Fraud in taxpayer-funded health care programs like Medicare and Medicaid is so pervasive that the government identified a breathtaking $17.5 billion in scams in just one year, according to an analysis conducted by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), the agency bureau charged with safeguarding the nation’s financial system form illicit activity, money laundering and the financing of terrorism. The crimes occurred in all 50 states, as well as Washington D.C, and U.S. territories including Guam, Puerto Rico and the Virgin Islands. A lengthy report made public this month identifies the largest number of offenders in California (3,141), followed by Florida (1,378), New York (989) and Minnesota (946) with some of the scams involving criminal networks connected to foreign entities.
“Health care fraud imposes enormous costs on U.S. taxpayers, increases the overall cost of health care in the United States, and puts patients at risk,” the FinCEN report states, identifying the offense as the act of knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or obtain by false or fraudulent means money or property of any health care benefits program. It frequently involves Medicare, the country’s health insurance program for those 65 and over, and Medicaid, which provides health care for low-income populations. Common schemes include filing false and fraudulent claims for reimbursement, double billing, phantom billing and upcoding. Others include fraudulently inducing patient referrals, the use of items and services with kickbacks and bribes, stealing patients’ health insurance identifiers, diverting legal prescriptions for illegal uses and impersonating health care professionals. The criminals make a lot of money considering Medicare and Medicaid spend about $1.9 trillion annually, according to government figures cited in the report.
The audit examines cases between March 1, 2025, and February 28, 2026, using reports filed by financial institutions under a law called Bank Secrecy Act (BSA) to help detect and prevent money laundering in the U.S. Home health care business were the most frequently identified suspected fraudsters in BSA reports, followed by hospice care companies, mental and behavioral health and addiction treatment providers and medical equipment businesses. In many cases the public funds were illegally used for luxury purchases, travel, real estate, construction or unrelated private investments and some of the money was transferred internationally. “Suspected perpetrators employed a range of apparent money laundering techniques—from simple funds transfers to complex layering processes—before spending the obtained health care payments,” FinCEN’s probe found. “In many cases, proceeds of suspected health care fraud that did not appear to go through a complex funds transfer process were used on personal expenses and luxury goods.”
In one case more than $25 million in Medicaid payments filled the coffers of a fake Alaska “dentist’s office” with multiple owners who were not involved in dentistry and the payments were used for cash withdrawals, personal expenses and payments to the owners’ other businesses. In another, $20 million from Medicare Administrative Contractors (MAC), state health agencies and a pharmacy organization went to a New York City based pharmacy that later sent payments to numerous wholesale companies in Hong Kong. The government also paid approximately $2 million for home health care, hospice, medical transportation and pharmaceuticals to multiple California-based individuals, including one linked to organized crime, that sent the funds to shell companies and a real estate firm. A Minnesota adult daycare registered at a shuttered store front received $870,000 from a state agency and insurance companies that administer state health plans, and the money was transferred internationally to personal accounts and a shell company. A Kentucky health care professional with a previously suspended operating license received over $400,000 using the same claim number for multiple claimants and transferred the money to personal investment accounts. A Pennsylvania hospice business got more than $330,000 that was used to pay the owner’s credit cards and other personal expenses. The list goes on and on.
