payments, and bill the federal government for the cost.

Johnson pointed out to one hospital system’s representatives that the plan would raise medical costs for their patients, asking, “Can it be possible you don’t have a problem with that?” To the audience, Johnson said, “The fact of the matter is, they don’t.”

Places States, Federal Government at Odds

States are incentivized to tax Medicaid providers, even though the practice inflates the cost of health care. That’s because it increases state revenue at the expense of federal taxpayers.

“It’s not that they want to take the money,” Oz said. “They’ll take it because it’s easier for us to print money than for them to balance their budget.”

This practice is legal. Former President Joe Biden called it a “scam,” according to Bob Woodward in his book “The Price of Politics.”

A $10-million tax on Medicaid providers could result in a $6.8-million gain for a typical state, even after raising payments to those providers, according to the Congressional Research Service. However, federal taxpayers would be out an additional $4.8 million in unnecessary Medicaid payments.

“Our government was built on the belief that a governor and a president should be directionally aligned,” Oz said. “We should be heading the same way.”

The provider tax scheme puts the states and the federal government at odds, he said.

However, several governors have defended the Medicaid provider tax, including Louisiana Gov. Jeff Landry.

“In my view, the provider taxes are a good thing,” Landry wrote to President Donald Trump in 2025. “By partially funding the state Medicaid program with an assessment on hospitals, we can avoid tax increases on our citizens.”

Harms People

Medicaid fraud schemes often take advantage of the poor, according to Blase.

“There have been very large-scale fraud schemes to manipulate homeless individuals [and] people who are mentally ill,” he said.

In some cases, hospice fraud could result in harm to a patient, Rep. John Joyce (R-Pa.) said. If the patient was unwittingly admitted to a hospice program but then needed hospital care, it could be denied. Hospice patients generally qualify only for care and comfort measures, not life-extending treatments.

“If you’re a scoundrel that’s willing to steal from people in their most vulnerable moments, you’ll steal their health, you’ll steal their lives,” Oz said.

The Centers for Medicare and Medicaid Services has stepped up fraud enforcement.

As a result of the added scrutiny, 450 hospices in California that were deemed fraudulent have been closed down.

Oz wrote to state governors on April 22, asking them to create a plan to re-certify health care providers for services often targeted by fraudsters.

Given the scope of the problem, strong action is needed, Oz said.

“We have got to come in quickly and aggressively,” Oz said. “If you do it subtly, you don’t send a clear message.”

Correction: A previous version of this article misstated the name of Louisiana Gov. Jeff Landry. The Epoch Times regrets the error.