The Department of Government Efficiency (DOGE) revealed during a DOGE subcommittee hearing on February 12 that since 2003, the U.S. government has issued $2.7 trillion in improper payments across various federal agencies, including Medicare and Medicaid. While a precise breakdown for these programs was not provided, Medicare and Medicaid have consistently been a source of improper payments among federal programs, raising concerns about the long-term security of federal healthcare spending. In 2023 alone, the Department of Health and Human Services (HHS) reported approximately $100 billion in improper payments tied to Medicare and Medicaid.
A critical area of concern lies within the durable medical equipment (DME) sector. According to Omar Pérez Aybar a special agent for the Department of Health and Human Services’ (HHS) Office of Inspector General in Florida, up to 90% of DME companies in South Florida were found to be fraudulent in 2023. This statistic reveals the extent of fraudulent activity in a sector that plays a crucial role in patient care. Florida was the second most active state for healthcare M&A in 2024, with 171 deals, and is also home to a high volume of Medicare and Medicaid beneficiaries. In January 2023, two Florida doctors were convicted for their roles in a scheme to defraud Medicare by submitting more than $31 million in claims for unnecessary DME, highlighting the persistent nature of fraud in the sector.
Although the immediate effects of this fraud are troubling, including challenges for healthcare providers, insurers and regulators, the long-term impact may be largely positive. Tackling this fraud will increase accountability and ensure that taxpayer funds are allocated to eligible recipients and services. The scrutiny that follows is likely to drive reforms that improve efficiency, reduce waste and protect the integrity of Medicare and Medicaid.
The healthcare M&A market, initially impacted by heightened regulatory oversight, stands to benefit in the long run. Deal flow may slow as companies adapt to new compliance requirements, but once these adjustments are made, the market could experience greater stability. Investors may become more confident, and acquisitions could shift toward companies with proven compliance and ethical practices, fostering sustainable growth within the sector.
Ultimately, while improper payments have been monitored and reported to Congress since 2019, the huge scale of this fraud and its persistence remain deeply troubling. By addressing it head-on, as DOGE is doing, there is an opportunity to create a more efficient healthcare system. Proper allocation of funds will protect U.S. taxpayers and ensure the sustainability of the system they pay into for years to come.
With DOGE investigations underway, we wonder what its reports will ultimately reveal. While its early findings have raised concerns, the full extent of improper payments in Medicare and Medicaid remains unclear. As DOGE continues its work, its efforts could reshape federal healthcare spending and bring much-needed reforms—but for now, the nation waits to see what comes next.
