Treasury Uncovers $17.5 Billion in Suspected Healthcare Fraud

The Treasury Department identified around $17.5 billion in suspicious financial activity linked to healthcare fraud through its financial crimes enforcement network.

“By identifying and reporting this suspicious activity, financial institutions have given law enforcement critical insight into the illicit actors who deliberately exploit U.S. healthcare benefits programs,” Treasury Secretary Scott Bessent said in a statement on Sept. 9.

The amount identified includes both completed and attempted transactions.

The Treasury’s financial crimes unit analyzed more than 5,700 Bank Secrecy Act reports from 471 financial institutions between March 2025 and February 2026, and mapped out critical fraud patterns in a financial trend analysis.

Where Potential Fraudsters Are Located

California led the nation in flagged providers, followed by Puerto Rico, Florida, New York, and Minnesota, while 1.5 percent have a foreign address.

Largely mirroring suspected provider addresses by state, top U.S. cities with suspicious healthcare activities include Glendale, Los Angeles, and Van Nuys in California; Minneapolis; Miami; and Brooklyn.

In most cases, seemingly fraudulent providers were registered at residential homes or nonmedical buildings, which include large office buildings, storefronts in strip malls, and standalone small offices.

But the nonmedical buildings were often abandoned or closed, sometimes with shuttered windows and doors, and no indication of healthcare activity. 

However, some potential fraud businesses have fewer obvious red flags.

In one case, an Alaska-based dentist’s office obtained more than $25 million in Medicaid payments. The office appeared to be active and providing dental services but had multiple owners who were not involved in dentistry.

The Bank Secrecy Act filer stated that the payments appeared to be used for cash withdrawals, personal expenses, and payments to the owners’ other businesses.

Possible Medicaid Eligibility Fraud in Puerto Rico

Fifty-nine depository institutions in Puerto Rico filed 29 percent of reports, which primarily identified suspicious activity related to eligibility for Puerto Rico’s Medicaid program. Most (67 percent) reported amounts below $15,000.

The depository institutions in Puerto Rico are financial cooperatives, similar to credit unions, and provide loans, checking and savings accounts, and other financial services.

As of January 2026, Puerto Rico enrolled 1.3 million individuals—about 40 percent of Puerto Rican residents—in Medicaid and the Children’s Health Insurance Program.

To prove eligibility for Medicaid, recipients need to submit a declaration, as well as supporting documentation, which can be a balance certification letter from their financial institution.

The Treasury’s financial crimes unit found that some recipients would withdraw enough money from their bank and then submit a bank letter with a lowered balance below the eligibility threshold to secure Medicaid.

Potential Fraud in Home Healthcare and Hospice

Excluding reports concerning Puerto Rico’s Medicaid eligibility, home healthcare businesses represented 32 percent of the remaining dataset.

Other providers with dubious behavior involved hospice care companies, mental or behavioral health and addiction treatment providers, medical equipment providers—including durable medical equipment—and adult or child daycare centers.

Improper payments in home health and hospice services reached $2.8 billion in 2025, with an error rate of 9.8 percent, according to Centers for Medicare and Medicaid Services’ estimates.

The Centers for Medicare and Medicaid Services had also identified home healthcare as a field vulnerable to fraud in a 2017 report, given that Medicare did not verify claims or conditions of providers before making payments. Some physicians and nurses also collected kickbacks to keep patients on home health services or had not been trained properly to fill out charts regarding service requirements.

From May to November, the Centers for Medicare and Medicaid Services has halted the enrollment of providers of hospice care and home health agencies into the Medicare program to prevent “new bad actors from entering Medicare” while the federal government can “aggressively identify, investigate, and remove those already exploiting them,” according to Administrator Dr. Mehmet Oz.

How Fraudulent Money Flows

Suspected perpetrators employed a range of money laundering techniques—from simple funds transfers to complex layering processes—before spending the obtained healthcare payments.

In many cases, suspected fraud proceeds were used for personal expenses and luxury goods. Some funds went abroad.

“A small percentage of filers reported suspected healthcare fraud activity potentially involving large fraud rings or criminal networks, as well as some potential connections to foreign entities,” the financial crimes unit stated.

International transactions involved 32 countries—most frequently Hong Kong, but also Canada, Mexico, Nigeria, Pakistan, China, the Philippines, Turkey, and the United Arab Emirates.

The transfers to Hong Kong primarily went to possible shell companies, and the Treasury was not clear about what happened to the funds after they were transferred.

In one case, a New York City-based pharmacy obtained payments totaling around $20 million from a Medicare Administrative Contractor, state health agencies, and a pharmacy benefit management organization.

The pharmacy then sent payments to numerous wholesale companies with registered addresses in Hong Kong. The Bank Secrecy Act filer suspected that the pharmacy was part of a larger fraud ring based in the New York City area.

Due to layers of processing in international transactions, “it is possible that a larger portion of the fraudulent proceeds were sent abroad, but financial institutions did not observe the activity since these transfers typically traverse multiple financial institutions,” the Treasury’s unit stated in the analysis.