Seven Key Moments: Hearing on Medicare Fraud

"How do you put a hospice in a burrito stand in California?"

WASHINGTON, D.C. - Medicare fraud is a massive problem that costs taxpayers $60 billion every year and denies Americans access to their Medicare beneficiaries. During a Ways and Means Committee hearing on fraud in the Medicare system, a California patient shared her harrowing story of needing care and being told she could not receive Medicare benefits because she was fraudulently enrolled in hospice. Unfortunately, this witness is not alone in experiencing the impacts of rampant Medicare fraud. The hearing examined the massive scope and scale of health care fraud that was allowed to fester under the Biden Administration and Democrat governors. Today, the Trump Administration is shutting down fraudulent health care providers, prosecuting alleged fraudsters and criminals, and saving billions in taxpayer dollars.

Trump Administration's Anti-Fraud Focus Gives Hope After Democrats Ignored Fraud Warnings

After years of inaction by Joe Biden, Biden's Health and Human Services Secretary Xavier Becerra, and Democrat governors like Gavin Newsom, the Trump Administration's anti-fraud enforcement is providing hope to medical providers who have been stuck in a fraud-riddled system. One hearing witness detailed meetings with high-level officials in the Biden and Newsom administrations to show them the hospice fraud occurring in Los Angeles County only to see them take no real action. She is now encouraged by the Trump Administration's efforts, like stopping payments to 450 hospices in L.A. County and cracking down on fraud across the country.

Chairman Jason Smith (MO-08): "Ms. Clark, clearly, the issue is not new, and you have been on the forefront for years. Did you flag this fraud with California officials and the previous administration?"

Sheila Clark, President and CEO, California Hospice and Palliative Care Association: "Yes, we've been flagging this since 2019 with our state lawmakers…Department of Public Health, Department of Health Care Services. In September 2024, we had two high-level officials down into our state for two days and showed them everything that we were seeing, and they also met with the Department of Public Health, the Department of Health Care Services."

Chairman Smith: "President Trump and Dr. Oz are not letting this persist. They have shut down 450 different hospices in L.A. alone, and are holding states accountable. How do these anti-fraud actions allow you and your legitimate hospice providers to focus on improving patient care and quality of life during their final days?"

Sheila Clark, President and CEO, California Hospice and Palliative Care Association: "Our providers, since this all started, it's their normal. They had to work within the fraudulent scammers, these people that were taking advantage. We see the enforcement and we see action being taken, we have hope that they're going to get these scammers out, because if we don't…it will collapse. They have taken over L.A. County and are proliferating through the rest of the state. We need to act."

"How Do You Put a Hospice in a Burrito Stand in California?"

Hospice fraud, particularly in California, is so flagrant that criminal, non-existent hospices were registered at a burrito restaurant, auto body repair shop, and a demolished building, among other implausible locations. The Biden Administration was made aware of fraudulent hospices in Los Angeles County in 2024 but took no action. Conversely, the Trump Administration has stopped payment to 450 hospices in the county.

Rep. Greg Steube (FL-17): "How can CMS (Centers for Medicare & Medicaid Services) and the states work with law enforcement entities to improve coordination amongst themselves to prevent fraud on the front end?"

Sheila Clark, President and CEO, California Hospice and Palliative Care Association: "…Hospice providers…you're going to go out and you're going to find them. They're going to open the door, you're going to survey them. You'd be amazed at how many hospices you can walk up to in California and there is nobody there. There is five months worth of mail stacked up from CMS, and nobody's there, and that passed a survey. How did that happen? How do you put a hospice in a burrito stand in California? How do you put a hospice in a tire store in California? That all had to be vetted through licensure and through certification and accreditation. How does that happen?"

Medicare Fraud Victim's Story: "It Was Terrifying."

Dr. Lynn Ianni was a Medicare patient who was denied coverage for an injury she suffered because her benefits were stolen through the multi-billion hospice fraud in Los Angeles County, California. Fraudulent hospice centers stole both her Medicare benefits and the government-issued identification number belonging to a California surgeon. Her story was featured in recent media investigations that shined a national spotlight on hospice fraud. Sadly, the facts of her story are not unique among fraud victims.

Dr. Lynn Ianni, PhD, Medicare fraud victim and Medicare beneficiary: "In early 2024, I suffered a shoulder injury while playing pickleball and was referred by my primary care provider to physical therapy…My provider billed Medicare and my supplemental insurance and payments were processed without issue. But, in July, at what was supposed to be my final appointment, everything changed. I was called to the front desk and told that Medicare had denied my claim. The reason, according to their records, I was enrolled in hospice care. At first, we laughed. It seemed like an obvious clerical error…It seemed what should have been a simple fix turned into an hours-long call [with Medicare], ending only with the suggestion that I file an appeal…Weeks turned into months. I called Medicare repeatedly, often waiting on hold for hours only to be told over and over again that no one could access my appeal, track its status, or provide any timeline for resolution. I received no acknowledgement that my appeal had even been received. Meanwhile, my claims continued to be denied…At the same time, I was required to continue paying my Medicare premiums or risk losing coverage entirely and permanently.

"I was locked out of receiving any medical care because I had been falsely classified as a hospice patient…It was not just frustrating; it was terrifying.

