As Congress considers cutting Medicaid funding as part of the ongoing budget reconciliation process, it is clear that many of the Medicaid funding policies under consideration would strip coverage away from millions of patients and destabilize communities, health care providers and state and local economies.
Proponents of Medicaid funding cuts assert that any reductions will target “waste, fraud and abuse” in the program. Overlooked in that debate are the robust program integrity activities that states, their contracted managed care plans and the federal government already use to limit waste, fraud and abuse in Medicaid. That’s why cuts of the magnitude being considered would directly impact patients’ access to coverage and care.
Understanding Waste, Fraud and Abuse
Within Medicaid, fraud involves intentionally deceiving or misrepresenting information to obtain money or property from the program, while waste and abuse refer to practices that lead to unnecessary costs — whether through excessive services, improper billing or overcharging for care.
However, much of the discussion around cutting alleged waste in Medicaid funding conflates “improper payments” with fraud. Improper payments result from clerical errors, missing documentation or eligibility miscalculations, many of which are later corrected. Fraud, in contrast, involves intentional deception for financial gain. Critically, a recent analysis by the Department of Health and Human Services Office of Inspector General found that beneficiary fraud was negligible in 2023.
Despite claims that many Medicaid beneficiaries are choosing not to work, the data tells a different story. Of non-disabled adults under 65 who rely on Medicaid, 92% are either working, caring for a family member, managing an illness or disability or attending school, according to KFF. Nearly half of Medicaid beneficiaries who are employed work for small companies and are not eligible for employer-sponsored health insurance at their job, leaving Medicaid as one of their only coverage options.
Medicaid’s Strong Safeguards to Detect and Prevent Fraud
Ensuring the integrity of Medicaid is a joint responsibility of the federal government and states, and there is a robust infrastructure in place to prevent fraud within the program.
Each state is required to have a Medicaid Fraud Control Unit (MFCU) to investigate providers suspected of fraud, prosecute fraudulent providers and recover federal and state funds as a result of fraud.
The federal government’s responsibility is to provide overarching support and assistance to states to combat fraud and abuse. Established in 2006, the Centers for Medicare & Medicaid Services’ (CMS) Medicaid Integrity Program collaborates with states to promote best practices and awareness of Medicaid waste, fraud and abuse. Their oversight and educational work help preserve Medicaid dollars and support states as they serve the needs of Medicaid beneficiaries.
All of these efforts are summarized through a transparent reporting process to Congress. The Medicaid Integrity Program delivers annual reports describing how CMS uses funds and the effectiveness of efforts to combat fraud in Medicaid. CMS regularly conducts reviews of states’ program integrity efforts in the Medicaid program.
Cutting Medicaid Harms Patients and Providers
Efforts to cut Medicaid based on exaggerated claims of waste, fraud and abuse endanger access to health care for millions. These cuts would not just target fraud; they would cut essential services, limit provider participation and shift costs to hospitals and state budgets. In fact, preliminary estimates show that the proposals currently under consideration could strip coverage away from 20 million Americans or burden states with an additional $1 trillion in costs over the next decade.
Medicaid is a lifeline for millions of Americans, and claims of rampant waste, fraud and abuse are often exaggerated to push harmful policy changes. The real focus should be ensuring the program continues operating efficiently while protecting those who rely on it. By pushing back against these misleading claims, we can safeguard Medicaid and prevent devastating cuts that would harm families, state budgets and local economies.
For more information on Medicaid’s vital role, visit https://modernmedicaid.org.