Enforcement actions carried out by the Centers for Medicare & Medicaid Services (CMS) have stopped over $1.6 billion in potentially improper Medicare lab payments so far under the Trump administration.
CMS took action against various types of lab fraud in its crackdown, including billing beneficiaries for medically unnecessary services and for services never rendered. Labs offering a wide range of services, including genetic testing, drug tests, and pathogen detection, may engage in such fraudulent billing patterns, CMS said in an Aug. 28 statement.
“When laboratories bill Medicare for tests they never performed, it drains the Medicare Trust Fund and diverts resources away from beneficiaries who need them,” CMS Administrator Dr. Mehmet Oz said in the statement.
“That's why, under the leadership of the White House Anti-Fraud Task Force, CMS has built a technology-powered fraud prevention operation to root out scammers all across our health care system, from laboratory testing and hospice care to medical equipment and autism therapy,” Oz said.
Of the more than $1.6 billion in payments stopped, $732 million was saved by revoking 157 fraudulent lab providers from the Medicare program, CMS said.
An investigation of around 600 labs led to the suspension of 185 payments, preventing over $500 million in potentially fraudulent payments. Over $276 million was recouped from 442 overpayments that were already disbursed to suspect labs.
In addition, $127 million in potentially fraudulent payments were prevented due to a CMS contractor's 85 law enforcement referrals.
In March last year, CMS launched its Fraud Defense Operations Center (FDOC), which has become a key tool to combat fraud, waste, and abuse in Medicare, according to the agency.
FDOC assembles investigators, data analysts, health policy experts, law enforcement, and legal advisors to crack down on fraud. It uses data-driven intelligence to detect threats in real time and shut down inappropriate Medicare billing, CMS said.
In its latest statement, CMS attributed the savings generated from the crackdown on fraudulent Medicare payments to advanced tools, such as machine learning and artificial intelligence. These tools look for indicators such as unusual billing patterns to identify potential fraud, abuse, and waste.
Overall savings from CMS’s Medicare fraud prevention efforts totaled $42 billion in fiscal year 2025, according to the agency. In addition, CMS is targeting improper payments in the Medicare program.
Medicare had an estimated $57 billion in improper payments in fiscal year 2025, according to an April 27 report from the Government Accountability Office. Improper payments include overpayments, underpayments, and unknown payments.
CMS said in its latest statement that it had identified $1.8 billion in Medicare overpayments so far in 2026 and that it had collected $378 million in overpaid funds.
Blocking Payments
Specifically, CMS withheld over $200 million from Minnesota and more than $867 million from California. According to officials, the decision was taken after advanced analytics identified suspicious activity and potential fraud.
In an emailed statement to The Epoch Times, Minnesota Gov. Tim Walz criticized the Trump administration, accusing the federal government of “cutting more money in healthcare than they’ve prosecuted for fraud.”
“The math doesn’t add up. They’re not punishing fraudsters; they’re punishing children, seniors, working families, and people with disabilities. This is about cutting healthcare for people they don’t care about in their campaign of retribution against Minnesota,” Walz said.
In a post on X, California Gov. Gavin Newsom said his state was being targeted for political reasons.
During the July 21 press conference, Kennedy said that if the states want the blocked funds, they must provide documentation that the relevant transactions were legitimate.
“Every dollar the federal government allows to be lost to fraud, waste, and abuse is a dollar stolen from American patients and the American taxpayer. That’s money that should be going to legitimate health care,” the health secretary said.
Earlier, in a March 17 testimony before a House committee hearing, Kim Brandt, the chief operating officer for CMS, said the agency was committed to identifying and intercepting fraud before funds leave accounts.
To do so, CMS is screening healthcare providers before they are allowed to take part in Medicare. The agency is also conducting audits and collaborating with law enforcement to prosecute fraud, according to Brandt.
“We partner with states, insurers, and other federal agencies to share intelligence and close vulnerabilities,” Brandt said.