Dr. Mehmet Oz, the Trump administration's point man at the Centers for Medicare and Medicaid Services, told Just the News that the billions in entitlement fraud being uncovered in Democrat-run states may not be the product of sloppy bookkeeping. It may be the point.
"I do think it's a feature for some of these states," Oz said in a wide-ranging interview Thursday night. The CMS administrator laid out a case that state-level political incentives, jobs numbers, tax revenue, union dues, have quietly turned Medicaid into an unregulated employment program in places like New York, with taxpayers footing the bill and organized criminals skimming the proceeds.
The charge is blunt: Democratic governors and their allies aren't just failing to stop the fraud. They benefit from it. And until the Trump administration started looking, nobody with enforcement power bothered to check.
Oz told Just the News that CMS alone is losing $100 billion a year to fraud. That figure dwarfs the budgets of most federal agencies. He said fixing the problem would "double the life expectancy of the Medicare trust fund", a claim aimed squarely at working Americans paying into a system that may not survive long enough to pay them back.
This week, Oz announced that his agency shut down 800 hospice centers suspected of being empty, fraudulent shells. The closures follow a pattern that has emerged across multiple states, where providers that exist largely on paper collect federal reimbursements for services never rendered.
The administration led by Vice President JD Vance has already withheld billions from home health and hospice providers suspected of bilking taxpayers. California saw $1.3 billion in Medicaid funding temporarily pulled. And the enforcement actions keep expanding.
Oz described the reaction inside the system when investigators finally showed up:
"It highlights the reality that the fraud had actually created such a deep corruption, such a deep rot in the system, that when someone finally began to take action, they all scurried like rats into the corners. They never thought anybody would come after them."
Oz singled out New York as a case study in how the fraud works and why state leaders have little incentive to stop it. He said the number-one job in the entire state is now "personal care service attendant", a category of unlicensed workers who perform tasks like carrying groceries, cooking meals, and driving patients to appointments. Tasks, Oz noted, that families would normally handle themselves.
"In New York State, we now pay people to do that for you," Oz said. "The person we're paying can be your son, or the neighbor's son. Your son could be helping them. You get the story. These are unlicensed people in undocumented, unsupervised settings, providing services that we're paying for."
Five hundred thousand people now hold these jobs, he said. That makes it the state's largest employment category, and every dollar flows through Medicaid.
Oz laid out the incentive structure plainly. When the governor of New York sees declining employment, getting people on the federal payroll through personal care services is a political win. The state avoids paying unemployment. It collects taxes on the wages. And the unions got permission to organize these workers, creating another revenue stream.
"And this is the catch: when the governor of New York is seeing declining employment, and they can get people employed by the federal government and the disguise of personal care services, it's a winner. They don't have to pay unemployment. They get to take taxes on the money that these guys are getting paid."
The arrangement, as Oz described it, benefits every political stakeholder in Albany, except the taxpayers funding it from across the country.
Oz also described a case in which organized criminals exploited the system on a grand scale. He said some of the money flowing through these programs ends up overseas, funneled through what he called "organized criminal endeavors" including the Russian mafia.
He offered one specific example. Federal investigators caught a group that had allegedly stolen $58 million from taxpayers. They bought gold bullion, packed it into suitcases, and were fleeing to their native country when authorities intercepted them. Oz said the case recently resulted in a sentencing.
"Think about how much money that is going to, in this case, organized criminal endeavors, the Russian mafia. Much of it goes overseas. I mean, we caught one of these guys. Just sentenced them.... These guys had stolen $58 million from taxpayers. They bought gold bullion. They know how to invest, put it in their suitcases, and they were fleeing back to their native country when we caught them."
The scale of alleged fraud in California alone has drawn scrutiny, with separate analyses pointing to losses that could reach into the hundreds of billions under recent Democratic leadership.
The administration is not limiting its crackdown to individual cases. The Washington Examiner reported that Oz has ordered all 50 states to submit plans within 30 days to audit and revalidate Medicaid providers, particularly in high-risk areas. A Washington Examiner analysis found that states paid more than $380 million in Medicaid funds to providers later caught defrauding the program.
"Give us your strategy of how you're going to do it," Oz said regarding the revalidation plans. He added a warning: "If you don't take it seriously, it indicates to us that we might have to take the audits that we're doing to the different states more aggressively."
The Vance anti-fraud task force has already suspended more than 450 hospice centers and home health agencies in Los Angeles over alleged Medicaid fraud exceeding $600 million. That effort has prompted congressional testimony suggesting Los Angeles hospice fraud alone may have cost taxpayers $5 billion.
Fox News reported that CMS sent letters to all 50 governors demanding action within 10 business days on revalidating high-risk providers, with a broader anti-fraud strategy due within 30 days. In the letter, Oz wrote: "Corrupt individuals and organizations masquerading as health care providers are defrauding Medicaid, and American taxpayers, of billions of dollars each year." He added: "It is urgent that action be taken immediately."
Minnesota has emerged as another flashpoint. A state-commissioned review there estimated up to $1.7 billion in improper Medicaid payments over four years and identified vulnerabilities across 14 high-risk services. The Trump administration has already frozen tens of millions in Minnesota Medicaid funds over those concerns.
Oz framed the fraud fight as a rare issue with bipartisan appeal, at least at the voter level. He told Just the News that Republicans long suspected fraud of this magnitude, while Democrats "feel embarrassed that it's gotten this bad, and they don't know what happened to all the money they thought they were helping people with."
"So it's a great issue for us to drive home."
The political appeal is obvious. Every dollar recovered from fraud is a dollar that doesn't have to be cut from services or added to the deficit. And every fraudulent provider shut down is one fewer drain on a trust fund that millions of working Americans are counting on.
But the deeper question Oz raised, whether the fraud is a feature rather than a flaw, cuts at something more fundamental. If state leaders build employment programs on top of Medicaid billing, collect taxes on the wages, let unions organize the workers, and never audit the results, the line between negligence and complicity gets thin.
Oz pointed to the consequences for ordinary Americans still paying into the system:
"So if you're out there working your tail off, hoping one day Medicare will be there for you to catch you in your older years, it'll double the life expectancy of that program."
Federal arrests in California healthcare fraud sweeps have already begun putting names and handcuffs on the problem. Whether the 50-state audit produces similar results in New York and elsewhere remains to be seen.
Oz's claims are specific enough to demand follow-up. He did not name the defendant sentenced in the $58 million gold-bullion case, or the court that handled it. He did not identify which hospice centers were shuttered or where they were located. He did not name the governor of New York he was referring to, nor did he cite the data source for his claim that personal care attendant is the state's top job.
Those gaps matter. The scale of the allegations, $100 billion a year, 800 shuttered hospice centers, half a million workers in a single state, demands documentation, not just interview assertions. CMS has the records. The question is whether the agency will release them in enough detail for the public to verify the claims independently.
For now, the pattern is consistent. Every time investigators pull back a corner of the Medicaid system in a blue state, they find billing that doesn't match reality. The question Oz is asking, whether anyone in charge ever wanted it to, is one that taxpayers deserve an honest answer to.
When the people running the system profit from the fraud, calling it a failure gives them too much credit.
