Why it Matters

The Trump administration has withheld or threatened to withhold billions in Medicaid funding to Minnesota, California, and New York, citing fraud concerns as billions of dollars have been lost due to falsified payments. On June 25, The House Energy and Commerce Subcommittee on Oversight and Investigations held a Medicaid program integrity hearing to examine fraud risks and oversight gaps across four states. The hearing underscored a fundamental tension. States and the Trump administration both claim to combat fraud, yet the administration's aggressive funding deferrals (which continue even as states simultaneously strengthen their own oversight systems) are creating chaos in legitimate care delivery.

The Big Picture

The June 25 hearing was the third in a series of Medicaid fraud examinations by the subcommittee during the 119th Congress. The subcommittee conducted a months-long investigation into Medicaid fraud, including two previous hearings, letters to 11 states requesting documents and information, and review of over 90,000 pages of documents.

The Centers for Medicare and Medicaid Services (CMS) estimates improper payments in Medicaid in the tens of billions annually. Recent takedowns across the four states tell a grim story: Minnesota identified over $100 million in Medicaid fraud, waste, and abuse in recent years; a California man pleaded guilty to $270 million in fraudulent prescription drug claims to Medicaid; New York saw $226 million in social adult daycare fraud charged in 2026 so far; and Ohio recovered over $100 million through program integrity activities in a recent year.

The hearing occurs amid congressional debate over a reconciliation bill that includes significant Medicaid cuts and new eligibility work requirements. The administration's aggressive posture on fraud has collided with state operations in ways that complicate the anti-fraud message. CMS announced it would withhold up to $2 billion from Minnesota's health care services in January, while it put $1.3 billion in Medicaid funding in jeopardy in California through a deferral for home health care service payments. CMS also used inaccurate math that overstated the number of New Yorkers receiving home health care services by over 10 times, yet has not backed down from its threat to cut Medicaid funding to New York despite admitting its mathematical error.

What They're Saying

The hearing featured testimony from four state Medicaid directors: John Connolly from the Minnesota Department of Human Services, Tyler Sadwith from the California Department of Health Care Services, Amir Bassiri from the New York State Department of Health, and Scott Partika from the Ohio Department of Medicaid.

Connolly highlighted thousands of investigations and millions of dollars recovered. (Minnesota hired a new inspector general specifically to combat Medicaid fraud.) Connolly used his congressional testimony platform to warn Congress against disruptions to Medicaid funding, framing fraud-fighting and program preservation as complementary goals.

Sadwith oversees Medi-Cal, the nation's largest state Medicaid program, covering approximately 14 to 15 million Californians (roughly one in three state residents), while California is currently investigating over 300 hospices for possible license revocation as part of a crackdown on the $267 million bogus-charges scheme. Yet even these aggressive state-level enforcement efforts have not insulated California from federal pressure.

New York's Bassiri oversees one of the country's most complex and costly Medicaid programs, serving approximately 8 million enrollees. The New York Medicaid Inspector General has recovered billions of dollars in improper payments over its history, and New York identified significant fraud in transportation, home care, and pharmacy benefit sectors. But Bassiri is directly named in an active Department of Justice (DOJ) lawsuit filed by the current administration. His testimony came days after the DOJ filed a lawsuit against the New York State Department of Health and Bassiri himself, over alleged ongoing Medicaid fraud related to New York's $10 billion home-care program. The DOJ alleged a "backroom deal" with contractor Public Partnerships LLC that cost taxpayers millions.

Ohio's Partika, operating under Governor Mike DeWine's Republican administration, has suspended payments to 49 high-risk home health providers exhibiting potential fraud red flags under DeWine's anti-fraud executive order. Ohio's managed care organization-based delivery system covers the majority of Medicaid enrollees and requires Medicaid Managed Care Organizations to report fraud referrals. Ohio also cross-matches Medicaid enrollment data against death records and other databases to identify ineligible enrollees. Yet even Ohio has faced direct congressional scrutiny. The House Oversight Committee sent Partika a formal letter dated May 12, 2026, raising concerns about waste, fraud, and abuse patterns in Ohio's Home and Community-Based Services (HCBS) waiver programs.