"A Medicare representative gave me the name of a hospice where I was supposedly enrolled. I looked it up. It appeared legitimate on the surface, listed on Medicare's own website, with an NPI number, a named CEO, and an address, but the address led to what looked like a strip mall. …As a clinician myself, I checked the NPI number of the physician listed with the hospice…He was a surgeon in Santa Monica and had no connection whatsoever to this hospice. His identity had been used without his knowledge."

Value-Based Doctors Are an Effective Force for Fighting Fraud

Accountable Care Organizations (ACOs) have a proven record of identifying health care fraud because of their ability to spot potential red flags in patient care data. Care teams comprised of doctors from different specialties and practices can flag abnormalities in care data by other physicians that may be suspicious or fraudulent.

Rep. Vern Buchanan (FL-16): "Why have you had good success while others are struggling? There's a lot of fraud in your specialty. Give us a thought about the difference that you're making that's having a positive impact."

David Klebonis, Chief Operating Officer, Palm Beach ACO: "I wish I could take more credit, but we really rely on the expertise and boots on the ground, reinforcement from our physicians. More than you and I, they actually know the treatments that patients require, and they know when treatments look out of line, and they're really the life blood to make these submissions and fight fraud. It's really the physicians that have given us an advantage."

Accountable Care Organizations Fight Fraud Because It Costs Their Bottom Line

Unlike traditional fee-for-service Medicare, which is riddled with fraud, Accountable Care Organizations have an incentive to fight fraud because they can be financially harmed by such criminal activity. ACOs have saved taxpayers over $2 billion while providing high-quality, cost-effective care. A Florida ACO shared their story of how fraud required employee layoffs while forcing the organization to take further actions to protect themselves against future fraud.

Rep. Darin LaHood (IL-16): "Mr. Klebonis, ACOs operate on a performance-based system. Would you say that the risk-based performance models of ACOs motivate them to detect fraud more aggressively than traditional fee-for-service providers who might not have the same financial consequences?"

David Klebonis, Chief Operating Officer, Palm Beach ACO: "In 2022, our ACO was affected by fraud [which ate into our shared savings]. Our revenue went down 26 percent. We took that very seriously. As a result, we had to lay off staff, we had to discontinue programs, and we had to realign resources to prevent future fraud. Absolutely, as a downside-risk organization, we take fraud very seriously."

Hospice Fraud Has Life-and-Death Consequences: A California Senior's Story

Once a Medicare beneficiary enrolls in hospice, Medicare generally stops coverage for curative treatments. Because of this rule, seniors fraudulently enrolled in hospice care often find themselves unable to receive necessary health care using Medicare benefits. The denial of coverage can carry deadly consequences as in the case of a California woman who passed away at a skilled nursing facility after a broken hip because her Medicare benefits were stolen and she was unable to receive care.

Rep. Nicole Malliotakis (NY-11): "You have seen a lot of seniors who have suffered from the issue of fraud. Are there any particularly egregious examples that you would like to share with the Committee?"

Sheila Clark, President and CEO, California Hospice and Palliative Care Association: "My first beneficiary that I worked with called me, and his wife needed cataract surgery…I said, 'Tell me what's going on.' They said, 'She's on hospice. She's not on hospice. She just needs her cataract surgery done, but they won't do it.'…I follow up two days later with them to say, 'Earl, this is what I found out.' Earl is out of breath, and he says, 'Sheila, she fell…Sheila, she fell. She can't see. She didn't wake me up to go to the bathroom.' She fell, and she broke her hip, and they pinned it and she went into a nursing home…She died two months later in a skilled nursing facility. That did not need to happen. She just needed her cataract surgery, but she was denied that because of a scammer hospice selection."

"Never Been Easier to Work with Centers for Medicare & Medicaid Services"

President Trump has charged his Administration with fighting fraud in health care, including Medicare, one of the largest sources of waste, fraud, and abuse in the federal government. A new anti-fraud pilot program from the Centers for Medicare & Medicaid Services (CMS) saved taxpayers $2 billion in one year. The agency continues to bolster partnerships with medical providers to share information on other medical providers suspected of fraud.

Rep. Mike Carey (OH-15): "Last year, CMS launched the Fraud Detection Operation Center (FDOC) to lead their charge to fight fraud, waste, and abuse in federal health programs. The FDOC, also known as the 'fraud room' uses artificial intelligence to detect fraudulent claims in real time and identify high-risk providers and bad actors to prevent fraud on the front end while keeping the human in the loop. CMS has reported that a successful pilot for this program prevented over $105 million in fraudulent payments between late March and May of just last year. Following that initial success, CMS and the FDOC reports that it saved an estimated $2 billion by February 2026, less than one year after the initial launch. Mr. Deery, you work in the private market to identify this fraud, have you interacted with the FDOC in any of your work?"

Christopher Deery, Director of Corporate and Financial Investigations, Independence Blue Cross:"I'm aware that some of the AI vendors they are working with are well-respected vendors in the space. I would say the collaboration with [the CMS Center for Program Integrity] and the commercial plans, at least, has never been better…I would also just commend them for the first time, CMS has shared with everybody a suspended provider list. They've shared with us information on providers that they suspended with a credible allegation of fraud. That is a big deal, because now that is visible, we can take a look at it on our own."