Federalism in a nutshell. Healthcare, too.

Original X post featured in the link.

https://www.realclearpolitics.com/video/2026/04/04/trump_not_possible_for_federal_government_to_take_care_of_day_care_or_medicare_were_fighting_wars.html

Trump: "Not Possible" For Federal Government To Pay For Day Care or Medicare, "We're Fighting Wars"

Ian Schwartz    |    April 4, 2026

President Trump said it's "not possible" for the federal government to fund Medicare, Medicaid and child care, as it needs to focus on military spending.

"The United States can't take care of daycare," Trump said this week. "That has to be up to a state. We can't take care of daycare. We're a big country. We have 50 states. We have all these other people. We're fighting wars. We can't take care of daycare. You got to let a state take care of daycare, and they should pay for it, too. They should pay. They have to raise their taxes, but they should pay for it. And we could lower our taxes a little bit to make up for it."


"It's not possible for us to take care of day care, Medicaid, Medicare, all these individual things," he said. "They can do it on a state basis. You can't do it on a federal. We have to take care of one thing, military protection. We have to guard the country."

https://www.beckersbehavioralhealth.com/behavioral-health-government-policies/5-state-behavioral-health-policy-updates/

5 state behavioral health policy updates

Ella Ruder    |    March 11th, 2026

States are advancing several behavioral health policy changes, from syringe service program restrictions in Indiana to Medicaid reimbursement debates in Maryland and workforce reforms in Oregon.

Here are five updates to know:

1. Indiana legislation allowing counties to continue syringe service programs — while adding restrictions — could soon become law. Although Gov. Mike Braun said he does not plan to sign the bill, he does not plan to veto it, so it is set to become law after seven days.

The legislation would extend six countries’ programs for five years. The programs provide sterile syringes, safe needle disposal, overdose prevention drugs, disease testing, and referrals to healthcare and social services.

Participants would be required to show identification proving they live in a county hosting the program and sites cannot operate within 1,000 feet of schools, child care centers or houses of worship without written consent.

Programs would also be required to exchange one sterile syringe for each used needle returned as well as track referrals to drug treatment, prohibit disruption of certain chemicals and allow the department to shut down sites that violate the rules after receiving complaints.

2. In Maryland, behavioral health providers and advocates have urged lawmakers to increase reimbursement rates for behavioral health services provided through Medicaid and the state’s Public Behavioral Health System.

Several behavioral health providers and activists asked the House Appropriations Subcommittee on Health and Social Services for a 3% provider rate adjustment, saying current reimbursement levels are insufficient to retain staff and maintain services for patients facing mental health challenges, substance use disorders and housing instability.

The funding request comes as lawmakers face a $1.6 billion budget deficit. Gov. Wes Moore’s proposed fiscal 2027 budget would cut $155.8 million from the Maryland Department of Health’s Behavioral Health Administration, a 3.8% reduction, allocating $3.9 billion for behavioral health services.

3. Oregon Gov. Tina Kotek signed a law March 5 requiring the creation of a centralized credentialing platform for behavioral health providers.

The step is intended to reduce wait times for clinicians ready to deliver care. It also seeks to reduce administrative requirements tied to provider burnout and expand access to master’s degree-level clinical supervision by allowing qualified licensed professionals to supervise across license types.

4. Texas Attorney General Ken Paxton on March 2 issued a legal opinion stating that a state law banning gender-affirming medical care for minors applies to mental health providers licensed by the Texas Behavioral Health Executive Council.

It states the council’s licensees qualify as healthcare providers under the legislation and are governed by state law barring funds from going to those who facilitate the prohibited “transition” procedures.

It also clarifies that the statute applies not only to individuals or entities who “provide” medical interventions, but also to those who “facilitate” such interventions.

5. North Carolina Gov. Josh Stein on Feb. 5 signed an executive order directing several state agencies to strengthen coordination between the state’s behavioral health and criminal justice systems.

Priority areas include supporting the behavioral health and public safety workforce, and strengthening the behavioral health crisis system.

