DOJ Announces 2026 National Health Care Fraud Takedown

On June 23, 2026, the Department of Justice (DOJ) announced its 2026 National Health Care Fraud Takedown (Announcement), involving charges against 455 defendants, including 90 doctors and other licensed medical professionals, in connection with alleged health care fraud and opioid abuse schemes totaling more than $6.5 billion. DOJ described the enforcement action as “a new era in federal, state, and international cooperation to combat health care fraud” with cases brought in 56 federal districts and 45 states and territories, and with participation by 50 state Medicaid Fraud Control Units—the most in DOJ history.

The Announcement also identified related administrative and civil actions, including CMS suspensions and revocations, HHS-OIG exclusions and civil monetary penalty actions, DEA administrative cases, and civil charges or settlements.

Fraudulent Wound Care Schemes

DOJ reported charges against 11 defendants, including a company executive and eight medical professionals in connection with alleged fraudulent claims for amniotic wound allografts. The alleged conduct included illegal kickbacks, billing for medically unnecessary allografts, and using proceeds to purchase luxury assets or real estate. 

Data Fusion Center, Financial Intelligence Review Team, and Data Analytics Enhancements

DOJ described the use of data analytics through the Health Care Fraud Unit’s Data Fusion Center and identified the first prosecution arising from its Financial Intelligence Review Team, involving an alleged $67 million Medicaid behavioral health scheme in Illinois. DOJ also announced agreements with CMS, the Department of Homeland Security, and the Federal Trade Commission intended to improve data access to identify potential health care fraud. 

Patient Harm

DOJ identified patient harm as a focus of the takedown and highlighted allegations involving unnecessary cardiovascular testing for student athletes and false personal-care-attendant claims associated with a Medicaid recipient’s neglect. 

Medicaid Fraud

DOJ stated that the takedown included the largest number of Medicaid fraud defendants and the largest amount of alleged Medicaid fraud loss charged in Department history, with 295 defendants and more than $518 million in alleged false Medicaid claims. The Medicaid examples cited by DOJ included alleged fraud involving social adult day care services, crisis stabilization services, and behavioral health services. 

Transnational Organizations, International Cooperation, and the Most Wanted Fraudsters List

DOJ described international cooperation in connection with fugitives and defendants linked to large alleged schemes involving durable medical equipment, urinary catheters, telemedicine, and genetic testing. The announcement also referenced apprehensions in Kyrenia, Estonia, and the Philippines, as well as additions to the FBI’s Most Wanted Fraudsters List. 

Illegal Opioid Distribution

DOJ reported charges against 36 defendants, including 28 licensed medical professionals, in connection with alleged illegal diversion of prescription opioids and other controlled substances. 

The full announcement can be found here.

Reporter, Lindsay Greenblatt, Los Angeles, +1 213 218 4032, lgreenblatt@kslaw.com

CMS Issues CY 2027 Proposed Rule for End-Stage Renal Disease Prospective Payment System

On June 24, 2026, CMS issued a proposed rule updating payment rates and policies under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for renal dialysis services furnished to Medicare beneficiaries on or after January 1, 2027. The Proposed Rule also would update the acute kidney injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities for CY 2027 and the requirements for the ESRD Quality Incentive Program (QIP). Comments are due by August 23, 2026.

Proposed Updates to the ESRD PPS for CY 2027

The ESRD PPS provides a bundled, per-treatment payment to ESRD facilities that includes all renal dialysis services furnished for outpatient maintenance dialysis, including drugs and biological products. Under the ESRD PPS for CY 2027, Medicare expects to pay $6.2 billion to approximately 7,600 ESRD facilities for furnishing renal dialysis services.

The proposed CY 2027 ESRD PPS base rate is $299.55, an increase of $17.84 from the current CY 2026 base rate of $281.71. This proposed amount reflects a proposed wage index budget neutrality adjustment factor of 1.00267, a $15.96 addition to the base rate to account for the inclusion of phosphate binders, a budget neutrality factor of 0.98783 for budget-neutral changes to the low-volume, pediatric, and home and self-dialysis training payment adjustments, and a proposed ESRD Bundled (ESRDB) market basket update of 1.6 percent. The proposed 1.6 percent market basket update reflects a proposed ESRDB market basket percentage increase of 2.6 percent reduced by a proposed productivity adjustment of 1.0 percentage point. CMS is also proposing, as a routine matter, to rebase and revise the ESRDB market basket to a 2024 base year and to update the labor-related share of the ESRD PPS base rate from 55.2 percent to 63.5 percent.

