Just how bad is Medicaid fraud in America? According to the federal government, the answer may be staggering: potentially $100 billion in fraudulent billings every single year.
That figure comes as the Trump administration launches a major crackdown on one of the most overlooked weaknesses in the Medicaid system — the failure by states to properly verify and monitor medical providers participating in the program.
The effort is being spearheaded by Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz, who announced April 21 that states will now be required to strengthen their Medicaid provider review systems.
The issue centers on what is known as “revalidation.”
Under federal law, Medicaid providers are supposed to have their enrollment status reviewed at least every five years. That process includes checking medical licenses, confirming legal compliance, verifying identities, screening against death records, and identifying providers barred from participating in Medicaid.
In theory, it is one of the government’s primary safeguards against fraud.
In practice, many states appear to be barely doing it at all.
Recent Freedom of Information Act requests submitted to dozens of states revealed widespread failures to properly revalidate Medicaid providers. According to the data obtained, some states are allowing thousands — even tens of thousands — of providers to continue billing taxpayers long after required reviews should have occurred.
Georgia reportedly has more than 374,000 Medicaid providers on record, including roughly 21,000 longstanding providers who have not been revalidated within the required five-year window.
Illinois appears even worse. More than a quarter of the state’s roughly 222,000 Medicaid providers reportedly have gone longer than five years without review. One provider allegedly had not been revalidated in over nine years.
That does not automatically mean those providers are fraudulent. But critics argue the lack of oversight creates ideal conditions for massive abuse.
Revalidation exists specifically to catch problems before they spiral into billion-dollar scams. The process can identify providers using stolen identities, providers practicing without valid licenses, individuals banned in one state but still operating elsewhere, or outright fake medical operations billing taxpayers for services never provided.
Federal officials say examples of those schemes are already widespread.
In Los Angeles alone, the Trump administration recently cracked down on 447 hospices accused of fraudulent billing practices. In California, investigators uncovered scams involving criminals allegedly stealing the identities of doctors — including deceased physicians — to bill Medicaid and Medicare for millions in fake hospice claims.
Operation Never Say Die, announced earlier this year, charged multiple suspects connected to approximately $60 million in fraudulent billings tied to phantom hospice clinics.
Minnesota became another national flashpoint after estimates suggested taxpayers may have lost roughly $9 billion to fraud since 2018.
Investigators have also uncovered cases where providers expelled from Medicaid programs in one state simply moved operations elsewhere because exclusion records were not properly shared or enforced.
One Minneapolis-area adult daycare facility reportedly lost its license after dozens of violations, including staff members failing to interact with patients. Yet failures in federal and state coordination can allow operators connected to those facilities to continue billing programs elsewhere.
An Inspector General report found roughly 12% of providers terminated for cause in one state later appeared participating in Medicaid programs in another state within months.
That is the environment Dr. Oz says must change immediately.
States now have 30 days to submit plans detailing how they intend to strengthen provider oversight and comply with federal review requirements.
The administration argues the potential savings could be enormous. Earlier Medicare revalidation efforts in the 2010s reportedly led to over 500,000 provider deactivations and 34,000 revocations, ultimately saving taxpayers an estimated $2.4 billion.
If even a small percentage of improper Medicaid payments were prevented through stronger oversight, officials say taxpayers could save billions annually.
Still, critics argue the current five-year review cycle itself may already be too weak. Fraudsters can operate for years before detection, collect enormous sums, shut down operations, and simply reopen under different provider names elsewhere.
That concern is fueling calls for more aggressive reforms, including shorter review windows and stronger interstate coordination systems to prevent banned providers from resurfacing under new identities.
For now, the Trump administration’s message to states is blunt: the era of loose oversight and rubber-stamp approvals is supposed to end.
