By Sally C. Pipes
The Department of Government Efficiency's crackdown on waste, fraud, and abuse is off to a fast start. But as an engine of government savings, DOGE still has substantial untapped potential.
That's because it hasn't yet addressed the fraud crippling one of the federal government's largest programs: Medicare. In fiscal year 2023 alone, "improper payments" in Medicare eclipsed $50 billion.
GUEST OPINION
If DOGE wants to put a real dent in government overspending while changing millions of Americans' lives for the better, it won't find a better target than Medicare fraud.
The legacy of Medicare after 60 years is one of relentless growth -- both in the number of beneficiaries and in spending. Medicare expenditures now exceed $1 trillion annually.
But the program's growth has only weakened its ability to effectively oversee its finances -- creating a fat target for scam artists who calculate their odds of success are high and their risk of getting caught is low.
The numbers paint an alarming picture. In fiscal year 2024, 7.66% of the payments Medicare's Fee-for-Service program made to providers were "improper," meaning they failed to comply with legal requirements. Those payments totaled more than $31 billion.
The improper payment rates for Medicare Advantage and the Medicare prescription drug benefit were not much better -- 5.61% and 3.70%, respectively. That translates into a total of over $22 billion in improper payments across the two programs in fiscal 2024.
In all, Medicare accounts for nearly one-fourth of the funds improperly spent by the government each year, according to a report from the Government Accountability Office.
That's a pitiful record -- and has real human consequences, both for seniors and for taxpayers.
Consider some of the most egregious cases of Medicare fraud. Earlier this year, a couple from Arizona "pleaded guilty for causing over $1.2 billion of false and fraudulent claims to be submitted to Medicare and other health insurance programs for expensive, medically unnecessary wound grafts that were applied to elderly and terminally ill patients," according to the U.S. Department of Justice.
In 2023, the Department of Justice charged 23 Michigan residents with nabbing more than $61.5 million from Medicare for unnecessary home health services. The feds allege that the defendants set up a complex web of home healthcare agencies in Detroit using straw owners -- such as family members -- and then paid bribes and kickbacks to recruiters to gain additional patients.
Every dollar spent improperly -- or fraudulently -- in Medicare is a dollar that can't go to a senior with legitimate healthcare needs.
Policymakers have already identified numerous concrete strategies for reforming the program. One is to ensure that Medicare pays the same amount for equivalent services no matter where they're provided. This change, which has long been championed by GAO, could save taxpayers more than $140 billion over the next decade.
Another potential reform would be to conduct more thorough audits of payments and claims. Auditors working at the state level have historically been successful at identifying fraud. Using their insights to improve federal Medicare oversight could help policymakers keep managing the program effectively as it continues to grow.
Work of the sort DOGE is doing is sorely needed. Waste and fraud run rampant in the federal government. Reforming Medicare can save not just money but lives.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy -- and How to Keep It (Encounter 2025). Follow her on X @sallypipes. This piece originally ran in the Detroit News.