The order focuses on improving the involuntary commitment process, expanding treatment for incarcerated people, supporting young people in the juvenile justice system with behavioral health needs, improving reentry support for people with mental health needs and strengthening cross-system coordination.

https://www.medpagetoday.com/special-reports/features/120173

A weekly roundup of healthcare's encounters with the courts

Kristina Fiore    |    March 5, 2026

More than two dozen couples have accused California fertility doctor Brian Acacio, MD, of holding their embryos hostage. (CBS News Los Angeles)

Surgeon Thomas Steffens, DO, who was accused of drugging and sexually assaulting a woman, was wounded during a shootout with law enforcement in Florida when they tried to arrest him. (9 News)

Former state senator and emergency physician David Hartsuch, MD, is once again suing two state licensing boards over an investigation into his practices during the acute COVID pandemic. (Iowa Capital Dispatch)

An Italian ambulance driver is being investigated on suspicion of murdering five patients who may have been given harmful substances while riding in the vehicle. (The Guardian)

A surgeon and a hospital director in South Korea were convicted of murdering a baby and sentenced to 4 and 6 years in prison. The mother, who was also convicted of murder, reportedly wanted to terminate the pregnancy at 36 weeks, but prosecutors said the baby was born alive and later killed. (BBC)

Cardiologist Christopher David Adams, MD, who reportedly was fired after faking a cancer diagnosis and misrepresenting his medical training, has surrendered his licenses in Tennessee and Kentucky. (Courier Journal)

A Wisconsin nurse was sentenced to 18 months in prison after admitting to having sex with a patient and then falsely accusing that patient of sexual assault. (People)

The New York attorney general is investigating how Columbia University handled allegations against gynecologist Robert Hadden, MD, who was ultimately sentenced to 20 years in prison for sexual abuse. (New York Times)

An Atlanta gastroenterology practice will pay $4.75 million to settle allegations that it took kickbacks for patient referrals and also provided unnecessary medical services, according to the U.S. Department of Justice.

Six Texas doctors will pay $5 million to settle allegations that they billed federal insurers for services that weren't needed or never provided, including pulmonary function tests, federal prosecutors said.

https://www.uppermichiganssource.com/2026/03/06/tv6-investigates-state-legislators-work-increase-michigans-medicaid-funded-personal-needs-allowance/

TV6 Investigates: state legislators work to increase Michigan’s Medicaid-funded Personal Needs Allowance
By Griffin Weinberg - March 6, 2026

UPPER MICHIGAN (WLUC) - An Upper Peninsula nursing home resident may be getting his wish after writing to state legislators trying to increase Michigan’s Personal Needs Allowance.

People who live in nursing homes and are covered by Medicaid receive a set monthly allowance to use however they’d like.

All 50 states and the District of Columbia decide how much money is in their respective Medicaid-funded PNA. However, federal law requires the minimum PNA to be set at $30/month. The maximum allowance is $200/month. In Michigan, the PNA is $60/month.

Mel Joslin, a Medicaid-covered resident at the Marquette County Medical Care Facility in Ishpeming, is leading the effort to see that number get doubled.

“That’s only fair to ask for that because everybody else gets raises and, I mean, we just get left out in the cold,” Joslin said.

People on Medicaid are responsible for their patient liability, or ‘share of cost.’ That means most people on Medicaid use most, if not all, of their monthly income to cover the cost of their care.

What’s left for Joslin to spend however he’d like comes from Medicaid’s PNA.

“I run out quick. I run out (in) about a tenth of the month,” Joslin said.

Joslin uses part of his allowance to pay for soaps and lotions to treat his skin. He says it’s hard to ration $60 over 30 days.

“(I have) credit card bills. Even to get a haircut costs money,” Joslin said. “A lot of these people, they just can’t function on $60 and they’re just barely getting by.”

According to the American Council on Aging, Alaska’s PNA is at the maximum of $200. Alabama’s is the minimum $30. The average PNA in the United States is about $76, making Michigan’s PNA below the national average.

