Medicaid Program Integrity Update: Recent Activity by CMS, States, and Congress
This update is an excerpt from a longer article distributed to subscribers on March 5, 2026. Click to receive additional information about how to subscribe and to activate a complimentary trial subscription.
Over the last week, the Centers for Medicare & Medicaid Services (CMS) and the House of Representatives have expanded their oversight activities concerning program integrity in state Medicaid programs, including a new CMS inquiry in New York and letters sent to 10 states by the House Energy and Commerce Committee. See below for discussion of these actions and a chart summarizing CMS’s recent high-profile program integrity actions in four states.
Oversight Actions by CMS:
- CMS Inquires into New York Program Integrity. On March 3, New York received a from CMS expressing concerns about the state’s Medicaid claiming patterns and requesting detailed information about the state’s program integrity practices, following on similar actions in Minnesota, California, and Maine. As with the earlier letters, CMS Administrator Dr. Mehmet Oz prepared a for dissemination with the New York letter, describing the state as having a Medicaid program that far outspends national norms and that such spending demands CMS scrutiny into any potential fraud, waste, and abuse (FWA).
- Minnesota Appeals CMS Deferral. Also on March 3, Minnesota—the first state to receive a letter, and the only state to date in which CMS has initiated high-profile enforcement actions related to program integrity—filed a lawsuit challenging CMS’s February 25 to defer approximately $260 million in federal Medicaid payments for services the state has already reimbursed. Previously, Minnesota requested a hearing to challenge CMS’s threat to prospectively withhold federal funding; CMS has not yet scheduled that hearing.
CMS Medicaid Enforcement Powers |
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CMS has now exercised two different enforcement powers to reduce federal Medicaid funding after concluding that a state is out of compliance with federal program requirements:
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House Committees Send Program Integrity Inquiries to Ten States, Continue Investigation of Minnesota. Also on March 3, the House Energy and Commerce Committee, through its Subcommittee on Oversight and Investigations, sent letters to the governors and Medicaid agencies in California, Colorado,Maine, Massachusetts, Nebraska, New York, Oregon, Pennsylvania, Vermont, and Washington, citing concerns about FWA in state Medicaid programs. (See sample letter .)
Like CMS’s inquiry letters, these Subcommittee letters cite spending growth and recent oversight actions in certain service areas—particularly home and community‑based services (HCBS), behavioral health, autism‑related services, and non‑emergency medical transportation—and request extensive information on state Medicaid program‑integrity frameworks. These questions are similar, but not identical, to those in CMS’s state inquiry letters.
On March 4, the House Committee on Oversight and Government Reform a second focused on program integrity in Minnesota Medicaid and other public programs—following an initial hearing in January—and a alleging that Minnesota’s Governor and Attorney General “were aware of widespread fraud in federally funded social services programs for years, possessed the legal and procedural authority to stop payments, but repeatedly failed to act.”
Broader Context. During the 2026 State of the Union address, President Trump declared that Vice President JD Vance will lead the Administration’s “war on fraud,” repeating the Administration’s allegations of FWA in state Medicaid programs and suggesting that CMS will initiate oversight actions in additional states.
Since spring 2025, CMS has steadily escalated its use of Medicaid program‑integrity oversight tools, beginning with of state Medicaid coverage of noncitizens, and now expanding to broader audits and enforcement actions related to the states’ overall program integrity frameworks. It is pursuing a growing list of actions in a growing number of states, all of which to date are led by Democrat governors. In a break from CMS’s tradition of quietly and collaboratively communicating with individual states about compliance issues, these oversight actions have been publicly announced on social media, often before the state received any official communication from CMS, and typically accompanied by video statements from CMS Administrator Dr. Oz.
Following the President’s State of the Union address, CMS on future FWA rulemaking across Medicaid, Medicare, and the Marketplace under an initiative branded by the Administration as the “Comprehensive Regulations to Uncover Suspicious Healthcare” or “CRUSH.”
Although this summary focuses on CMS’s Medicaid oversight activities, we note that the Administration has also taken action to freeze funding for Democrat-led states across a variety of other jointly funded social programs based on similar allegations of program integrity concerns.
Looking Ahead. CMS’s parallel enforcement actions in Minnesota evince the Administration’s ongoing consideration of all available options to apply pressure—and deny federal funding—to states the Administration has characterized as having program integrity issues in Medicaid and other social programs. Administration officials have also signaled that additional deferrals and program integrity oversight actions may be forthcoming. In the near term, key developments to watch include:
- Whether CMS issues program integrity inquiry letters to additional states;
- Whether, after receiving responses from California, Maine, and New York, CMS follows up by requesting a corrective action plan (CAP) or initiating deferral or withholding proceedings; and
- How Minnesota’s challenges to CMS’s enforcement actions fare before the CMS holding officer (as to the withholding) and the court (as to the deferral).
CMS Oversight Actions on State Medicaid Program Integrity: Snapshot as of March 5, 2026 | ||
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State | CMS Actions and State Responses | Service Areas of Focus |
Minnesota |
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California |
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Maine |
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New York |
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Note: This table reflects publicly reported or disclosed CMS actions as of March 5, 2026, and will be updated as additional letters, deferrals, withholdings, or litigation developments occur. States may be subject to more than one action type simultaneously.
On January 6, for example, the Department of Health and Human Services (HHS) it is restricting $10 billion in federal funding for key social safety net programs in five states—California, Colorado, Illinois, Minnesota, and New York—citing “serious concerns about widespread fraud.” Specifically, the funding freeze applies to Temporary Assistance for Needy Families ($7.35 billion), the Child Care and Development Fund (approximately $2.4 billion), and the Social Services Block Grant ($869 million). The states sued in court and received a blocking the funding freeze on February 6. Litigation is ongoing.
