On March 19, President Trump issued an Executive Order Establishing the Task Force to Eliminate Fraud. The stated purpose of the Task Force, which is chaired by Vice President J.D. Vance, is to “coordinate and accelerate a comprehensive national strategy to stop fraud, waste, and abuse within Federal benefit programs, including programs administered jointely with State, local, tribal, and territorial partners.” Members of the task force include representatives of nine cabinet agencies, including the Department of Justice, which recently created a National Fraud Enforcement Division, as well as HHS. Assistant to the President for Homeland Security Stephen Miller is the Senior Advisor to the Task Force to Eliminate Fraud.
According to the Executive Order, the rationale for the Task Force is that “some States have refused to institute basic fraud controls” and as a result, “illegal aliens, criminals, foreign gangs, bureaucrats, State and local officials, non-governmental organizations, and ineligible providers exploit these programs—which are intended to provide a safety net to lawfully eligible Americans—with ease.” The E.O.’s poster child is Minnesota: “Federal prosecutors in the State estimate that Medicaid fraud in recent years could total in the billions.” The E.O. also implicates other Democratic-led states: “There is also strong reason to believe that similar problems exist in other states, including California, Illinois, New York, Maine, and Colorado.”
You get the drift.
The E.O. directs HHS and every other member agency to identify its “benefit transactions and processes that are most susceptible to fraud schemes” and, within 30 days (April 15), to submit “suggested measures to prevent such fraud.” Within 60 days (May 15), the Task Force is to coordinate efforts of member agencies to “adopt, as appropriate, minimum anti-fraud requirements” for the benefit transactions and processes identified as most susceptible to fraud schemes. Within 90 days (June 15) a “measurable implementation plan” for the measures to prevent fraud is due from each agency. There is no indication as to whether the responses of member agencies will be made available to the public.
Among all federal benefit programs the E.O. focuses particularly on those “administered by a State, local, territorial, or tribal jurisdiction.” It directs the Task Force and member agencies to address “how such jurisdictions can demonstrate implementation of … anti-fraud requirements” including pre-payment integrity and risk controls and audit and remedial measures like suspension and termination. Tellingly, it also directs the Task Force and member agencies to “recommend, as appropriate, any ways that Federal funds may be withheld from jurisdictions that do not have adequate anti-fraud requirements.”
We’ve already seen an initial foray along these lines by CMS in Minnesota. Ostensibly to reduce fraud against Medicaid, CMS invoked both a compliance action (to withhold federal Medicaid matching funds going forward) and a deferral (to delay and potentially disallow altogether payment of matching funds on past expenditures). The compliance action now seems to be on hold; the deferral is in litigation. In addition, CMS has sent letters of inquiry about anti-fraud measures to California, Florida, Maine, and New York that may be a prelude to compliance and/or deferral actions against those states as well.
Medicaid is likely to be of considerable interest to the Task Force. With federal outlays estimated at $708 billion this fiscal year, it is the third largest federal benefit program behind Social Security and Medicare, and it is far and away the largest federal benefit program administered (and financed in part by) states. Crucially, Medicaid is also the largest federal program for children (other than the child tax credit), spending more than Title 1 and other education programs, SNAP and child nutrition, income security (TANF), and child care and early education programs. CBO estimates that on average, 31 million children will be enrolled in Medicaid every month this fiscal year.
There has been fraud against Medicaid in Minnesota and other states as well. It is largely committed by bad actor providers and business people. Fraud against Medicaid harms children and families and other Medicaid beneficiaries by diverting program resources away from needed services delivered by honest providers. To prevent, detect, and prosecute fraud against Medicaid, the responsible federal and state agencies—CMS, HHS/OIG, DOJ, FBI, state Medicaid agencies, and state Medicaid Fraud Control Units—need to collaborate, sharing intelligence and coordinating investigations and enforcement actions.
There’s nothing in the E.O. that speaks to collaboration and cooperation with state partners. Those words simply don’t appear. To the contrary, the E.O. asserts that [s]elf-dealing political actors use [federal] benefits programs to solidify control over their communities and our political systems.” And it blames “irresponsible State politicians” for “increase[ing] Federal spending in their own States, which has contributed to inflation for health care services, housing, utilities, and groceries.”
This disparagement of state officials, combined with the E.O.’s emphasis on withholding federal funds and its silence on transparency, does not augur well. Instead, it creates a risk that the Task Force’s anti-fraud agenda may provide cover for CMS to use its compliance and deferral/disallowance processes even more aggressively than it has in Minnesota, disrupting other state Medicaid programs and their finances without actually reducing fraud.