Key Takeaways
- •Chairman Rep. Jason Smith (R, MO-8) announced that the Trump administration and CMS have shut down 450 fraudulent hospices to combat an estimated $60 billion in annual Medicare losses.
- •Dr. Lynn Ianni (Medicare beneficiary and Medicare fraud victim) testified that a fraudulent hospice enrollment falsely classified her as terminal, preventing her from receiving necessary physical therapy for months.
- •Rep. Lloyd Doggett (D, TX-37) questioned witnesses on the accountability of convicted fraudsters, criticizing President Trump for pardoning individuals who stole millions from the Medicare program.
- •Republicans attributed rampant fraud to lax oversight in Democratic-led states, while Democrats argued that firing agency watchdogs and Inspectors General undermined federal efforts to protect taxpayers.
- •Congress is evaluating the Hospice Care Act and enhanced data sharing between CMS and private insurers to identify fraudulent billing patterns before payments are issued to sham providers.
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Hearing Analysis
Overview
This hearing examined the systemic vulnerabilities within the Medicare program that allow for an estimated $60 billion in annual losses due to fraud, waste, and abuse. The discussion focused on the rise of "sham" hospice and home health agencies, fraudulent billing for durable medical equipment (DME), and the exploitation of National Provider Identifier (NPI) numbers by transnational criminal organizations. Beyond the financial toll on taxpayers, the committee explored how these schemes directly harm patients by "trapping" them in hospice care, which prevents them from receiving life-saving treatments or routine medical services.
Key Testimony & Policy
Witnesses and lawmakers highlighted several specific sectors where fraud has proliferated, most notably in hospice and home health services. Dr. Lynn Ianni, a Medicare beneficiary, provided a personal account of being falsely enrolled in hospice care without her knowledge, which resulted in Medicare denying coverage for physical therapy for a shoulder injury. She discovered that the hospice used the stolen identity of a surgeon to appear legitimate. Sheila Clark, President and CEO of the California Hospice and Palliative Care Association (CHAPCA), testified that in Los Angeles County alone, hospice payments tripled between 2018 and 2024, driven by "paper-only" companies. She urged the adoption of the Hospice Care Act, introduced by Rep. Linda Sánchez (D, CA-38), which proposes a 15-day notification requirement for hospice election and enhanced screening for new providers.
The hearing also addressed massive fraud in the durable medical equipment (DME) and skin substitute markets. David Klebonis, CEO of Palm Beach Accountable Care Organization (ACO), testified that his organization identified $122 million in suspected fraudulent Part B claims, including $16 billion spent by Medicare on skin substitutes in 2025. He noted that under current rules, ACOs are often held financially responsible for fraudulent claims billed by outside entities, which reduces the "shared savings" payments intended to reward high-quality care. Klebonis and Christopher Deery, Director of Corporate and Financial Investigations at Independence Blue Cross, advocated for a shift from the traditional "pay-and-chase" model to a "stop-and-verify" approach using real-time data analytics and machine learning to flag suspicious billing patterns before payments are disbursed.
Prescription drug policy and transparency were also central themes. Christy Martin, a former CMS official, discussed the impact of the Inflation Reduction Act (IRA) on lowering out-of-pocket costs but raised concerns regarding the "Trump RX" initiative and confidential "Most Favored Nation" (MFN) agreements. Martin argued that these programs lack transparency and that some "Trump RX" prices are actually higher than existing market rates. She also highlighted the role of Pharmacy Benefit Managers (PBMs) in obscuring medical spending through vertical integration with insurers.
Notable Exchanges & Partisan Dynamics
The hearing featured sharp partisan disagreements regarding the root causes of fraud and the effectiveness of current enforcement. Chairman Jason Smith (R, MO-8) and other Republicans, including Rep. Michelle Fischbach (R, MN-7) and Rep. Nicole Malliotakis (R, NY-11), argued that "open border states" led by Democratic governors, such as California, Minnesota, and New York, have become epicenters for fraud. They praised the Trump administration and CMS Administrator Dr. Mehmet Oz for shutting down 450 fraudulent hospices and establishing the National Healthcare Fraud Takedown.
In contrast, Ranking Member Lloyd Doggett (D, TX-37) and Rep. Richard Neal (D, MA-1) criticized the Trump administration for what they termed a "soft-on-fraud" approach. They specifically highlighted President Trump’s pardons of more than 20 individuals convicted of massive healthcare fraud, including Philip Esformes and Salomon Melgen. Democrats also expressed alarm over the firing of 17 independent Inspectors General (IGs) and the dismissal of 200 CMS staff members responsible for marketplace oversight. Rep. John Larson (D, CT-1) questioned the role of the Department of Government Efficiency (DOGE), raising concerns about unvetted outside entities having access to sensitive beneficiary data.
Rep. David Schweikert (R, AZ-1) expressed frustration with both parties, arguing that the committee continues to hold hearings on "rounding errors" while the Medicare trust fund faces insolvency in six years. He advocated for a total revolution in how Medicare codes and licenses providers, using advanced data science rather than "buildings full of auditors."
