DOJ’s Using Advanced Data Analytics and AI Tools to Combat Healthcare Fraud Before Payment
The U.S. government has announced record-breaking Medicaid fraud charges as part of its 2026 National Health Care Fraud Takedown, with the enforcement action resulting in charges for 455 defendants, including more than 90 doctors and other licensed medical professionals, in connection with more than $6.5 billion in healthcare fraud and opioid abuse claims.
The enforcement action involved a whole-government approach, including U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), HHS Centers for Medicare and Medicaid Services (CMS), and Drug Enforcement Administration (DEA), with cases in 56 federal districts, 45 U.S. states and territories, and 50 state Medicaid Fraud Control Units participated, more than ever before. There was also unprecedented international cooperation over the two-week takedown. The DOJ seized more than $182 million in cash, luxury vehicles, jewelry, and other assets.
“We are aggressively scaling our offensive against anyone using health care as a front to steal from the American people,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “As today’s cases and arrests show, there is no case too big, no scheme too complex, and no hiding place too remote for our relentless fraud-fighting team. Our message is simple: if you put profit over patients, you should expect to be put in prison.”
Advanced Algorithms and AI Tools Used to Shift from Pay-and-Chase to Pre-Payment Detection
The takedown involved the use of cutting-edge data analytics algorithms and artificial intelligence tools to identify potential fraud before criminals cash out, rather than the reactive pay-and-chase approach of previous years. The use of AI tools for fraud prevention is set to expand significantly moving forward. AI tools were used to identify suspicious activity in many of the fraud schemes, including the first-ever criminal prosecution under the Data Fusion Center that was formed last year.
The Data Fusion Center was established to track, identify, and prevent fraudulent billing and medical scams and combines traditional data analytics with financial analysis and comprises experts from the Health Care Fraud Unit’s Data Analytics Team, HHS-OIG, FBI, and other agencies, supported by data sharing agreements between a wide range of government agencies. “Prosecuting criminals who steal from American patients is necessary—but stopping them before a single dollar leaves the building is smarter,” said CMS Administrator Dr. Mehmet Oz.
The Data Fusion Center helped identify a $67 million fraud scheme involving the billing of Illinois Medicaid for behavioral health services that were never provided. The defendant allegedly billed more than 500 hours a day for counselling and therapy services, which could not have been provided even if all providers on staff had been working 24 hours per day. The data analysis showed that patients were hospitalized at other institutions on days when the defendant billed for behavioral health services. Prosecutors opened the case within 5 days of the completion of the data analysis, and the defendant was arrested within 7 months while attempting to flee the country.
Actions by the CMS resulted in the suspension of 1,079 providers and the revocation of billing privileges for 1,403 providers. More than $73 million was obtained in 48 Civil Monetary Payment settlements accompanied by more than 1,400 exclusions, while 25 actions by HHS-OIG are seeking more than $10 billion in payments to the Medicare Trust Fund from payments identified by CMS and blocked before the funds were paid in fraudulent claims. CMS has announced that under a new arrangement, it will provide cloud computing space within its integrated data repository to support the DOJ fraud division’s data analysis algorithms and AI tools to combat health care fraud. Civil charges have been filed against 13 defendants for $14.8 million in health care fraud schemes, along with $23 million in civil settlements with 31 defendants. There have also been 928 administrative cases by the DEA seeking the revocation of authority to handle and prescribe controlled substances since October 1, 2025.
Fraud Costs Taxpayers and Causes Significant Patient Harm
Healthcare fraud costs U.S. taxpayers, exploits vulnerable patients and puts lives at risk, causing considerable patient harm, including death. In one case, the medical director of a cardiovascular testing and treatment practice in Florida was charged in connection with an $89 million fraud scheme to bill for medically unnecessary cardiovascular tests on student athletes. The director falsified diagnoses to defraud health care benefit programs for the testing and is alleged to have rubber-stamped test results as normal without checking them, in some cases stamping test results as normal within seconds.
Student athletes with cardiac abnormalities were not made aware that they were at high risk of sudden cardiac arrest. In one case, a patient’s test results showed an enlarged heart, but the results were signed off as normal. The patient died from complications from his enlarged heart within 24 hours of the test results being signed off as normal.
The DOJ highlighted fraud cases involving wound care, especially allografts, and hospice providers in its announcement, where fraud cases have increased significantly, and these are likely to remain key enforcement areas moving forward. Medicare billing for wound care more than doubled from $3.4 billion in 2023 to $7.5 billion in 2024 and almost doubled again in 2025 to $14.4 billion. The increase in payments was not due to medical necessity; rather, it was driven by illegal kickback and healthcare fraud schemes. Charges were filed in 6 districts for fraudulent claims for amniotic wound allografts against 11 defendants, including a company executive and 8 medical professionals.
In one scheme, a company that did not manufacture allografts obtained them from another firm, added a 2,000% mark-up, paid 40% of that in illegal kickbacks to marketers, and targeted hospice patients, providing medically unnecessary allografts, far exceeding the size of the wound, which were often provided without coordinating with the individual’s treating physician, without proper treatment for infection, and for superficial wounds that did not require the treatment, The defendant was paid more than $24 million by the company, with the marketers and medical professionals involved often paid between $500 and $600 per square centimeter of graft.
“Today’s historic enforcement action sends a clear message: if you use our health care system to enrich yourself at the expense of patients or the American people, we will find you, we will prosecute you, and we will hold you accountable,” said HHS Secretary Robert F. Kennedy, Jr. “HHS will continue working with our law enforcement partners to protect patients, safeguard taxpayer dollars, and restore integrity to our health care system.”