CMS projects that the CY 2027 updates would increase total payments to all ESRD facilities by 1.1 percent compared with CY 2026, with a projected 2.0 percent increase for hospital-based facilities and a 1.1 percent increase for freestanding facilities.

Wage Index, Outlier Policy, and Phosphate Binders

CMS is proposing routine annual updates to the ESRD PPS-specific wage index using the latest available Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) data and freestanding ESRD facility cost reports. CMS would continue to apply the wage-index floor of 0.6000 and the 5 percent cap on wage-index decreases from the prior year.

CMS is also proposing routine updates to the fixed dollar loss (FDL) and Medicare allowable payment (MAP) amounts under the outlier policy for CY 2027. For pediatric beneficiaries, the proposed FDL amount would increase from $162.43 to $206.43 and the proposed MAP amount would increase from $50.19 to $60.86. For adult beneficiaries, the proposed FDL amount would increase from $14.80 to $114.98 and the proposed MAP amount would increase from $23.68 to $41.28. CMS attributes these increases primarily to the projected utilization of drugs currently paid through the transitional drug add-on payment adjustment (TDAPA) that will become ESRD outlier services in CY 2027.

In addition, CMS is proposing to permanently increase the ESRD PPS base rate by $15.96 to account for the costs of phosphate binders, marking the completion of the incorporation of phosphate binders into the bundled payment that began January 1, 2025.

Low-Volume, Pediatric, and Training Payment Adjustments

CMS is proposing to expand the Low-Volume Payment Adjustment (LVPA) to ESRD facilities that furnish up to 8,000 treatments per year, an increase from the current 4,000-treatment threshold, with payments based on six tiers of volume on a budget-neutral basis. CMS is also proposing to modify the case-mix adjusters for pediatric ESRD patients and to allow ESRD facilities to receive the LVPA for pediatric ESRD patients, coinciding with the end of the Transitional Pediatric ESRD Add-on Payment Adjustment (TPEAPA) as of December 31, 2026.

CMS is proposing to increase the payment for home and self-dialysis training from $95.60 to $138.22 and to allow the add-on payment during the onset period (the first 120 days of ESRD dialysis), during which the ESRD PPS does not currently pay the training add-on, on a budget-neutral basis. CMS states these changes would better align the training payment with the actual cost of training patients and caretakers to perform home and self-dialysis.

Finally, CMS is proposing several technical changes to better align the TDAPA and post-TDAPA add-on payment adjustment with the actual costs of drugs, including using older average sales price (ASP) data when current ASP data are unavailable (such as when reported ASP reflects zero or negative sales) and updating the post-TDAPA add-on payment adjustment quarterly through change requests to reflect the most recent pricing and utilization data.

Proposed Changes to Payment for AKI Dialysis Services

As required by section 1834(r) of the Social Security Act, CMS is proposing to update the AKI dialysis payment rate for CY 2027 to $299.55, equal to the proposed CY 2027 ESRD PPS base rate. The proposed increase to the home and self-dialysis training payment adjustment would also apply to training payments for AKI dialysis. CMS projects a 6.0 percent overall increase in Medicare payments for individuals with AKI and estimates that aggregate Medicare payments to ESRD facilities for AKI dialysis services would increase by approximately $5 million in CY 2027 compared with CY 2026.

Proposed Changes to the ESRD QIP

Beginning with payment year (PY) 2029, CMS is proposing to remove the Hypercalcemia reporting measure and replace it with the Facility-Level Percentage of Chronic Hyperphosphatemia in Dialysis Patients (Hyperphosphatemia) clinical measure, which CMS states would more directly assess patient-focused clinical outcomes by incentivizing interventions such as nutritional counseling, phosphorus-binding medications, or adjustment of the dialysis prescription. CMS is also proposing to update the National Healthcare Safety Network (NHSN) Bloodstream Infection (BSI) in Hemodialysis Patients clinical measure national baseline data and risk adjustment methodology.