Organizations Mentioned
* **Centers for Medicare and Medicaid Services (CMS):** Discussed as the primary agency responsible for provider enrollment and fraud prevention; criticized by some for "pay-and-chase" models and praised by others for recent hospice shutdowns. * **Office of Inspector General (OIG):** Identified as the lead investigative body for healthcare fraud; Democrats criticized the firing of the HHS Inspector General as a blow to oversight. * **Independence Blue Cross (Independence):** Represented by witness Christopher Deery, who described the company's use of machine learning and data visualization to detect fraud in the Philadelphia region. * **California Hospice and Palliative Care Association (CHAPCA):** Represented by Sheila Clark, who advocated for state and federal reforms to stop the proliferation of sham hospice agencies in California. * **Palm Beach Accountable Care Organization (Palm Beach ACO):** Cited as a leader in fraud detection that has reported over $100 million in suspicious claims, though only a fraction were reversed by CMS. * **Department of Government Efficiency (DOGE):** Mentioned regarding its potential role in auditing federal agencies, with Democrats raising concerns about data privacy and the lack of transparency in its operations. * **National Association of ACOs (NAACOS):** Mentioned in the context of protecting value-based care providers from the financial impact of external fraudulent billing. * **Senior Medicare Patrol (SMP):** Praised as a vital resource for helping beneficiaries like Dr. Ianni navigate and report identity theft and fraudulent enrollment.
What's Next
Lawmakers indicated interest in advancing the Hospice Care Act to reform enrollment and notification procedures. Rep. Darin LaHood (R, IL-16) highlighted the Preserving Patient Access to Accountable Care Act, which aims to provide incentive payments for ACOs and could include provisions to shield them from fraud-related losses. There were also calls for the Department of Justice (DOJ) and the Attorney General to provide more detailed reports on the prosecution of transnational criminal organizations involved in Medicare billing schemes.
Transcript
The committee will come to order. When the Medicare program was created, it was intended to provide affordable health insurance to Americans over the age of 65. Medicare was a promise that Americans will be able to get the care that they need when they need it. Now Medicare is one of the largest programs in the federal government, totaling over $1 trillion annually. Medicare is not a handout, it is a benefit earned by Americans who work their whole lives, paid into the system, and played by the rules. We must ensure it is there for them when they need it. That's why the reports of the ongoing theft of healthcare benefits by fraudsters, illegal immigrants, and even transnational criminal organizations that have come to light in recent months are so shocking. Videos by citizen journalists in Gavin Newsom's California show people hiding the dirty conditions of neglected or wholly nonexistent facilities, all while driving away in luxury vehicles and refusing to answer questions. How can it be that these journalists keep finding hospice facilities that appear busy on paper, but in reality are nothing more than an empty office space collecting millions of taxpayer dollars? The answer, of course, is fraud. And the alarm bells are ringing very loud and clear. Open border states led by Democrats like Minnesota, New York, and California are the epicenters, the epicenters of fraud in this country. In Los Angeles County alone, 700 of the 1,800 hospice companies located there have displayed at least one red flag that signals that they may be conducting fraudulent practices. LA County had a 1,500 percent rise in the number of hospice facilities from 2010 to 2022. One building in the county is allegedly the home of 89 different hospices. At one of these scam hospice providers, a social worker wrote about a family's grief after a patient had died. And yet that patient didn't ever exist, and there was no evidence they had ever passed. Why has this occurred? Because California turned off a fraud prevention tool and opened the door for millions to be stolen. But it's not just in California. Healthcare and social services fraud is a nationwide problem. In Minnesota, federal investigators estimate that more than half of roughly $18 billion spent across several public programs have been lost to fraud, either through sham daycare centers linked to the Somali community, pandemic food aid fraud, and government-funded housing services and autism therapy where providers billed for services that were never delivered. In Mayor Zohran Mamdani's New York, fraudulent home health aides are the number one new job in the state by a mile. Millions of taxpayer dollars are being spent on fake adult daycare centers, increasing 100 percent just this year alone. Look at the fraud convictions handed down just last week. A pharmacist in New Jersey was sentenced to prison for bilking Medicare $2.5 million for medication he never used and spent some of the stolen taxpayer funds on luxury vehicles. A Michigan surgeon was sentenced to prison for stealing $7 million in Medicare funds for mental health services that were never provided. In Miami, foreign nationals from Cuba are fraudulently billing Medicare millions of dollars for durable medical equipment that was never delivered to beneficiaries using their stolen information. And sadly, that's just one instance of the 24 percent of the DME dollars that is improperly paid, including fraud. For many Americans, including one of our witnesses today, healthcare fraud has serious health consequences. Victims with legitimate healthcare claims seek treatment only to find out that they are unable to use their benefits because every, every single dollar was already stolen. Leaving Medicare fraud unaddressed risks that health and safety of more seniors. Every single year Medicare loses roughly $60 billion to fraud, waste, and abuse. That's $858 per beneficiary that could be helping to shore up the program's finances or improve benefits. That is staggering. Democrat governors in states have let these and other fraud schemes fester and even encouraged them for years. When the truth about the systemic fraud came out, they questioned why it was their states that were under investigation. The real question is why Democrat governors like Gavin Newsom and Tim Walz allowed Medicare beneficiaries to become easy targets for fraudsters for so long. The Trump administration, on the other hand, has made fighting fraud a top priority. Taxpayer money is being recovered, fraudsters are being stopped, and criminals are going to jail. President Trump's 2025 National Healthcare Fraud Takedown saved taxpayers nearly $15 billion and charged more than 300 bad actors with criminal crimes. To date, Dr. Oz and CMS have shut down 450 hospices with none of those companies asking why, why their payment stopped arriving. Why? Because they were all fake. We are holding this hearing because the American people are demanding answers about the theft of their tax dollars and their Medicare benefits. To the fraudsters, your time operating in the dark is way over. You will be held responsible and we will restore the promise of Medicare and what rightfully belongs to the American taxpayer. I'm pleased to now recognize Mr. Doggett of Texas to provide his opening statement.
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