A top official at the Centers for Medicare & Medicaid Services informed Congress on Tuesday that federal investigators have stripped billing privileges from three-fifths of newly enrolled hospice agencies that have continued to pop up in California, a state long riddled with healthcare fraud.
Of the remaining California-based hospice service providers that emerged over the past six months, 35% were flagged for corrective action, Kimberly Brandt, the chief operating officer of CMS, told the House Energy and Commerce Subcommittee on Oversight and Investigations.
The committee’s congressional hearing, where Brandt was the only witness, focused on the Trump administration’s recent efforts to combat billing schemes targeting federally funded healthcare programs amid reports across the country that large-scale scams are stealing millions from Medicare and Medicaid.
Brandt noted that CMS is entrusted with overseeing such programming, which provides insurance coverage to more than 170 million Americans and accounts for almost $1.8 trillion in annual federal spending.
“In fact, if CMS was a country, it would have the 16th largest GDP in the world,” Brandt remarked. “With that responsibility comes a clear moral mandate to protect taxpayer dollars and protect the beneficiaries who rely on those programs.”
Rep. John Joyce (R-PA), chairman of the subcommittee, said sectors such as durable medical equipment, genetic testing, skin substitutes, home healthcare, and hospice are all experiencing high rates of fraud within the Medicare program.
In Medicaid, authorities say schemes are running rampant across a variety of service areas, from non-emergency medical transportation to personal care services, autism therapy, and substance abuse treatment.
“These crimes are despicable, yet we are seeing them occur time and time again across the country,” Joyce said. “In Minnesota, it’s Medicaid [Advanced Behavior Analysis] services. In California, it’s Medicare hospice services. In Florida, it’s Medicare durable medical equipment.
BOGUS BUSINESSES AND ‘LAX’ OVERSIGHT: HOW HOSPICE FRAUD HAS FLOURISHED IN CALIFORNIA
Brandt mentioned how CMS has launched the Fraud Defense Operations Center, also known as the Fraud War Room, a specialized team of data analysts, investigators, health policy experts, legal advisers, and law enforcement formed to identify irregular billing practices.
During the early months of the pilot program in 2025, the FDOC’s data-driven work resulted in over $1.8 billion in payment suspensions due to suspected fraudulent activity.
Brandt said the FDOC looks at real-time Medicare claims data and detects noticeable spikes. For instance, in one case, CMS noticed that an 89-year-old hospice patient had 5,029 claims for skin substitutes submitted on her behalf.
“Is that improper payment or fraud?” Rep. Brett Guthrie (R-KY), chairman of the House Committee on Energy and Commerce, questioned.
“That would be fraud,” Brandt said. “And she would be mummified if that was actually the case.”
Rep. Randy Weber (R-TX) said that his home state of Texas paid out $65 million in fraudulent Medicare claims for genetic testing that was never even requested on behalf of beneficiaries.
Brandt said that FDOC stopped more than $100 million in reimbursement claims tied to laboratory service schemes involving fraudulent or unnecessary testing.
“And unfortunately, what that means is then when those services get billed — even if they’re not provided — they go on the patient’s medical record, and it precludes them from being able to get that type of testing in the future when they might need it for a cancer diagnosis or something more serious,” Brandt explained.
Rep. Troy Balderson (R-OH) pressed about cases in which Medicaid providers billed for services supposedly delivered to patients who were deceased, hospitalized, incarcerated, or living abroad.
For instance, in Massachusetts, a transportation company billed for 100 rides, including patients who were already confirmed dead. In Colorado, a defendant claimed $165,000 in rides for one deceased beneficiary. In New York, investigators identified 25 transportation companies billing for patients who were confirmed to be deceased or hospitalized.
“What mechanisms does CMS currently have to cross-check active claims against death records, hospital admission records, and incarceration records before approving payment?” Balderson asked.
Brandt said that CMS has a data-matching agreement with the Social Security Administration to cross-reference beneficiary records against the Death Master File database, to which every locality in the United States reports all deaths.
HEALTHCARE FRAUD HAS PROLIFERATED NATIONWIDE, HOUSE REPUBLICANS WARN
Critics have said CMS and other federal and state agencies are not doing enough to stop fraud, including by ignoring existing tools they have to detect bad actors.
“President Trump has issued Executive Orders and signed laws that are simply not being implemented and abided by that would grant federal regulators the data that they have only so far pursued via the Courts,” the United Council on Welfare Fraud said in a statement. “Before we layer more costly technology onto the Medicare and Medicaid programs as an additional burden to taxpayers, shouldn’t we all FIRST be doing what is already on the books and actually SAVE scarce tax dollars?”