CMS is further proposing to remove the Medication Reconciliation (MedRec) reporting measure and the COVID-19 Vaccination Coverage Among Healthcare Personnel (HCP) reporting measure from the ESRD QIP measure set beginning with PY 2029. If the proposals to remove the Hypercalcemia, MedRec, and COVID-19 HCP Vaccination reporting measures are finalized, the measure set would no longer include any measures under the Reporting Measure Domain, and CMS is therefore proposing to remove that domain and to update the domain and individual measure weights in the Care Coordination Domain and the Clinical Care Domain accordingly. CMS estimates that the overall economic impact of the PY 2029 ESRD QIP would be approximately $125.4 million, which includes $102.1 million in costs associated with information collection requirements and approximately $23.3 million in payment reductions across all facilities.

CMS is also requesting public comment on the potential inclusion of the Dialysis Facility Discussion of Patient Life Goals (D-PaLS) Patient-Reported Outcome Performance Measure (PRO-PM) in the ESRD QIP, which would assess patient satisfaction with discussions about their life goals and the extent to which those goals are incorporated into treatment planning, and which CMS may propose in future rulemaking.

Requests for Information on Advancing Dialysis Care

The Proposed Rule includes several requests for information (RFIs) soliciting public input to inform potential future policy development related to increasing home dialysis uptake among incident ESRD beneficiaries, improving access to palliative care for ESRD beneficiaries, and promoting efficiency in dialysis service delivery by reevaluating the unit of payment under the ESRD PPS and AKI dialysis payment system. CMS notes that these RFIs do not propose any policy changes and therefore do not have a direct economic impact.

The CMS fact sheet is available here, and the Proposed Rule can be downloaded from the Federal Register here.

Reporter, Christopher C. Jew, Los Angeles, +1 213 443 4336, cjew@kslaw.com

California Attorney General Settlement Highlights Continued Focus on Corporate Practice of Medicine

On June 26, 2026, California Attorney General Rob Bonta entered into a settlement with Carbon Health Technologies, Inc. (Carbon Health), its affiliated medical groups, and its co-founder and former Chief Executive Officer, resolving allegations that Carbon Health violated California’s prohibition on the corporate practice of medicine and engaged in improper billing practices and false advertising. The settlement includes injunctive terms and $4.4 million in penalties, including a penalty of $100,000 against the co-founder and former Chief Executive Officer.

Carbon Health owns and operates over 80 clinics in California and seven other states. On June 17, 2026, the Attorney General filed a complaint seeking injunctive relief and civil penalties alleging that Carbon Health violated: (1) Business and Professions Code section 17500 et seq. by making false or misleading statements by misrepresenting the entities’ in-network status and misrepresenting that out-of-network patients will pay in-network rates, and (2) section 17200 et seq. (part of the Unfair Competition Law) by engaging in unlawful, unfair, or fraudulent practices, including engaging in the corporate practice of medicine and improperly billing patients by, for example, charging patients with HMO coverage more than the applicable co-pay, deductible, and coinsurance.

The complaint alleges that the “friendly PC” arrangement entered into between the lay management services organization (MSO) entity and the clinical entity (PC) through an MSO agreement violated the corporate practice of medicine prohibition based on the following factors:

The complaint also alleged that the MSO Board’s actions reflected the MSO’s undue control and influence over the PCs. For example, at a Board meeting, the MSO discussed reducing professional staff, payor contracting, and physician compensation decisions. The complaint also cited media statements by the co-founder that indicated some level of control over the PCs such as “we’re going to own clinics.” (Complaint  39.)

Providers and companies that are operating through a “friendly PC” arrangement should carefully review their contracts and actions to ensure that the lay entity is not exercising undue control and influence over the professional entity in light of this new settlement agreement. Governor Newsom signed SB 351 into law last year that codifies California’s prohibition on the corporate practice of medicine. The Attorney General did not rely on it here, but it is likely to be an enforcement basis in the future.

The complaint is available here, and the proposed settlement agreement is available here.

Reporter, Taylor Whitten, Sacramento, +1 916 321 4815, twhitten@kslaw.com

Editors: Chris Kenny and Ahsin Azim

Issue Editors: Morgan Cronin