We have not cut Medicaid, and we have not cut SNAP. What we’re doing…is working on fraud, waste, and abuse. And everyone in Louisiana and around the country understands that that’s a responsibility of Congress….[Medicaid] is intended for vulnerable populations, for young single pregnant women and the elderly and the disabled and people who desperately need those resources. Right now, they’re being drained by fraud, waste, and abuse.
– Speaker Johnson on House Passage of the One Big Beautiful Bill Act (May 25, 2025):
That’s the rhetoric. Here’s the reality.
There is fraud against Medicaid (as there is against Medicare and private health insurance). There is also waste and abuse in Medicaid (as there is in Medicare and private health insurance). And the Speaker is right that it is the responsibility of Congress to address fraud, waste, and abuse in Medicaid. Program funds should be spent on health care services needed by eligible individuals, not stolen by bad actors or wasted on excessive administrative costs.
Addressing waste, fraud and abuse in Medicaid is not, however, what the One Big Beautiful Bill Act (OBBBA) does. Instead, according to final estimates released by the nonpartisan Congressional Budget Office this week, OBBBA as passed by the House May 22 will lead to the loss of Medicaid coverage by millions of Americans over the next ten years. An estimated 7.8 million of those will become uninsured because they will not have access to employer or other coverage they can afford.
The OBBBA contains 24 Medicaid provisions, explained here by our colleague Edwin Park. Of these, one addresses fraud, and six address waste or abuse. As shown in the table below, these seven provisions will, under CBO projections, reduce federal Medicaid spending by approximately $28.0 billion over the next ten years. That is just 3.2 percent of the $863.4 billion in cuts in federal Medicaid spending that the OBBBA will make. Nearly half of the cuts—$408 billion, or 47 percent—are attributable to loss of Medicaid coverage due to the imposition of work reporting requirements in expansion states ($344 billion) and to the requirement to redetermine eligibility every 6 months (instead of annually) that will apply in all states ($64 billion).
Bottom line: the OBBBA is not about reducing waste, fraud, and abuse in Medicaid. It’s largely about cutting federal Medicaid spending by terminating coverage for low-income Americans and their families through red tape.
Fraud, Waste, and Abuse Provisions in OBBBA, H.R. 1, as passed by the House May 21
| Bill Section | Provision (Effective Date) | CBO Score |
| 44103 | Address Verification and Identification of Duplicate Coverage (1/1/27, 10/1/29) | -$17.4 billion |
| 44104 | Identification of Deceased Individuals (1/1/28) | *(between -$500,000 and $500,000) |
| 44105 | Provider Screening for Termination of Participation (1/1/28) | $0 |
| 44106 | Additional Screening for Deceased Providers (1/1/28) | *(between -$500,000 and $500,000) |
| 44107 | Expansion of Penalty for Erroneous Excess Payments (10/1/29) | -$7.8 billion |
| 44123 | Accurate Payments to Pharmacies | -$2.5 billion |
| 44124 | Ban on Pharmacy Benefit Manager Spread Pricing (18 months after enactment) | -$237 million |
| Total | -$28.0 billion |
The one provision that squarely addresses fraud against Medicaid is section 44105, which relates providers participating in the program. Most fraud against Medicaid is committed by bad actor providers; beneficiaries are almost always the victims, not the perpetrators. In order to keep providers who are bad actors out of the program, state Medicaid agencies must screen providers before they enroll in the program and revalidate them every five years. Section 44105 would require state Medicaid agencies to check a federal database on at least a monthly basis to determine whether a provider has been terminated from participation in Medicare or another state’s Medicaid or CHIP programs. This is intended to limit monetary losses to providers that CMS or another state have determined to have defrauded their programs.
The other six provisions relate to waste, which GAO defines as “incurring unnecessary costs due to inefficient or ineffective practices, systems, or controls.” (A classic example of waste is the excessive administrative costs of Georgia’s work reporting requirements program). Section 44103 is intended to keep beneficiary address information current; among other things, this will enable state Medicaid agencies to more quickly identify simultaneous enrollment in two Medicaid programs when an individual moves from one state to another. Sections 44104 and 44106 are designed to ensure that state Medicaid agencies have more timely information about when beneficiaries or participating providers have died by requiring quarterly checks against the Social Security Administration’s Death Master File. Section 44107 would penalize state Medicaid programs with high rates of eligibility errors and other improper payments. Section 44123 would provide state Medicaid agencies with information about drug acquisition prices obtained by chain pharmacies and non-retail pharmacies to more accurately set their pharmacy payment amounts. Section 44124 would require pharmacy benefit managers reimbursing pharmacies for Medicaid-covered drugs on behalf of the state Medicaid agency or managed care organization to pass through manufacturer discounts or rebates to the Medicaid program.
Several of these provisions could and should be improved. For example, section 44107’s increase in state accountability for eligibility errors should reflect not just erroneous approvals of ineligible individuals but also erroneous denials of coverage for eligible individuals. That said, these particular provisions are all intended to reduce waste in Medicaid by making state programs more efficient. They are also the only ones in the bill that do so. In particular, the provisions relating to provider taxes (sections 44132 and 44134) would change the current federal Medicaid statute in ways that our colleague Edwin Park points out are highly problematic for states. These provisions reflect a policy debate about federal-state financing relationships, not, some persistently but falsely assert, waste, fraud and abuse of Medicaid in the form of “money laundering” by states.
It’s worth noting that CBO estimates that the provisions requiring more frequent screening of participating providers (section 44105) and more frequent matches against the SSA Death Master File (sections 44104 and 44106) would together produce $0 savings for the federal government. This underscores the point that my colleague Joan Alker made months ago: addressing waste, fraud and abuse in Medicaid was never going to result in federal savings anywhere close to the $880 billion over ten years directed by the House budget resolution.
Of course, there are federal (and state) savings to be had from reducing waste, fraud and abuse in Medicaid. OBBBA could do more than just the seven provisions listed above. For example, it could increase mandatory funding for the Health Care Fraud and Abuse Control Program to expand the ability of HHS/OIG, DOJ, and the FBI to investigate and prosecute fraud against Medicaid and Medicare. The return on investment for the HCFAC program is $2.80 for every $1.00 invested. OBBBA could also increase the federal investment in State Medicaid Fraud Control Units, which in FY 2024 recovered $3.46 for every $1.00 spent.
The OBBBA does not make these investments. What it does do is change Medicaid eligibility and financing policies in such a way that 7.8 million low-income Americans will lose coverage altogether, “saving” the federal government hundreds of billions of dollars. The bill is now before the Senate, which has the opportunity to come up with a version that actually addresses waste, fraud, and abuse in Medicaid without increasing the number of uninsured.