For years, sophisticated AI detection tools made banking an inhospitable place for fraud. Healthcare filled the gap.
Mehmet Oz, MD, CMS administrator, said at the Oracle Health and Life Sciences Summit that dynamic is now driving one of his highest priorities at the agency: deploying the same AI playbook that secured the banking system against federal healthcare programs that have been operating without it.
“Bank fraudsters are better at fraud than bank managers, right? Bank managers don’t get fraud classes in school, and they have a different mindset. So the banks began to use very sophisticated super intelligence tools in order to be able to detect fraud as early as possible and that early warning system has allowed them to prevent the money from getting stolen,” he said.
The result was a migration away from banking. Healthcare, with its volume, its complexity and the absence of comparable detection infrastructure, absorbed the demand the banking system pushed out. The COVID-19 pandemic accelerated the shift. ACA exchange enrollment grew from roughly 10 million to 22 million in the years following the pandemic, growth the agency has linked to improper and phantom enrollments enabled by weakened verification processes.
CMS has deployed AI and machine learning tools across Medicare that run analytics models daily to flag unusual billing patterns before payments are released, according to the agency. Those efforts yielded what CMS called a record $42 billion in Medicare fraud savings in fiscal year 2025. The agency has since expanded the approach to Medicaid in partnership with Oracle, working with states to build comparable detection capability in programs where the federal government’s data access is more limited.
The coordination extends beyond the agency’s own jurisdiction. Dr. Oz described routing suspected fraud cases to the IRS, the Department of Justice and the FBI, an approach aimed as much at deterrence as prosecution.
“One of the first things we do when we think you’re stealing from Medicaid is, if you’re stealing from the poor, you probably won’t pay your taxes,” Dr. Oz said. “So we like to give their information to the IRS because that’s actually a much easier way to catch people.”
CMS has moved on the front end of the problem, tightening ACA enrollment verification and coordinating task force actions to remove phantom accounts from the exchanges. The agency has characterized improper and phantom ACA enrollments as having peaked in recent years before anti-fraud measures began reducing them.
The agency announced Sept. 22 it canceled 315,000 ACA policies for the 2026 plan year covering 760,000 people. Led by the White House Task Force to Eliminate Fraud, the canceled plans belong to individuals who enrolled with an agent or broker but didn’t include verified citizenship or immigration documentation. CMS also said it will work with insurance companies to identify unauthorized enrollments and terminate noncompliant brokers and agents.
The goal is to make healthcare a less attractive destination for bad actors, not simply to recover money already lost. The financial harm matters, but it understates the damage fraud does.
“The number one problem with fraud is not the money we lose,” he said. “They steal your health, they steal your life, and they steal the nation’s trust.”
