⚡️ NIMITZ HEALTH NEWS FLASH ⚡️ 

“State Medicaid Program Integrity: Examining Fraud Risks and Oversight Deficiencies”

House Energy and Commerce Subcommittee on Health

June 25th, 2026 (recording linked here)

WITNESSES (TESTIMONY LINKED)

• John Connolly, Temporary Commissioner and State Medicaid Director, Minnesota Department of Human Services

• Tyler Sadwith, State Medicaid Director, California Department of Health Care Services

• Amir Bassiri, State Medicaid Director, New York State Department of Health

• Scott Partika, Director, Ohio Department of Medicaid

QUICK SUMMARY

• Members from both parties agreed that Medicaid fraud is a serious problem, but they sharply disagreed over whether recent CMS funding deferrals reflected legitimate program integrity efforts or politically motivated actions targeting Democratic-led states. 

• Republican members emphasized strengthening provider screening, data sharing, audits, and law enforcement partnerships to prevent fraudulent providers from entering Medicaid and to protect taxpayer dollars. 

• Democratic members argued that CMS funding deferrals and new administrative requirements were increasing costs, disrupting state-federal collaboration, and threatening access to home- and community-based services for vulnerable Medicaid beneficiaries. 

• State Medicaid officials highlighted investments in advanced data analytics, enhanced provider enrollment screening, more frequent revalidation, and improved coordination with law enforcement as key strategies for detecting and preventing fraud. 

• Witnesses consistently stressed that protecting Medicaid beneficiaries requires balancing aggressive anti-fraud enforcement with preserving continuity of care and maintaining access to essential healthcare services.

🐘 Republicans

• Emphasized that Medicaid fraud is widespread and argued that stronger provider screening, audits, data sharing, and law enforcement partnerships are necessary to protect taxpayers and preserve Medicaid for eligible beneficiaries.

• Defended CMS's increased scrutiny of state Medicaid programs, arguing that aggressive oversight and funding actions are appropriate when significant fraud risks exist.

• Highlighted state reforms—particularly in Ohio and Minnesota—as examples of proactive efforts to identify high-risk providers, prevent fraudulent enrollment, and strengthen program integrity.

🫏 Democrats

• Argued that the Trump administration was using allegations of Medicaid fraud to justify politically motivated funding deferrals aimed primarily at Democratic-led states.

• Emphasized that abrupt CMS funding delays and new administrative requirements threaten access to care, particularly home- and community-based services for seniors, people with disabilities, and other vulnerable populations.

• Supported continued anti-fraud efforts but stressed that they should occur through collaborative federal-state partnerships, transparent oversight, and targeted enforcement rather than broad funding disruptions.

MEMBER OPENING STATEMENTS

• Chairman David Joyce (R-OH) stated that the hearing examined Medicaid program integrity in Minnesota, California, New York, and Ohio, arguing that fraud is a nationwide problem that harms vulnerable patients and wastes taxpayer dollars. He cited recent, high-profile Medicaid fraud cases in each state to demonstrate the scale of the issue and emphasized that fraud often deprives beneficiaries of needed care. He praised recent federal efforts to increase oversight and enforcement but maintained that states must do more to prevent fraud rather than simply recover funds after the fact. He concluded that strengthening program integrity is essential to protecting both Medicaid beneficiaries and taxpayers. 

• Ranking Member Yvette Clarke (D-NY) argued that the Trump administration was using Medicaid fraud investigations as a pretext to target Democratic-led states with politically motivated funding cuts. She criticized CMS for withholding or deferring Medicaid funding in Minnesota, California, New York, and Hawaii, asserting that the agency had failed to provide consistent guidance and had overstated concerns in some cases. She contended that the administration's actions threatened patient access to care while undermining productive partnerships between CMS and the states. She concluded that fraud should be addressed collaboratively without jeopardizing care for vulnerable populations. 

