Eliminating Waste, Fraud, and Abuse in Medicaid
President Trump issued a memorandum to address what he claims is excessive and wasteful spending in the Medicaid program.
The memorandum directs the Secretary of Health and Human Services to take action to eliminate waste, fraud, and abuse within Medicaid and to align Medicaid payment rates with those of Medicare—a move the president characterizes as necessary to protect the financial stability of both programs and ensure access to care for seniors and vulnerable groups.
The President contends that the Biden administration enabled states to circumvent cost controls resulting in unsustainable spending.
Arguments For
Intended Benefit: Reduce wasteful spending in Medicaid, ensuring the program's long-term sustainability and protecting taxpayer dollars.
Evidence Cited: The memorandum cites a significant increase in State Directed Payments, reaching $110 billion in 2024, and alleges that these payments are three times higher than Medicare rates.
Implementation Methods: The Secretary of Health and Human Services is directed to take action to eliminate waste, fraud, and abuse, including ensuring Medicaid payment rates are not higher than Medicare rates.
Legal/Historical Basis: The memorandum aligns with a general principle of fiscal responsibility and seeks to align Medicaid payment rates with Medicare rates, which were historically used as a cap.
Arguments Against
Potential Impacts: Restricting Medicaid payments could limit access to care for vulnerable populations, potentially leading to negative health outcomes. It may increase the financial strain on states and healthcare providers.
Implementation Challenges: Implementing the directives may face legal challenges, particularly regarding the extent to which the federal government can regulate state Medicaid programs. It may require significant administrative changes.
Alternative Approaches: Alternative strategies for addressing waste, fraud, and abuse could be explored, such as strengthening auditing and oversight mechanisms, implementing stricter fraud detection systems, or focusing on specific areas of high risk rather than imposing an overall payment cap.
Unintended Effects: Reducing Medicaid reimbursement rates could inadvertently discourage participation from healthcare providers who serve low-income or underserved populations, further exacerbating access issues.
MEMORANDUM FOR THE SECRETARY OF HEALTH AND HUMAN SERVICES THE ADMINISTRATORS OF THE CENTERS FOR MEDICARE AND MEDICAID SERVICES
SUBJECT: Eliminating Waste, Fraud, and Abuse in Medicaid
This is the header of the memorandum, identifying the recipient(s) and the subject matter.
The memorandum is addressed to the Secretary of Health and Human Services and the Administrators of Centers for Medicare and Medicaid Services, indicating a clear focus on healthcare policy.
My Administration has been relentlessly committed to rooting out waste, fraud, and abuse in Government programs to preserve and protect them for those who rely most on them.
The Medicaid program was designed to be a program to compassionately provide taxpayer dollars to healthcare providers who offer care to the most vulnerable Americans. To keep payments reasonable, billable costs for such care were historically capped at the same level that healthcare providers could receive from Medicare. The State and Federal Governments jointly shared this cost burden to ensure those of lesser means did not go untreated.
Under the Biden Administration, States and healthcare providers were permitted to game the system. For example, States “taxed” healthcare providers, but sent the same money back to them in the form of a “Medicaid payment,” which automatically unlocked for healthcare providers an additional “burden-sharing” payment from the Federal Government. Through this gimmick, the State could avoid contributing money toward Medicaid services, meaning the State no longer had a reason to be prudent in the amount of reimbursement provided. Instead of paying Medicare rates, many States that utilize these arrangements now pay the same healthcare providers almost three times the Medicare amount, a practice encouraged by the Biden Administration.
These State Directed Payments have rapidly accelerated, quadrupling in magnitude over the last 4 years and reaching $110 billion in 2024 alone. This trajectory threatens the Federal Treasury and Medicaid’s long-term stability, and the imbalance between Medicaid and Medicare patients threatens to jeopardize access to care for our seniors.
I pledged to protect and improve these important Government healthcare programs for those that rely on them. Seniors on Medicare and Medicaid recipients both deserve access to quality care in a system free from the fraud, waste, and abuse, that enriches the unscrupulous and jeopardizes the programs themselves. We will take action to continue to love and cherish the Medicare and Medicaid programs to ensure they are preserved for those who need them most.
The Secretary of Health and Human Services shall therefore take appropriate action to eliminate waste, fraud, and abuse in Medicaid, including by ensuring Medicaid payments rates are not higher than Medicare, to the extent permitted by applicable law.
This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
The President's justification for the memorandum is presented.
He alleges that the Medicaid program has been exploited, leading to excessive spending, and claims that the Biden administration's policies facilitated this abuse.
He asserts that this undermines the program's long-term fiscal health and potentially harms access to care for eligible beneficiaries.
The memorandum concludes with a directive to the Secretary of Health and Human Services to address the issues and a standard legal disclaimer.
DONALD J. TRUMP
This is the signature line of the memorandum, indicating the President's approval and authorization.