The Department of Health and Human Services has issued a warning that federal health programs have been targed in a scheme that has led to millions of dollars in losses.

The scheme, according to the HHS Office of Inspector General (OIG), targets Medicare and Medicaid with fraudulent funds transfer requests from individuals posing as healthcare providers. These requests resulted in multiple fraudulent payments, causing more than one-third of health contractors and agencies surveyed to lose between $140,000 and $1 million.

“There is a potential for large losses associated with electronic funds transfer fraud, given how widely electronic funds transfer transactions are used within the health care industry,” a report by HHS reads. “Recently, fraudsters who were able to gain unauthorized access to email accounts targeted the HHS grant Payment Management System, leading to millions of dollars in losses in 2023.”

Two-thirds of those surveyed told HHS they were aware they were targets for these schemes. Security threats that led to fraud attempts included email phishing and impersonation attacks and threats from individuals inside the health organizations.

OIG recommended engaging with Medicare contractors to improve security and sharing information “to mitigate evolving threats.”

Department of Government Efficiency head Elon Musk wrote in February his team is working to root out fraud within Medicare and Medicaid.

“Yeah, this is where the big money fraud is happening,” Musk wrote.

The findings come as other federal officials are sounding the alarm over tax dollar misuse. The Cato Institute released a report Tuesday on federal government subsidies, which it argued are akin to “corporate welfare.”

“The federal government runs a wide array of programs that subsidize businesses and industries,” the report said. “These ‘corporate welfare’ programs burden taxpayers and undermine economic growth. Favoring some businesses over others with subsidies also contradicts the American ideal of equal treatment under the law.

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