• Full Committee Chairman Brett Guthrie (R-KY) emphasized that Medicaid fraud harms taxpayers and vulnerable patients alike by diverting resources intended for legitimate care. He cited recent fraud prosecutions involving luxury purchases and large-scale criminal schemes as evidence that stronger oversight is necessary. He defended CMS's decision to temporarily suspend payments where widespread fraud was suspected, arguing that legitimate providers ultimately received payment while fraudulent actors did not. He concluded that Congress must continue strengthening program integrity to preserve Medicaid for those who truly need it. 

• Full Committee Ranking Member Frank Pallone (D-NJ) argued that Republicans and the Trump administration were using allegations of fraud to justify deep Medicaid cuts that have already caused millions of Americans to lose health coverage. He criticized recent CMS actions against Democratic-led states, asserting that broad funding deferrals threatened access to home- and community-based services rather than targeting specific instances of fraud. He also warned that new Medicaid eligibility requirements and administrative burdens would disproportionately harm vulnerable populations, including cancer patients and individuals with disabilities. He concluded that political attacks on Medicaid were undermining access to care rather than improving program integrity. 

WITNESS OPENING STATEMENTS

• Mr. Connolly stated that Minnesota maintains a zero-tolerance policy toward Medicaid fraud while recognizing the importance of preserving access to care for beneficiaries. He highlighted the state's recent fraud investigations, increased oversight, expanded prepayment reviews, and enhanced provider screening efforts, which have resulted in millions of dollars in recoveries and numerous law enforcement referrals. He also warned that recent federal payment deferrals placed vulnerable Minnesotans and the state's broader healthcare system at risk. He concluded that fraud prevention and maintaining beneficiary access to care are complementary objectives that require continued collaboration with federal partners. 

• Mr. Sadwith emphasized California's commitment to protecting Medi-Cal through extensive fraud prevention, provider screening, audits, investigations, and collaboration with law enforcement. He highlighted that roughly one-fifth of the department's staff focuses exclusively on program integrity and noted that California has recovered more than $1 billion through fraud enforcement efforts in recent years. He praised the state's longstanding partnership with CMS and described California as a national leader in Medicaid program integrity. He concluded that continued federal-state collaboration is essential to protecting taxpayer dollars while ensuring access to care for vulnerable Californians. 

• Mr. Bassiri described New York's multi-agency approach to preventing, detecting, and prosecuting Medicaid fraud while safeguarding care for more than six million beneficiaries. He highlighted significant investments in technology, provider oversight, audits, and enforcement that have resulted in billions of dollars in recoveries and hundreds of criminal referrals. He also outlined reforms to personal care and transportation programs designed to strengthen accountability while preserving access to services. He concluded that effective Medicaid oversight depends on strong partnerships between state and federal agencies. 

• Mr. Partika stated that strengthening Medicaid program integrity has been a top priority since he became Ohio Medicaid director. He outlined Ohio's recent reforms, including enhanced provider screening, improved eligibility verification, expanded audits, new fraud penalties, and a temporary moratorium on new home health providers following the discovery of significant fraud. He also called for stronger interstate data sharing to prevent fraudulent providers from moving between states. He concluded that Ohio remains committed to eliminating fraud while protecting Medicaid for eligible beneficiaries. 

QUESTION AND ANSWER SUMMARY

• Rep. David Joyce (R-OH) questioned Mr. Sadwith about California's decision to classify all Medicaid-only providers as "limited risk," arguing that a uniform designation could allow fraud to go undetected. Mr. Sadwith responded that California uses multiple safeguards beyond categorical risk classifications, including fingerprinting, criminal background checks, provider risk profiling, and ongoing efforts to reassess higher-risk provider categories. Rep. Joyce also pressed him on California's hospice licensing requirements, expressing concern that weak oversight could permit fraudulent providers to operate, though Mr. Sadwith emphasized California's partnership with state health regulators and recent efforts to strengthen licensure standards. Rep. Joyce then asked Mr. Bassiri about safeguards for New York's consumer-directed personal care program but requested a written response after his time expired. 

