The Evolving Face of Healthcare Fraud: Inside Congress’s Latest Battle Against Medicare and Medicaid Schemes 

Olga Khabinskay, Director of Operations at WCH, analyzes the February 3, 2026 House Energy and Commerce hearing “Common Schemes, Real Harm: Examining Fraud in Medicare and Medicaid.” The hearing revealed how approximately $100 billion in annual improper payments continue to undermine Medicare and Medicaid through increasingly sophisticated methods — including AI-enabled fraud, interstate schemes, telehealth vulnerabilities, and high-risk services. She argues that adaptive oversight and structural reforms are essential to protect program integrity and sustainability. 

Key Takeaways 

• $100 Billion Problem: Roughly $100 billion in annual improper payments flow through Medicare and Medicaid; while not all are fraud, the scale reveals systemic vulnerabilities that bad actors exploit and that strain legitimate providers. 

• AI Is a Double-Edged Sword: Artificial intelligence can dramatically lower the cost and increase the sophistication of fraudulent documentation. Witnesses called for transparency, auditability, and governance frameworks to harness AI’s benefits without opening new fraud pathways. 

• Fraud Has Gone Interstate: Modern schemes routinely cross state lines, outpacing fragmented oversight. Stronger coordination between CMS, HHS-OIG, DOJ, UPICs, and state MFCUs is now essential. 

• Telehealth Needs Guardrails: Pandemic-era flexibilities improved access but weakened verification and documentation standards. Policymakers must design permanent oversight that protects access without sacrificing accountability. 

• High-Risk Service Categories: Applied Behavior Analysis (ABA), Non-Emergency Medical Transportation (NEMT), laboratory services, and Home and Community-Based Services (HCBS) remain especially vulnerable due to billing complexity and limited real-time oversight. 

• Medicare Advantage Under Scrutiny: Upcoding and inflated risk scores in MA plans continue to draw OIG and congressional attention. Aligning profit incentives with accurate documentation is critical to prevent billions in avoidable overpayments. 
  
• Prevention Beats Punishment: Not all improper claims are intentional. Investing in provider education, clearer guidance, and — crucially — professional licensing and standardized training for medical billers (as proposed in WCH’s Trusted Biller Program) could close critical gaps at minimal federal cost.