CMS has spent 2026 building a public case that its Medicaid program integrity crackdown is paying off, including a $1.3 billion funding deferral to Minnesota, provider revalidation orders sent to all 50 state governors, and a jump in Medicare program integrity savings to $41.9 billion in fiscal year 2025 from $26.3 billion the year before, according to a study published July 14 in the American Journal of Managed Care.
But an analysis from Georgetown University’s Center for Children and Families, cited by AJMC, complicates the fraud narrative CMS has built around those numbers.
Of the 21 Medicaid provisions included in the federal budget reconciliation law, the analysis found only four actually target fraud, waste or abuse. The Congressional Budget Office estimates those four provisions will reduce federal payments to states by $25 billion over 10 years — about 2.5% of the law’s roughly $990 billion in total Medicaid cuts. Work-reporting requirements and six-month redetermination cycles for Medicaid expansion adults, by contrast, account for nearly 40% of the law’s cuts, largely by disenrolling people who fail to complete paperwork or verify income and work status on shortened timelines — not by identifying fraudulent claims.
The distinction matters most for the population who remain eligible for Medicaid but lose coverage anyway because they missed a redetermination deadline or couldn’t document work-reporting compliance. Robert Andrews, CEO of the Health Transformation Alliance, a purchasing cooperative representing large self-insured employers, told AJMC the two categories of savings shouldn’t be treated as interchangeable.
“It’s not that the cost of taking care of them is going to disappear,” Mr. Andrews said, noting that hospitals are still required to treat emergency patients regardless of coverage status — meaning the uncompensated costs simply resurface elsewhere in the system.
Mr. Andrews, whose organization audits more than $40 billion in annual employer health spending and has found roughly 2% of claims to be erroneous or fraudulent, said he supports CMS’ data-driven approach to catching clear billing anomalies, such as a physical therapy practice billing implausibly high visit volumes. But he drew a sharp line between that kind of enforcement and the redetermination and work-reporting apparatus doing the heavier lifting on paper.
For hospitals and health systems, the practical exposure is less about CMS’ enforcement tools themselves and more about what happens when eligible patients lose coverage administratively. Uncompensated care costs don’t disappear when a patient is disenrolled for paperwork reasons; they shift from Medicaid to hospital balance sheets, particularly in states managing aggressive federal scrutiny and short redetermination cycles at the same time.
CMS has signaled that additional state-level deferral and withholding actions are likely as its Comprehensive Regulations to Uncover Suspicious Healthcare initiative, or CRUSH, continues to develop, according to AJMC. Whether that enforcement wave settles into standard practice, or state legal challenges like Minnesota’s reshape it, will help determine how much of the fiscal story ends up attributed to fraud versus red tape.
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