• Rep. Clarke (D-NY) criticized CMS and the Trump administration for targeting Democratic-led states through unprecedented Medicaid funding deferrals, arguing that the agency had failed to identify specific instances of fraud. She asked Mr. Bassiri about CMS's claim that nearly three-quarters of New York Medicaid beneficiaries received personal care services, and he confirmed the figure was inaccurate, explaining that approximately 450,000—not 4 million—beneficiaries received those services. Rep. Clarke also questioned Mr. Sadwith about California's $1.34 billion funding deferral, and he stated that the action was unprecedented, that California had proactively worked with CMS to explain program growth, and that CMS had not identified evidence of fraud, waste, or abuse supporting the deferral. He added that California continued monitoring potential impacts on patient access while responding to CMS's requests. 

• Rep. Guthrie (R-KY) questioned Mr. Bassiri about New York's delayed responses to congressional oversight requests, arguing that the committee had not received basic program integrity information months after requesting it. Mr. Bassiri stated that New York had been responding to multiple federal inquiries and promised to continue working with the committee, though he did not commit to providing all requested materials immediately. Rep. Guthrie similarly criticized Mr. Sadwith for California's late production of audit documents, and Mr. Sadwith explained that ongoing law enforcement investigations limited what could be disclosed while pledging to provide additional information when appropriate. Rep. Guthrie then asked Mr. Connolly about Minnesota's autism therapy fraud cases, and Mr. Connolly described enhanced audits, provider licensing, high-risk designations, fingerprinting, and more frequent revalidation efforts implemented after major fraud was uncovered. 

• Rep. Pallone (D-NJ) focused on the potential consequences of CMS funding deferrals for beneficiaries in Democratic-led states. Mr. Connolly stated that Minnesota's deferred and withheld federal Medicaid funding represented a significant threat to the state's ability to finance care for children, seniors, and people with disabilities, adding that CMS had not indicated when funding might be restored despite Minnesota's compliance efforts. Rep. Pallone then asked Mr. Sadwith about California's home- and community-based services, and Mr. Sadwith explained that those services help vulnerable individuals remain safely in their homes while reducing institutional care costs by roughly $100,000 per person annually. Finally, Rep. Pallone asked Mr. Bassiri about New York's implementation of community engagement requirements, and Mr. Bassiri said the state was investing in outreach and administrative systems to minimize disruptions in care while complying with the new requirements. 

• Rep. Balderson (R-OH) praised Ohio's recent Medicaid program integrity efforts and asked Mr. Partika how recent federal reforms had strengthened the state's oversight capabilities. Mr. Partika said more frequent eligibility redeterminations, improved detection of duplicate enrollment across states, enhanced data sharing, and new federal analytical tools had helped Ohio improve payment accuracy and identify emerging fraud risks earlier. Rep. Balderson also asked about Ohio's collaboration with federal and state law enforcement, and Mr. Partika described efforts to shift from reacting to fraud after it occurs toward preventing fraudulent providers from entering the Medicaid program through stronger enrollment screening and interstate information sharing. Finally, Rep. Balderson questioned Ohio's provider enrollment and revalidation processes following recent fraud cases, and Mr. Partika highlighted recent legislative reforms, more frequent provider revalidations, and expanded data sharing across programs to better identify high-risk providers.

• Rep. Balderson (R-OH) concluded his questioning by asking Mr. Partika whether Ohio was reevaluating provider risk classifications following recent fraud cases. Mr. Partika said Ohio was using provider behavior and billing patterns—not just provider type—to identify high-risk providers requiring additional scrutiny, while emphasizing that a high-risk designation does not automatically indicate fraud. 

• Rep. DeGette (D-CO) contrasted Ohio's collaborative relationship with CMS against what she characterized as the agency's treatment of Democratic-led states. She questioned Mr. Connolly and Mr. Sadwith about whether CMS had provided advance notice or clear guidance before withholding or deferring Medicaid funding, and both witnesses indicated they had received little or no advance warning or specific instructions for securing the release of funds. Rep. DeGette argued that CMS was treating blue states differently than red states and accused the administration of using Medicaid oversight as a partisan tool rather than a genuine anti-fraud effort. 

