Congress Investigates Medicaid Fraud and Abuse in the States

Four state Medicaid directors will testify before the U.S. House Energy and Commerce Committee this Thursday as lawmakers investigate billions of dollars in potential waste, fraud, and abuse within state Medicaid programs.

The hearing, organized by the Committee’s Oversight and Investigations Subcommittee, will examine fraud risks, oversight failures, and the safeguards states have in place to protect taxpayer-funded health care programs. State Medicaid directors from New York, California, Minnesota, and Ohio are expected to appear before lawmakers.

The hearing comes at a time of growing concern over Medicaid program integrity. Recent investigations have uncovered abuse involving provider payments, enrollment verification, and state financing arrangements, raising questions about whether existing oversight mechanisms are sufficient to protect taxpayers.

Medicaid Still Needs Stronger Guardrails

CFE has repeatedly pointed to the need for stronger Medicaid oversight. Recent Medicaid and CHIP enrollment data from the Kaiser Family Foundation showed 74.9 million people enrolled in February 2026, about 3.5 million more than in February 2020, before the pandemic.

With enrollment still well above pre-pandemic levels, even a small error rate can result in billions of dollars in improper payments. A program serving nearly 75 million people requires accurate eligibility checks, strong enforcement, and safeguards against duplicate enrollment, stale records, improper payments, and fraud.

Program integrity reforms are designed to ensure taxpayer dollars are directed toward eligible beneficiaries rather than wasted through administrative failures or abuse. Congress should not confuse stronger oversight with cuts to the program.

CBO has projected that federal Medicaid spending will continue rising every year, from $708 billion in 2026 to $981 billion in 2036. Continued growth in the program makes effective oversight, accurate eligibility verification, and strong program integrity protections increasingly important.

Ambulance Abuse Shows the Problem

One of the clearest examples of Medicaid abuse involves ambulance reimbursement practices.

Earlier this year, CFE highlighted reforms pursued by the Centers for Medicare and Medicaid Services after investigators uncovered cases where government-owned ambulance providers received Medicaid payments far above what private providers were paid for the same transportation services. These financing arrangements allowed states and local governments to draw down additional federal Medicaid dollars while often bearing little relationship to the actual cost of care.

CMS responded by proposing reforms to state directed payments and other Medicaid financing practices. The agency estimated the changes would save taxpayers more than $775 billion over 10 years, including roughly $510 billion in federal savings.

The ambulance reimbursement issue demonstrates how weak oversight can create incentives for higher spending without improving patient care.

Fraud Is Not Limited to Medicaid

Recent enforcement actions have highlighted similar concerns across taxpayer-funded health care programs.

CMS recently suspended payments to approximately 800 hospices that billed federal taxpayers $1.4 billion last year while investigators examine potential fraud. Dr. Mehmet Oz has also identified hospice fraud, home-based service fraud, and phantom Obamacare enrollment as examples of how bad actors exploit weaknesses in federal health programs.

These cases reinforce the need for stronger oversight, better enforcement, and greater accountability throughout the health care system.

Reforms Should Focus Medicaid on the Truly Needy

Program integrity reforms should work alongside policies that ensure Medicaid remains focused on eligible beneficiaries.

The One Big Beautiful Bill Act includes provisions to strengthen eligibility verification, reduce duplicate enrollment, improve address verification, and establish community engagement requirements for certain able-bodied adults. CFE has previously highlighted an HHS analysis projecting that Medicaid work requirements should reduce poverty by between 1.6 million and 2.9 million people through higher employment and earnings.

These reforms seek to preserve Medicaid's core mission while ensuring that limited resources are directed toward the individuals and families the program was designed to serve.

CFE Takeaway

The Energy and Commerce Committee is right to demand answers from state Medicaid officials. Enrollment remains above pre-pandemic levels, Medicaid spending continues to grow, and recent ambulance and hospice fraud cases demonstrate the risks created by weak oversight. Congress should continue advancing reforms that strengthen eligibility verification, improve accountability, curb abusive payment schemes, and protect Medicaid for the Americans who depend on it.