Dr. Mehmet Oz may have skirted paying Medicare and Social Security taxes, Democrats say

(CNN) — Dr. Mehmet Oz, who is President Donald Trump’s nominee to lead the Centers for Medicare and Medicaid Services, may have “significantly underpaid his Social Security and Medicare taxes” in recent years, according to a memo prepared by Democratic staff on the Senate Finance Committee and obtained by CNN.

A spokesperson for Oz pushed back on the claim from Democrats, saying that the doctor is compliance with the law.

Oz, who appeared before the committee Friday for his confirmation hearing, paid “negligible” Social Security or Medicare taxes in 2022 and no such taxes in 2023 – avoiding $440,000 in levies, according to the memo and Sen. Ron Wyden, the committee’s ranking member.

The celebrity doctor would be responsible for overseeing Medicare if he is confirmed. CMS provides health care coverage to more than 160 million Americans through Medicare, Medicaid and the Affordable Care Act health insurance exchanges.

Oz took the position that he was not liable for certain taxes – including a self-employment tax, known as SECA – on income from his media entity Oz Property Holdings, the memo said.

“What that means is the person who is nominated to run Medicare thinks that it’s acceptable not to pay his taxes into Social Security and Medicare, like nurses and firefights do out of every paycheck,” Wyden said at the hearing.

Oz’s accountant told the committee’s Democratic staff that the doctor was relying on the limited partner exception, which allows certain income to be excluded from self-employment earnings. But Democratic staffers contend that he was actively involved in the company that bears his name, noting that “Dr. Oz’s position is counter to the position of the Department of Treasury.”

Oz, however, told the staffers he would not amend his tax returns.

“The Office of Government Ethics has conducted an extensive review of Dr. Oz’s finances as part of the regular vetting process. OGE has transmitted to the Senate a letter indicating that any potential conflicts have been resolved, and he is in compliance with the law,” Christopher Krepich, a spokesman for Oz, said in a statement to CNN.

At least one tax expert said that Oz’s action is not against the law. “Dr. Oz’s position is aggressive, and one that I would not recommend. I would label Dr. Oz’s a dodge, but not illegal,” said Steve Rosenthal, a former senior fellow with the Urban-Brookings Tax Policy Center.

The White House did not immediately return a request for comment.

Pressed on Medicaid

Oz, a cardiothoracic surgeon and longtime television host, was repeatedly asked during Friday’s confirmation hearing about his position on Medicaid. The program covers more than 72 million low-income Americans and is in the spotlight as House Republicans are expected to seek cuts to its funding to help pay for extending the Trump tax cuts from 2017.

Several of the committee’s Democrats pointed out that Medicaid serves a vital role in improving the health of children, mothers, people with disabilities and others. They noted that the program supports hospitals, nursing homes and clinics.

Sen. Maggie Hassan, a Democrat of New Hampshire, asked the nominee if he supports the Republican budget plan that she said would “terminate the health coverage of millions of Americans, including as many as 30,000 children in my state.” She pointed out that Medicaid covers 40% of births in the US and half of births in rural areas.

“I don’t want children losing health care,” Oz responded, adding, “We do have to make investment, I believe, in maternal care in order to provide better services.”

However, Oz also voiced support for several GOP critiques of the program. He ran for a US Senate seat in Pennsylvania as a Republican in 2022 but lost to Democrat John Fetterman, who was the state’s lieutenant governor at the time.

The doctor said he is in favor of adding work requirements to Medicaid, a longtime GOP goal, but that the mandate should not be an obstacle to coverage – as critics say it has been in the two states that have implemented it. (Arkansas added a work requirement in 2018, but the mandate was struck down in court. Georgia’s program is in effect.)

Oz also touched on other controversial topics during the hearing, which lasted more than two-and-a-half hours. The doctor, who told reporters it’s “game time” as he entered the hearing, pushed the use of technology to improve CMS’ services for beneficiaries and its ability to reduce waste, fraud and abuse, as well as to make it easier for doctors to care for patients.

He advocated for using artificial intelligence to help speed the prior authorization process so physicians and their patients can learn more quickly if insurers have approved treatments or medications. But Oz also agreed that a human should have the final say when Sen. Tina Smith, a Democrat from Minnesota, pointed out that insurers have been accused of using AI to deny care.

Several Democrats also pressed Oz on his views about Medicare Advantage, which he often promoted on his television show. Massachusetts Sen. Elizabeth Warren noted that the program, in which the federal government pays private insurers to provide Medicare coverage to beneficiaries, is more expensive than traditional Medicare. Part of the reason stems from a controversial practice called upcoding, in which insurers include additional diagnoses in patients’ records in order to receive higher reimbursements.

Oz agreed that upcoding can be cheating, and that there are ways to “make sure that people are being appropriately paid for taking care of sick patients, but not for patients who aren’t ill.”

“We have numerous tools, but part of this is just recognizing there’s a new sheriff in town,” he told Sen. Bill Cassidy, a Louisiana Republican, who also asked the nominee about getting better value in Medicare Advantage.

This story has been updated with additional developments.

CNN’s Veronica Stracqualursi contributed to this report.

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