• Rep. Palmer (R-AL) questioned the witnesses about information sharing between state Medicaid agencies, Medicare, other states, and federal databases to prevent fraudulent providers from operating across programs. While all four witnesses confirmed they share information with Medicare or CMS to varying degrees, several said they would need to follow up regarding use of Treasury's Do Not Pay system or certain interstate data-sharing practices. Rep. Palmer then focused on Mr. Connolly, asking about Minnesota's provider revalidation process after thousands of providers were temporarily disenrolled, and Mr. Connolly explained that providers restored during the appeals process remained subject to enhanced prepayment review and that providers with credible fraud allegations would continue to face payment withholds and law enforcement referrals. Rep. Palmer concluded that Congress' objective was to eliminate fraud so Medicaid resources could be directed toward eligible beneficiaries rather than criminals. 

• Rep. Tonko (D-NY) emphasized that Medicaid depends on a productive federal-state partnership and questioned Mr. Bassiri and Mr. Connolly about their interactions with CMS. Mr. Bassiri said strong collaboration with CMS is essential to effectively combating fraud because Medicaid oversight requires coordinated efforts across complex programs. Mr. Connolly described months of continuous meetings and corrective actions with CMS but stated that Minnesota continued receiving new compliance actions and funding deferrals despite meeting requested milestones. He also said Minnesota had repeatedly attempted to correct public mischaracterizations of its anti-fraud efforts and noted that the state had proactively strengthened oversight before CMS initiated its current enforcement actions. 

• Rep. Allen (R-GA) stated that significant fraud existed across state Medicaid programs and argued that taxpayers should not continue funding systems that fail to adequately prevent abuse. He asked each witness what their states were doing to identify provider ownership structures and affiliations that could conceal fraudulent activity. Mr. Connolly, Mr. Sadwith, Mr. Bassiri, and Mr. Partika described enhanced provider screening, ownership disclosures, new enrollment systems, revalidation efforts, and collaboration with law enforcement to identify bad actors before they enter or remain in Medicaid. Rep. Allen also asked whether CMS had raised similar concerns during the previous administration, and Mr. Sadwith responded that California had long collaborated with CMS on program integrity, although the current level of public attention was different. 

• Rep. Trahan (D-MA) argued that new Medicaid requirements and administrative burdens were diverting resources away from patient care while increasing costs for states. She asked Mr. Bassiri about New York's implementation costs, and he said the state had incurred substantial expenses for outreach, eligibility systems, staffing, and beneficiary education to comply with new federal requirements. Rep. Trahan then asked Mr. Connolly about Minnesota's projected administrative costs, and he responded that new federal requirements could both increase state spending and result in coverage losses for beneficiaries at a time when Minnesota already faced budget constraints. She concluded that Medicaid fraud should be addressed without imposing policies that reduce access to healthcare. 

• Rep. Harshbarger (R-TN) asked the witnesses to describe how their agencies investigate suspected Medicaid fraud after receiving complaints or identifying suspicious activity. Mr. Connolly explained that Minnesota evaluates referrals, develops cases when sufficient evidence exists, and refers credible fraud allegations to state and federal law enforcement. Mr. Sadwith said California uses a multidisciplinary process involving investigators, auditors, clinicians, data scientists, and sworn peace officers to evaluate complaints and refer credible cases to the California Department of Justice.

• Rep. Harshbarger (R-TN) questioned the witnesses about how quickly their states refer suspected Medicaid fraud to Medicaid Fraud Control Units and suspend payments once credible allegations are identified. Mr. Connolly, Mr. Sadwith, Mr. Bassiri, and Mr. Partika said referrals generally occur once a credible allegation of fraud is established, although the timing of payment suspensions varies depending on the complexity of investigations and coordination with law enforcement. She also asked about "good cause" payment exemptions that allow providers to continue receiving payments during investigations, and the witnesses explained that timelines differ by case while emphasizing efforts to minimize delays, preserve continuity of care, and strengthen oversight. 

