Dr. Oz Shines Spotlight on Health Care Fraud at Paragon Event

Health care fraud is not a paperwork problem. It is a taxpayer rip-off that drains money from patients who need care, providers who follow the rules, and workers who fund the system.

At Paragon Health Institute’s National Press Club event, Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz laid out the scale of the challenge facing federal health programs. Dr. Oz estimated health care fraud at about $100 billion per year and warned that fraud in Medicare, Medicaid, and Obamacare has become a business model for bad actors who know how to exploit weak oversight.

The Center for a Free Economy has been warning about the same problem. Waste, fraud, and abuse in federal health programs are not victimless accounting errors because they raise costs, weaken trust, and divert resources away from vulnerable Americans.

Fraud Thrives When Washington Stops Watching

At the event, Dr. Oz described fraud schemes involving hospice care, home-based services, phantom Obamacare enrollment, and other billing abuses. In one example, CMS has already shut down 450 fraudulent hospices in California, most of them in Los Angeles, saving roughly $600 million this year.

Program integrity cannot be treated as an afterthought when Washington rewards enrollment growth, payment volume, and complicated financing arrangements without enough scrutiny. Fraudsters and political insiders learn how to work the system, while patients and taxpayers pay for the damage.

Fake hospice claims, fictitious caregivers, phantom enrollees, and inflated payment loops do not improve care for patients. They simply push more costs onto taxpayers and make federal health programs easier to exploit.

California Shows How the System Gets Gamed

CFE’s earlier post, “Stop the Next Medicaid Money Laundering Scheme,” highlighted one example of this problem in California Medicaid ambulance payments.

At Paragon Health Institute’s National Press Club event, Dr. Oz pointed to the same kind of ambulance payment fraud that CFE has warned about, showing how Medicaid financing schemes can turn a program for vulnerable patients into a taxpayer-funded revenue machine.

The issue involves intergovernmental transfers, known as IGTs. States can set high supplemental Medicaid payments for government-owned providers, such as public ambulance services. Those same providers can then transfer money back to the state, which uses the funds to claim additional federal Medicaid matching dollars. The money appears to support higher Medicaid spending, but much of it moves through a closed loop that brings federal taxpayer dollars back to the same government entities.

In California, public ambulance services receive payments three times higher than private counterparts for identical Medicaid transport. The service is the same, but the ownership structure and financing maneuver drive the difference.

Medicaid should help vulnerable patients access care, not reward government-owned providers for building better accounting machines. California’s ambulance payment scheme shows how quickly a health care program can be turned into a revenue strategy when federal oversight breaks down.

Medicaid Money Laundering Deserves Real Scrutiny

Dr. Oz described provider taxes and state-directed payments as a form of “legal money laundering,” where states use accounting gimmicks to extract more federal Medicaid dollars without a real state contribution. He singled out states such as California, New York, and Massachusetts as leading examples of this behavior and warned that unchecked state-directed payments were on track to cost federal taxpayers trillions over the next decade.

Congress should not allow Medicaid financing tricks to become a permanent revenue strategy for states and politically favored providers.

Federal Medicaid dollars are supposed to reflect shared responsibility between Washington and the states. They were never meant to serve as a blank check for states that learn how to recycle money through hospitals, nursing homes, ambulance services, or other government-linked providers.

Stopping Payment Is Essential

Dr. Oz made another important point: once fraudulent money goes out the door, taxpayers rarely get it back. Audits and prosecutions have a role, but enforcement cannot depend only on chasing stolen money after it has already disappeared. CMS needs the ability to stop payment when billing patterns show clear signs of fraud.

That approach protects taxpayers and honest providers. Legitimate doctors, nurses, hospitals, ambulance services, and care providers should not have to compete against fraud schemes built around inflated claims, fake patients, or manipulated payment rules.

Program integrity protects care by making sure federal health dollars reach real patients and legitimate providers instead of criminal schemes and political payment games.

CFE Takeaway

Health care fraud should offend everyone who wants federal health programs to serve patients instead of insiders.

The Trump administration, CMS, and Congress have an opportunity to restore basic accountability to Medicare, Medicaid, and Obamacare. That means shutting down fake claims, stopping suspicious payments before the money leaves the Treasury, and closing Medicaid financing loopholes that allow states to launder federal dollars through provider taxes, state-directed payments, and intergovernmental transfers.

CFE has been clear on this point: federal health care dollars should support patients, not fraudsters, political machines, or government payday schemes disguised as care.

Click below to watch Paragon Health Institute’s YouTube video of the event to hear Dr. Oz explain how fraud, waste, and abuse are draining federal health programs.