New Federal Focus on Fraud, Waste and Abuse May Signal Changes for the Health Care Industry
Congress and the Trump Administration have issued a series of heightened warnings indicating an emerging effort to crack down on what it terms rampant “fraud, waste, and abuse” in the health care industry. All industry stakeholders should be aware of this new focus, which not only signals potentially heightened scrutiny and enhanced penalties for compliance issues but also potential policy changes intended to reduce federal expenditures on programs or practices that are identified as improper or wasteful.
Efforts to date include the creation of an interagency Task Force to coordinate and strengthen fraud prevention and enforcement activities across affected programs, an increased focus on criminal prosecutions, and a six‑month nationwide moratorium on Medicare enrollment for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers, which the Centers for Medicare & Medicaid Services (CMS) states is necessary due to longstanding fraud, waste, and abuse in the DMEPOS sector.
The Federal Initiative Aims to Compel States and Other Non-Federal Actors to Prevent Fraud, Waste, and Abuse
A key aspect of the federal initiatives are attempts to compel states and other non-federal actors to adopt a similar focus. Most significantly, CMS temporarily deferred approximately $259.5 million in federal Medicaid matching funds to Minnesota based on allegations that the state had failed to take adequate steps to ensure program integrity. CMS has warned that if Minnesota fails to remediate identified program integrity vulnerabilities, the agency may defer more than $1 billion in federal funds over the next year.
Additionally, CMS directed the Minnesota Department of Human Services to freeze enrollment of 13 categories of providers. Judith Waltz, Medicaid Moratoria: CMS Directs State to Limit Provider Enrollment in Minnesota, Foley & Lardner LLP (Jan. 22, 2026). The alleged program integrity vulnerabilities in Minnesota related to Medicaid providers of certain categories of rehabilitative or supportive services, such as adult day services, assertive community treatment, nonemergency medical transportation, peer recovery support services, and recuperative care. See Foley & Lardner LLP, Judith Waltz Comments on DOJ Medicaid Fraud Crackdown (Jan. 23, 2026). The deferral of Medicaid matching funds prompted Minnesota to sue CMS, an action which the district court ultimately denied on April 6 for procedural reasons. Minnesota also submitted a corrective action plan to CMS to address the identified program integrity concerns. Although CMS approved the corrective action plan, the funds nevertheless remain withheld.
Congress has expanded its fraud prevention efforts by increasing oversight of state Medicaid programs. Specifically, in early March, the House Committee on Energy and Commerce sent letters to governors and Medicaid agency leaders in California, Colorado, Maine, Massachusetts, Nebraska, New York, Oregon, Pennsylvania, Vermont, and Washington seeking detailed information on Medicaid program integrity efforts. In an interview with Bloomberg Government, Dr. Mehmet Oz, administrator of CMS, announced that CMS will soon expand beyond the states where they are already investigating for Medicaid fraud and warned that states that do not cooperate with CMS’ investigations may lose federal funding.
CMS’s actions have been publicized with social media campaigns against California, Florida, Maine, and New York, alleging high-dollar public benefit fraud. In some cases, states have responded by enhancing and publicizing their own anti-fraud efforts. For example, in Texas, Governor Greg Abbott directed the Texas Health and Human Services Commission (HHSC) and HHSC’s Office of Inspector General to increase Medicaid fraud enforcement, including by ensuring that Medicaid Managed Care Organizations maintain fully staffed and compliant Special Investigations Units and by prioritizing oversight of high‑risk service areas. Nanette K. Beaird et al., Texas Governor Issues New Directive on Medicaid Fraud Enforcement: Five Things That Managed Care Organizations Should Do Now, Foley & Lardner LLP (Jan. 22, 2026).
CRUSH RFI
In addition to its heightened emphasis on enforcement activities, the Administration has signaled an interest in policy changes to prevent “fraud, waste, and abuse” in federal health care programs. In February 2026, CMS issued a Request for Information (RFI) inviting input on how CMS can expand and strengthen its fraud, waste, and abuse efforts under a future proposed rule pursuant to CMS’ Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) initiative (CRUSH RFI).
The CRUSH RFI solicited feedback on a wide variety of topics, listed below, and provided insight on the types of actions CMS is considering taking. The topics were not limited to tools designed to prevent fraudulent or criminal activity but also indicated that CMS was considering affirmative changes to program policy in areas it viewed as improper or wasteful. Hundreds of comments were submitted in response to the CRUSH RFI, which CMS is now reviewing. Changes identified in the CRUSH RFI generally would require new rulemaking to be implemented.