• Rep. Fletcher (D-TX) stated that fraud should be addressed through established legal processes rather than used as a justification for broad funding cuts. She argued that the Trump administration had invoked allegations of fraud to freeze funding for certain states while simultaneously weakening federal oversight through actions such as dismissing inspectors general and issuing pardons to individuals convicted of fraud-related offenses. Rep. Fletcher did not question the witnesses directly and instead used her time to criticize what she characterized as the administration's inconsistent approach to combating fraud. 

• Rep. Rulli (R-OH) praised Ohio's collaboration among the Medicaid agency, the Attorney General, and the state auditor to strengthen fraud detection while stressing that fraud diverts resources from vulnerable patients. He asked Mr. Partika about Ohio's recent fraud findings, and Mr. Partika highlighted abnormal billing patterns, a $42 million behavioral health fraud case, enhanced prior authorization requirements, provider enrollment reforms, and stronger identification of high-risk providers. Rep. Rulli also asked how interagency cooperation would improve future enforcement, and Mr. Partika said the partnership would continue identifying fraud trends while translating investigative findings into policy improvements that better protect Medicaid resources.

• Rep. Mullin (D-CA) argued that California had invested heavily in preventing Medicaid fraud while maintaining access to care and questioned Mr. Sadwith about the state's provider screening process. Mr. Sadwith explained that California exceeds federal requirements by conducting additional business verification, monthly screening against exclusion databases, and more frequent provider revalidation whenever ownership or location changes occur. Rep. Mullin also asked about growth in California's In-Home Supportive Services program, and Mr. Sadwith said the expansion resulted from intentional investments to strengthen the caregiving workforce and keep elderly and disabled beneficiaries in their homes, adding that the recent federal funding deferral threatened those services despite California's ongoing cooperation with CMS. 

• Rep. Weber (R-TX) questioned Mr. Connolly about Minnesota's response to widespread Medicaid fraud and asked why 14 high-risk service categories had become targets for fraudulent activity. Mr. Connolly described enhanced provider screening, unannounced site visits, fingerprint background checks, prepayment review, data analytics, and legislative reforms designed to identify fraud earlier and prevent repeat abuse. Rep. Weber then questioned Mr. Sadwith about hospice fraud in California, arguing that the number of fraud referrals appeared low compared with the scale of reported fraudulent billing. Mr. Sadwith responded that California had referred hundreds of credible cases, implemented licensure moratoriums, strengthened regulations, revoked hundreds of licenses, and continued collaborating with federal authorities because Medicare is the primary payer for hospice services. 

• Rep. Landsman (D-OH) asked each witness to identify the investments their states had made to improve Medicaid program integrity. Mr. Connolly, Mr. Sadwith, Mr. Bassiri, and Mr. Partika highlighted increased staffing, enhanced prepayment review, new provider enrollment systems, advanced data analytics, machine learning tools, improved eligibility verification, and expanded technology infrastructure to detect fraud before improper payments occur. Rep. Landsman concluded by asking whether Congress could provide additional support to strengthen state anti-fraud efforts, and each witness agreed that additional federal investment would help states better prevent and detect fraud. 

• Rep. Bilirakis (R-FL) questioned Mr. Sadwith, Mr. Bassiri, and Mr. Connolly about how their states oversee Medicaid managed care payments and recovery audit contractor (RAC) programs. The witnesses explained that their RAC programs primarily focus on fee-for-service claims but that they also use managed care contract requirements, encounter data validation, analytics, oversight mechanisms, and program integrity staff to monitor managed care organizations for improper payments and fraud. Rep. Bilirakis emphasized the importance of modernizing Medicaid payment integrity efforts and highlighted his legislation to strengthen CMS oversight of Medicaid RAC programs and improve accountability across the program.