After the House passed its version of what was then known as the “One Big Beautiful Bill Act,” we examined Speaker Johnson’s assertion that the House had not cut Medicaid but had instead targeted waste, fraud, and abuse in the program. We reported that just seven of the 24 Medicaid provisions in the bill truly targeted waste, fraud, and abuse, and they accounted for just 3.2 percent of the $864 billion in cuts in federal payments to states, as estimated by the nonpartisan Congressional Budget Office. In contrast, nearly half of those cuts were attributable to the loss of Medicaid coverage by expansion adults due to the imposition of work reporting requirements and the requirement to redetermine eligibility every 6 months. Bottom line: the OBBBA was not about addressing waste, fraud, and abuse; it was about cutting federal spending by weaponizing red tape to disenroll millions of beneficiaries.
Now that the bill has been enacted into law, has this picture changed? In a word, no. Neither have the falsehoods about the Medicaid provisions. Take, for example, the White House press release explaining “what this [law] means for everyday Americans:”
- “Strengthening Medicaid by eliminating waste, fraud, and abuse …”
As my colleague Edwin Park explains, only four of the 21 Budget Reconciliation Law (BRL)’s Medicaid provisions actually address waste, fraud, and abuse. (These are summarized in the table below). CBO estimates that these four provisions will reduce federal payments to states by a total of $25 billion over the next 10 years, accounting for only about 2.5 percent of the $990 billion in total Medicaid cuts in the law. In contrast, the work reporting and 6-month redetermination requirements imposed on Medicaid expansion states represent almost 40 percent of the total cuts, largely achieved by using red tape to disenroll beneficiaries.
Fraud, Waste, and Abuse Provisions in the Budget Reconciliation Law (P.L. 119-21)
| Bill Section | Provision (Effective Date) | CBO Score (10 years) |
| 71103 | Address Verification and Identification of Duplicate Coverage (1/1/27, 10/1/29) | -$17.4 billion |
| 71104 | Identification of Deceased Individuals (1/1/27) | *(between -$500,000 and $500,000) |
| 71105 | Screening for Deceased Providers (1/1/28) | *(between -$500,000 and $500,000) |
| 71108 | Expansion of Penalty for Erroneous Excess Payments (10/1/29) | -$7.6 billion |
| Total | -$25.0 billion |
Regrettably, there is fraud against Medicaid (and Medicare and private health insurers). Most of it is committed by providers, with beneficiaries as the victims. It can even be trans-national, as in this example from the recent Department of Justice announcement of a National Fraud Takedown:
“Finally, a defendant based in Pakistan and the United Arab Emirates who owned a billing company allegedly orchestrated a scheme to prey upon vulnerable individuals in need of addiction treatment by conspiring with treatment center owners to fraudulently bill Arizona Medicaid approximately $650 million for substance abuse treatment services. According to court documents, some of the services billed were never provided, while other services were provided at a level that was so substandard that it failed to serve any treatment purpose. As part of the conspiracy, treatment center owners allegedly paid illegal kickbacks in exchange for the referral of patients recruited from the homeless population and Native American reservations. The defendant received at least $25 million of ill-gotten Arizona Medicaid funds as a result of the conspiracy and is charged with a money laundering offense for his alleged use of those funds to purchase a $2.9 million home located on a golf estate in Dubai.”
Hopefully, the Budget Reconciliation Law will reduce duplicate payments for beneficiaries moving from one state to another, payments on behalf of deceased beneficiaries, and payments to deceased providers. It might also lead to a reduction in improper payments. But it will do nothing to deter, identify, or prosecute transnational or domestic provider fraud against the program. That is the job of the state and federal agencies responsible for protecting Medicaid: state Medicaid agencies, the state Medicaid Fraud Control Units, CMS, the HHS Office of Inspector General, DOJ, and the FBI. As this indictment indicates, DOJ and OIG, among others, are on the case.
Perhaps these agencies could use more resources to fight fraud. We don’t know, because neither the House nor Senate held hearings on the bill to learn how federal and state governments could better address fraud and abuse against Medicaid. That’s very unfortunate. But what is worse is the false narrative that the $990 billion in Medicaid cuts in the Budget Reconciliation Law are, to quote the White House, “strengthening Medicaid by eliminating waste, fraud, abuse.” In fact, the final bill passed by the Senate and House did even less on that score.