The Centers for Medicare & Medicaid Services (CMS) on Wednesday singled out personal care and home- and community-based services (HCBS) in announcing a “major crackdown” on health care fraud.
Among other elements of a broader crackdown, CMS is deferring $259.5 million in federal Medicaid funding for Minnesota due to concerns over fraudulent claims in the state. The agency in its announcement highlighted personal care and HCBS as service areas with “unusually high spending and rapid growth,” based on a review of Q4 2025 claims; that review involved “traditional financial management approaches and new program integrity oversight strategies.”
After rejecting a corrective action plan for combating Medicaid fraud that Minnesota submitted in December 2025, CMS last month put the Gopher State on notice that federal funds might be withheld. Minnesota is appealing the rejection of the corrective plan and also is “attempting to work with federal officials,” according to a Feb. 2 announcement related to the state’s Medicaid integrity efforts.
Now, CMS warns that further federal Medicaid funds are at risk of deferral.
“Should Minnesota fail to clean up its significant program integrity vulnerabilities or demonstrate that the expenditures are allowable, CMS may defer more than $1 billion in federal funds over the next year,” the agency stated. “CMS also continues to intensely oversee Minnesota’s efforts to carry out its corrective action plan to address the underlying causes of fraud, waste, and abuse within the state.”
The approach that CMS is taking in Minnesota is unusual, according to a Feb. 2 KFF piece on the Medicaid home care fraud landscape.
“Historically, CMS has used disallowances to deny claims for payments that have been deemed impermissible and has worked collaboratively with states to recoup the funds,” the piece stated. “Under its new process — known as the ‘compliance process’ — CMS can withhold future payments if the Administrator determines that there is a ‘failure to comply substantially’ with one or more Medicaid requirements. In Minnesota’s case, CMS is effectively withholding funds in anticipation of future fraud.”
Other components of the Trump administration’s fraud crackdown include:
- A six-month nationwide Medicare enrollment moratorium on suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).
- A request for information from a variety of stakeholders to identify ways to prevent Medicare and Medicaid fraud. The input – which must be submitted via the Federal Register by March 20, 2026 – might be used in the development of a possible future rule under CMS’ Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) initiative.
Administration officials announced the fraud crackdown measures at the White House.
“For decades, Medicare fraud has drained billions from American taxpayers—that ends now,” said Secretary of Health and Human Services (HHS) Robert F. Kennedy Jr. “We are replacing the old ‘pay and chase’ model with a real-time ‘detect and deploy’ strategy, using advanced AI tools to identify fraud instantly and stop improper payments before they go out the door.”
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