According to the Michigan Long Term Care Ombudsman Program, the state’s PNA hasn’t been changed in more than 30 years.

To find out why, we reached out to the Michigan Department of Health and Human Services (DHHS), the state’s primary payer for long-term care.

In a statement, the DHHS said:

“As the state’s primary payer for long‑term care, ensuring that nursing facility residents can maintain a basic level of independence and quality of life is a priority for the Michigan Department of Health and Human Services.

Federal law requires that a Medicaid-funded nursing home resident receive a Personal Needs Allowance (PNA) and the federally mandated PNA is set at $30 a month. States can allow for a higher PNA and Michigan’s PNA is set at $60 per month, allowing residents to keep $60 from their income for personal needs. That amount is deducted from the patient pay liability, which means Medicaid covers a larger share of the cost of care than it would if the PNA were lower or did not exist.

Increasing the PNA in Michigan would require additional Medicaid funding, as any increase reduces the amount residents contribute toward their cost of care and shifts those costs to the program. If funding were appropriated by the Legislature to support such a change, it would then require CMS approval through a State Plan Amendment."

As president of the Marquette County Medical Care Facility’s resident council, Joslin says he commits himself to improving the quality of life for his fellow residents.

“If the room is too cold, or something like that, I get to the bottom of it. If they have any other complaint, I try and solve it,” Joslin said.

Joslin also collected feedback from residents about the current PNA. Then, Joslin sent that feedback to Rep. Karl Bohnak (R-109th State House District).

“What we’re asking for is $125 (per month) and a cost-of-living allowance that grows and coincides with Social Security every year,” Joslin said.

Bohnak said he received those letters. Now, Bohnak says he’s working with Rep. Greg Markannen (R-110th State House District) and Rep. Dave Prestin (R-108th State House District) on drawing up legislation.

“We’re in the process of getting a legislative fix for this because it’s high time that this changed,” Bohnak said. “Not as much as Alaska, but certainly a heck of a lot more than some of the other states. Even California only has $35 a month for Personal Needs Allowance.”

Bohnak says he wants to double Michigan’s PNA to $120.

“We wanna try to get it in the middle there, and I think that would work out, (and) hopefully help these residents because they certainly are overdue for a raise,” Bohnak said.

Any set of bills drafted up by Bohnak, Markkanen and Prestin will have to pass through the appropriate committee before making it to the House of Representatives and into law.

https://nypost.com/2026/03/03/us-news/hhs-finds-up-to-600m-improper-payments-for-autism-services-in-four-states/

https://oig.hhs.gov/reports/work-plan/browse-work-plan-projects/srs-a-25-029/

HHS finds up to $600m ‘improper’ payments for autism services, errors on every bill checked in four states
By Chadwick Moore - March 3, 2026

It’s not just Minnesota where people have bilked Medicaid for millions.

Federal auditors found $198 million “improper payments” for Medicaid-funded autism services in four states, and another $410 million may have been incorrectly billed.

The Department of Health and Human Services (HHS) put Medicaid spending for autism care in Indiana, Wisconsin, Maine and Colorado under the microscope, examining 100 monthly bills in each state over a year.

They found potential payment errors in every single one.

According to the audits, Indiana made at least $56 million in improper payouts, Wisconsin $18.5 million, Maine $45.6 million and Colorado a whopping $77.8 million.

Between 2019 and 2025, Medicaid spending on Applied Behavior Analysis (ABA) therapy—the primary treatment protocol for children with autism—has skyrocketed 298% nationwide, according to a report from healthcare analytics company Trilliant Health.
Tatsiana – stock.adobe.com

In 2014, new federal rules required Medicaid to cover autism care. Since then, Autism spectrum disorder (ASD) prevalence in the United States has nearly doubled, from about one in 64 children in 2014 to one in 36 in 2020, with much of the rise attributed to changing diagnostic criteria, increased screening, and greater public awareness.

Payments should not have been made due to reasons like caregivers failed to properly document therapy sessions, lacked the appropriate credentials to provide treatment or patients had not been properly diagnosed with autism.

