CMS defers $260M in Medicaid funds as part of ‘major crackdown on healthcare fraud’
The Centers for Medicare & Medicaid Services (CMS) announced it will be making some changes aimed at combating what it calls “major” healthcare fraud. The agency said it’s acting to reduce healthcare costs for Americans, in line with President Donald Trump’s agenda.
In a statement released on Wednesday, CMS outlined a three-step approach to this healthcare fraud crackdown effort, beginning with halting $259.5 million in Medicaid funding meant for the state of Minnesota. The agency said the Trump administration notified the state of its intent to defer the money in January, citing an ongoing fraud case related to numerous “daycare” facilities in the state known to have received funds, despite not providing services.
The withheld money represents federal matching funds. CMS said the state was spending “$243.8 million for unsupported or potentially fraudulent Medicaid claims and $15.4 million related to claims involving individuals lacking a satisfactory immigration status.”
Notably, the fraud investigations into the bogus homecare and daycare companies predate Trump’s second term and have resulted in numerous indictments from the U.S. Department of Justice.
The Trump administration threatened to withhold even more funding—up to $1 billion—if Minnesota fails to “carry out its corrective action plan to address the underlying causes of fraud, waste, and abuse within the state.”
It’s not clear what benchmarks the state must reach to reclaim the Medicaid funds, nor is it clear how these cuts will impact the ability of citizens covered by the program to seek care.
DMEPOS enrollment moratorium
The second piece of its plan to thwart fraud and waste involves placing a six-month moratorium on new Medicare enrollment for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) companies.
CMS said this will allow it to avoid paying out $1.5 billion in “suspected fraudulent billing,” which it said was paid out to DMEPOS companies wrongly last year. The agency added that the pause will give it time to develop “additional safeguards to further mitigate longstanding instances of fraud” from these unnamed supply chain entities.
It said it also plans to revoke the Medicare participation of some suppliers and providers as part of the shift. CMS said impacted groups will be notified and provided with a reason for no longer being able to participate in the program.
Those details will also be published for the public to see and review.
“This additional transparency will allow patients and payers, including private insurers, to understand which providers have been subject to such administrative enforcement action by the government,” the agency said.
Operation “CRUSH”
As the third prong to its fraud crackdown, CMS said it will be looking to adopt new rules under the umbrella of a new Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) initiative. To do this, it’s seeking feedback on what the agency can do to tamp down on unseen waste and abuse happening in the healthcare system.
Ideas for new strategies to “crush” fraud related to Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and commercial plans sold on Affordable Care Act (ACA) exchanges are being sought from all stakeholders.
“Stakeholders can provide input on both existing authorities, as well as ideas for new regulatory approaches,” the agency confirmed.
CMS identified “states, providers, suppliers, payers, technology companies, patient advocates, beneficiaries and others” as those it wishes to receive feedback from.
Comments related to CRUSH can be submitted by clicking here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.