The tension at the hearing centered on whether aggressive federal enforcement was helping or hindering anti-fraud efforts. State officials acknowledged real problems while questioning the federal approach.

Partika acknowledged imperfection in program rules. "I'm not going to say that the program rules are 100% perfect. And I think we certainly have found instances where they're not and we have actually prosecuted for fraud in that space," he stated.

The hearing highlighted Medicaid fraud's human toll. Medicaid fraud harms vulnerable patients by billing for services that are not rendered. One California case illustrated the issue: Paul Randall pleaded guilty to $270 million in Medicaid fraud after using proceeds to purchase luxury cars, rare sports memorabilia including Mickey Mantle rookie baseball cards, and game-worn Kobe Bryant sneakers. In Ohio, law enforcement seized 14 luxury vehicles owned by defendants in a $30 million Medicaid behavioral health fraud case.

HCBS programs, particularly personal care attendant services, are the highest-risk area for fraud in Minnesota's Medicaid program. Minnesota's fraud investigations have led to numerous criminal prosecutions of providers billing for services never rendered.

In Los Angeles County, there were over 400 home health care providers, and CMS suspended payments to all of them due to rampant fraud it could not distinguish from legitimate providers. Only 12 legitimate home health care companies out of over 400 in LA County contacted authorities about suspended payments for services they had provided.

The atmosphere reflected frustration on multiple sides. State officials defended their enforcement records while pushing back against federal overreach. The subcommittee pressed witnesses on whether states were doing enough. And members questioned whether the growth in home health care services reflected genuine patient need or provider exploitation.

Political Stakes

For the witnesses, the stakes are existential. Bassiri faces potential personal liability in an active lawsuit. Connolly must defend his state's program against federal pressure while managing real fraud problems. Sadwith oversees the nation's largest Medicaid program while it faces the largest federal deferral in agency history, and Partika navigates alignment with a Republican administration while facing congressional scrutiny.

For the administration, the stakes involve credibility on fraud enforcement. President Trump threatened Minnesota with a "day of reckoning and retribution" following CMS's announcement of funding withholding. The administration has made fraud enforcement a centerpiece of its Medicaid agenda, but crude math errors and blunt anti-funding weapons have raised questions about whether the approach is precision enforcement or political punishment.

For the American public, the stakes involve access to care. Enrollment in Medicaid and the Affordable Care Act has dropped by more than 5 million people over the past year. The subcommittee staff memo framed the hearing around three core concerns: improper payments in Medicaid estimated in the tens of billions annually, eligibility verification failures following COVID-19 continuous enrollment unwinding, and oversight gaps in HCBS and managed care programs.

Yes, but:

Critics argue the administration is weaponizing fraud concerns. Georgetown's Center for Children and Families argued that the administration is using fraud as a political weapon against Medicaid rather than a genuine policy concern. The organization stated that CMS has made "partisan videos" and sent letters with "egregious overstatements of fraud" to states like New York. The Conversation cautioned against equating improper payments with outright fraud, noting that administrative errors and billing disputes differ fundamentally from criminal schemes.

State Medicaid directors have called for partnership rather than punishment. The National Association of Medicaid Directors called on CMS to be a partner in strengthening program integrity rather than simply an enforcement overseer. On March 27, 2026, the group submitted official comments to CMS in response to the agency's Request for Information on its Comprehensive Regulations to Uncover Suspicious Healthcare initiative, urging that any new regulations be workable for state agencies.

The Bottom Line

Medicaid fraud is real and substantial, but the Trump administration's enforcement approach is creating collateral damage in legitimate care delivery, putting state officials in an impossible position, and raising questions about whether the cure is worse than the disease.

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