HHS Seeks Feedback on AI Usage in Healthcare Fraud Prevention

In a new initiative aimed at combating the escalating problem of healthcare fraud, the U.S. Department of Health and Human Services (HHS) is turning to artificial intelligence (AI) for solutions. The Centers for Medicare and Medicaid Services (CMS), under the HHS, has announced plans to integrate AI tools to detect and prevent fraudulent claims before they are paid.

Healthcare fraud continues to be a significant issue in the United States, with approximately $60 billion lost to Medicare fraud annually. In 2023, over $100 billion in improper payments were identified across the Medicare and Medicaid programs by the HHS Office of Inspector General (HHS-OIG). Fraud is estimated to account for between 3% and 10% of total healthcare spending. Traditionally, efforts to recover fraudulently paid funds have only been partially successful, leaving taxpayers footing the bill.

Leadership Calls for a New Approach

On February 25, 2026, Vice President J.D. Vance, HHS Secretary Robert F. Kennedy, Jr., and CMS Administrator Dr. Mehmet Oz outlined next steps in the government’s effort to address healthcare fraud. These measures are part of a broader push by the Trump administration to make healthcare more affordable, protect patients, and reduce taxpayer burdens.

"For decades, Medicare fraud has drained billions from American taxpayers - that ends now", declared HHS Secretary Kennedy. "We are replacing the old ‘pay and chase’ model with a real-time ‘detect and deploy’ strategy, using advanced AI tools to identify fraud instantly and stop improper payments before they go out the door."

Dr. Mehmet Oz echoed this sentiment, describing the proactive stance the CMS is taking: "CMS is done trying to catch fraudsters with their hands in the cookie jar - instead, we’re padlocking the jar and letting them starve. This proactive approach will help us crush fraud, protect taxpayer dollars, and make sure the vulnerable Americans who depend on our programs get the care they need."

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New Measures to Strengthen Oversight

One key step in this initiative involves deferring $259.5 million in quarterly federal Medicaid funding for Minnesota while fraudulent or unsupported claims are further investigated. Additionally, a nationwide moratorium on Medicare enrollment for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) has been implemented. This sector has historically been a significant source of healthcare fraud, and the moratorium is intended to curtail further abuse.

The HHS and CMS are also prioritizing stakeholder engagement in their efforts. A Request for Information (RFI) has been issued, seeking input on how the CMS can enhance its ability to prevent, detect, and respond to fraud, waste, and abuse across Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and the Health Insurance Marketplace.

AI as a Fraud Prevention Tool

AI is at the center of the proposed strategy. The CMS is particularly interested in feedback on analytics, methodologies, and data-driven approaches, including specific AI tools that could help identify indicators of fraud, waste, or abuse before payments are made. The agency has invited suggestions on using AI in areas like Medicare Advantage coding oversight and hospital billing, with a focus on off-the-shelf AI products and their ability to assist human coders with processing large volumes of records.

Stakeholders are encouraged to share their insights on essential AI features, implementation lessons, and how such solutions can improve billing accuracy while avoiding errors. Additionally, the CMS is seeking recommendations on how AI can address coding issues tied to overpayments and underpayments, and how it can be leveraged for compliance oversight.

Balancing Innovation with Privacy

While the potential of AI tools in fraud detection is immense, the HHS has emphasized the need to ensure the protection of Medicare and Medicaid beneficiaries’ privacy. Rigorous safeguards and oversight will be required to make sure legitimate and necessary medical care is not disrupted.

The feedback collected through this RFI will guide future rulemaking, including a potential "Comprehensive Regulations to Uncover Suspicious Healthcare" (CRUSH) proposed rule, along with broader program changes to strengthen fraud prevention efforts.

As the government seeks to move from a reactionary to a preventative model, the hope is that modern technology, coupled with stakeholder collaboration, will help mitigate the financial drain caused by healthcare fraud while preserving vital care for patients in need.

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