The Federal Government Is Treating Healthcare Fraud With Enforcement Actions

Healthcare fraud drains billions of dollars from federal programs every year — funds that should go to patients instead.

The Trump administration and Congress are moving to address it. According to Foley & Lardner, a federal law firm tracking these developments, the push includes a new interagency Task Force to coordinate fraud enforcement across federal programs, increased criminal prosecutions, and a six-month nationwide moratorium on Medicare enrollment for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies — known as DMEPOS — suppliers.

The Centers for Medicare & Medicaid Services cited longstanding fraud, waste, and abuse in the DMEPOS sector as the reason for the moratorium.

Minnesota Got Hit First — And Sued Over It

The most concrete action so far targeted Minnesota.

CMS temporarily deferred approximately $259.5 million in federal Medicaid matching funds to the state due to allegations that Minnesota failed to take adequate steps to ensure program integrity.

CMS warned that if Minnesota doesn't fix the identified vulnerabilities, it could withhold more than $1 billion in federal funds over the next year.

The alleged fraud vulnerabilities involved Medicaid providers of rehabilitative and supportive services — adult day services, assertive community treatment, nonemergency medical transportation, peer recovery support services, and recuperative care. These are high-volume services where fraud often occurs.

Minnesota sued CMS over the fund deferral. A federal district court denied the lawsuit on April 6 for procedural reasons, according to Foley & Lardner. Minnesota's legal challenge failed at the first gate.

CMS also directed the Minnesota Department of Human Services to freeze enrollment of 13 categories of providers, cutting off new provider enrollment in affected categories.

Understanding Healthcare Fraud

A 2020 study published in the Journal of the American Pharmacists Association by researchers at Auburn University's Harrison School of Pharmacy defined fraud plainly: knowingly submitting false claims or misrepresenting facts to obtain a federal healthcare payment you're not entitled to.

Every fraudulent dollar is a dollar not spent on an actual patient who needs care. It raises costs for everyone — insurers, providers, and patients.

The Existing Infrastructure Was Already There

CMS operates the Healthcare Fraud Prevention Partnership, known as the HFPP, which brings together public and private payers to share data and identify fraud patterns. The program produces biennial reports to Congress, runs regional events, and conducts cross-payer research studies.

The HFPP has been around for years. The tools exist. What's changed is the political will to actually use them and to hold states accountable when they don't.

Coverage of Healthcare Fraud Enforcement

Most mainstream coverage of healthcare fraud enforcement either ignores it entirely or frames enforcement actions as attacks on vulnerable people.

Cutting off fraudulent Medicaid billing protects the program's money so it goes to actual patients instead of fraudsters. Fraud directly reduces the dollars available for legitimate care.

Fox News coverage focused on transparency rules as the fix. Transparency matters, but without enforcement it remains a statement. The real mechanisms are withheld funds, provider enrollment freezes, criminal referrals, and a task force with actual authority.

What Needs to Happen Next

The moratorium on DMEPOS suppliers is a start, but it's temporary. Congress needs to make the enforcement mechanisms permanent and expand them.

The interagency task force is promising, but task forces without prosecutorial follow-through become bureaucratic theater. Criminal prosecution is what deters fraud — fraudsters fear federal prison far more than audits.

Minnesota won't be the last state in the crosshairs. Any state receiving federal Medicaid funds that fails to maintain program integrity should face similar treatment.

Looking Ahead

The enforcement push is overdue. The question is whether the task force has the follow-through to make it stick — or whether this becomes another Washington announcement that quietly disappears in six months.