In addition, in each case the audits flagged separate “potentially improper payments” in each state, which was a much higher number: up to $77 million in Indiana, $22 million in Maine, $94 million in Wisconsin and $207 million in Colorado.

These payments were flagged as carers billing for potential non-therapy time and during recreational activities and not keeping proper notes of the care.

“There’s a big myth that needs to be busted, is the idea that states and the federal government equally share the goal of reducing improper spending,” Chris Medrano, an analyst at the free-market health care research group Paragon Health, told The Post.

He also claimed “a lot” of states use “funding gimmicks” to redirect boatloads of Medicaid money into their general funds, suggesting they may be incentivized to keep the gravy train flowing and turn a blind eye to overbilling.

Although no companies have been prosecuted for fraud related to the HHS audits at this time, the federal government has requested the return of millions of dollars in improper payments from each of the states.

More children are being diagnosed with autism in the US, largely due to increased screening, greater public awareness and a widening of the definition on what counts as autism. Key revisions in 2013 merged previously separate diagnoses into a single Autism Spectrum Disorder (ASD) umbrella.

Feds found “improper or potentially improper” payments in 100 percent of Medicaid-funded autism services sampled across four states in recently published findings—totaling up to $198 million in potentially fraudulent payouts.

Diagnosis rates have gone from 1 in 150 children in 2000 to 1 in 31 children in 2022, according to the CDC.

Some autism researchers, however, have criticized the supposed “epidemic” in autism by suggesting that the new broad criteria has contributed to overdiagnosis.

In 2014, new federal rules required Medicaid to cover autism care. Since then, Medicaid spending on Applied Behavior Analysis (ABA) therapy — the primary treatment protocol for children with autism — has skyrocketed 298% nationwide from seven million hours of therapy administered to 25 million a year in 2024, according to a report from healthcare analytics company Trilliant Health.

Centria Healthcare was the largest Medicaid funded autism care center in the nation, with operations in 12 states as rates of autism diagnoses have exploded since 2014.

As our graph charts, In Indiana, ABA spending rose from $21 million in 2017 to $611 million in 2023 and is projected to reach $825 million by 2029.

North Carolina ABA spending grew from $122 million in 2022 to $329 million by 2024. It is projected to reach an eye-popping $639 million this year.

ABA spending in Nebraska surged from $4.6 million in 2020 to over $83 million in 2024. One provider, Above and Beyond ABA, billed for $29 million alone, according to a state report (it is not suggested they were part of the overbilling).

Colorado ABA payments were $60 million in 2019 and, and $164 million by 2023.

Brown University researcher Daniel Arnold told The Post: “The increases you’re seeing in some states are astronomical When private equity comes in usually the price increases, the intensity of services increase as well. In the ABA space this would mean more hours at a higher price.”

However, none has been more eyepopping than Minnesota which received just over $1 million in Medicaid reimbursements for autism care in 2017, but by 2024 that number had skyrocketed to $343 million, according to the Minnesota Department of Human Resources.

As part of numerous federal prosecutions centered around the Somali community in Minneapolis, in September Asha Farhan Hassan and Abdinajib Hassan Yussuf both pleaded guilty to an autism fraud scheme in Minnesota. Hassan owned Smart Therapy Center and was found to have hired unqualified staff, paid kickbacks of $300–$1,500 per month to parents to recruit children — some not diagnosed with autism — billed for services not provided or inflated hours, and submitted false documentation between 2019 and 2024, according to the Department of Justice.

With all the money sloshing around, private equity has taken note of the seemingly recession-proof profitability potential of Medicaid-funded autism centers.

President Trump announced during last week’s State of the Union address that VP Vance would be heading up the administration’s “war on fraud.”

Quality Learning Center in Minnesota became an emblem of the Minnesota fraud, after allegations it was collecting funds but providing no services. It has since been closed.

In the last decade, private equity firms have acquired over 500 autism centers in the US, according to a January 2026 Brown University study.

Among them, Michigan-based Centria Healthcare LLC, a business which has distributed over half a billion in Medicaid reimbursements. It was acquired by private equity firm Thomas H. Lee Partners in 2019.