A. Modifications to Program Integrity Requirements. CMS sought stakeholder input on how it can better use or modify its existing program integrity authorities, including provider enrollment, audits, payment suspensions, analytics, and enforcement processes, to more quickly and effectively prevent fraud, waste, and abuse across federal health care programs.
B. Enhanced Identity Proofing and Ownership Requirements. Based on significant concerns that Medicare fraud is increasing through international fraud schemes characterized by opacity of ownership structures, CMS sought feedback on potential provisions that would require enhanced identify proofing of individuals associated with Medicare-enrolled entities and impose citizenship or legal resident requirements for ownership.
C. Preclusion List and Medicare Advantage (MA) Enrollment Requirements. CMS sought input on how to strengthen the Medicare Advantage preclusion list to prevent providers revoked from Medicare Parts A and B (Traditional Medicare) from continuing to bill MA plans, including whether MA billing should require provider enrollment in Traditional Medicare.
D. Laboratory Testing (Including Genetic and Molecular Tests). In light of increased spending and persistent fraud concerns related to laboratory tests, particularly genetic tests, including molecular testing, CMS sought input on what additional authorities, analytics, and safeguards could better prevent, detect, and address fraud related to laboratory tests.
E. Reducing Risks from Non-Participating DMEPOS Suppliers in MA. CMS has identified that non-participating DMEPOS suppliers are fraudulently billing MA plans for millions of dollars of services not rendered and not needed. CMS sought feedback on solutions related to non-participating DMEPOS suppliers in MA.
F. Reducing Fraudulent Traditional Medicare Claim Submission. CMS sought feedback on the impact of reducing the Traditional Medicare one (1)-year timely filing deadline for claims for high-risk items and services, including for DMEPOS.
G. Artificial Intelligence in MA Coding Oversight and Hospital Biling. CMS sought input from stakeholders about the availability, use, efficacy, and cost of using artificial intelligence, based on machine learning and other methods, to assist with accurately and efficiently abstracting diagnoses from medical record documentation as part of a medical records review.
H. Beneficiary Solicitation, Contact, and Fraud Reporting. Because Medicare beneficiaries are often subject to unsolicited outreach by individuals seeking to obtain the beneficiaries’ personally identifiable information, CMS sought feedback on the impact of expanding prohibitions on unsolicited beneficiary outreach beyond DMEPOS suppliers and beyond telephone communications. CMS also sought guidance on how to better support beneficiaries in identifying and reporting potentially suspicious Traditional Medicare claims.
I. Surety Bond Requirements. CMS sought feedback on how it can strengthen the existing surety bond requirements for DMEPOS suppliers under Section 1834(a)(16) of the Social Security Act.
J. Medicaid and CHIP. CMS sought input to ensure that “states are proactive in crushing fraudulent activities in these programs.” Specific inquiries related to improving program integrity with regard to intergovernmental transfers (IGTs), programs that offer services to individuals without satisfactory immigration status, or differential payment rates between public and private providers.
K. Federally Facilitated Exchange (FFE) and State-Based Exchanges (SBE). CMS sought comments on how it can strengthen program integrity, including fraud prevention and consumer protection in both the FFEs and SBEs.
Looking Ahead
The rhetoric from CMS, the Trump Administration, and from Congress indicate that health care enforcement activities to prevent fraud, waste, and abuse are on the rise. These efforts include a wide swath of proactive tools that can be used to prevent improper activity — including preventive moratoria or enhanced scrutiny applied against entire sectors. They also may extend to policymaking in areas that the government now views as wasteful. Financial threats such as those imposed by CMS on the state of Minnesota or the letters issued by the Governor of Texas may also lead state actors to take harder lines on the prevention of fraud, waste, and abuse.
Key Takeaways
Providers, suppliers, managed care organizations, and other stakeholders may wish to assess their readiness for heightened scrutiny and consider how CMS’s evolving approach could affect enrollment, billing, and program integrity expectations going forward.
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At Foley, we are tracking these developments closely and actively advising providers across the country on how to respond to this evolving legal landscape. From policy development and compliance strategy to enforcement defense, we are here to help. Please reach out to the authors, your Foley relationship partner, or to our Health Care Practice Group and Health Care & Life Sciences Sector with any questions.