Indiana-based Hopebridge LLC, backed by PE firm Arsenal Capital Partners, has also taken in at least $140 million, according to the data.

“The increases you’re seeing in some states are astronomical,” Daniel Arnold, a health policy researcher at Brown University, told The Post.

“When private equity comes in, usually the price increases, the intensity of services increase as well. In the ABA space this would mean more hours at a higher price.”

Medicaid fraud has been a hot topic since it was revealed last fall that Somali scammers in Minnesota had bilked the state out of an estimated $9 billion in similar schemes.

“It’s not obvious to me that, say, 40 hours a week of ABA is better than 20. It gets to a point where you are crowding out other services kids are doing —like speech therapy, occupational therapy or play activities,” he added.

For those who are proven to have inflated bills, there are consequences.

Two executives at South Carolina Early Autism Project, Angela Breitweiser Keith and Ann Davis Eldridge, were sentenced to a year in prison in 2019 and paid $8.8 million in a settlement for using autism services to defraud Medicaid.

The Department of Justice said the execs had instructed employees to bill for time waiting in driveways and sitting in restaurants; pressured employees to submit exaggerated session timesheets; forged patient signatures and incentivized fraud by establishing high billing goals with rewards like gift cards and company-paid vacations for those who met quotas.

During last week’s State of the Union address, President Trump announced he was appointing Vice President JD Vance to lead a “war on fraud” task force.

“The gold standard solution would be to have some sort of set funding because right now Medicaid is an open-ended reimbursement,” said Medrano. “Have the state internalize the cost of Medicaid so they’re incentivized to save money.”

https://www.justice.gov/usao-edmi/pr/pharmacist-and-business-owner-convicted-3m-medicare-medicaid-and-private-insurer-fraud

Pharmacist and Business Owner Pleads Guilty to $3M Medicare, Medicaid, and Private Insurer Fraud Scheme
U.S. Attorney's Office, Eastern District of Michigan - February 24, 2026
For Immediate Release

DETROIT – A pharmacist and business owner who engaged in a five-year pharmacy shortage fraud scheme at two separate pharmacies pleaded guilty today, announced United States Attorney Jerome F. Gorgon, Jr.

Gorgon was joined in the announcement by Mario M. Pinto, Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) and Special Agent in Charge Jennifer Runyan, Federal Bureau of Investigation, Detroit Field Division.

Mohammad Hamdan, age 44, from Dearborn Heights, Michigan, pleaded guilty to the charge of conspiracy to commit health care fraud for a scheme that caused over $3 million in loss to Medicare, Medicaid, and Blue Cross Blue Shield of Michigan.

At the hearing, Hamdan admitted to utilizing his two pharmacies to submit false and fraudulent claims for prescriptions even though the prescribed drugs were medically unnecessary or not actually dispensed. In many instances, the pharmacies lacked the inventory to dispense these drugs but billed the health care insurers as thought they had been dispensed. Over the five-year scheme, Hamdan submitted or directed the submission of false and fraudulent claims totaling over $3.2 million.

Sentencing before United States District Judge Judith Levy will be set after a presentence report is prepared. Hamdan faces a possible maximum sentence of not more than 10 years’ imprisonment without the possibility of parole, a fine of not more than $250,000, and up to three years of supervised release following any term of imprisonment.

The case was investigated by the Department of Health and Human Services Office of the Inspector General (HHS-OIG) and the Federal Bureau of Investigation (FBI). The case is being prosecuted by Assistant United States Attorney Jason Dorval Norwood.

https://www.cms.gov/newsroom/press-releases/trump-administration-prioritizes-affordability-announcing-major-crackdown-health-care-fraud

• Personal care services;
• Home and community-based services; and
• Other practitioner services.

• Suspending $5.7 billion in suspected fraudulent Medicare payments by leveraging advanced analytics, cross-agency coordination, and law enforcement partnerships;
• Preventing $1.5 billion in suspected fraudulent DMEPOS billing;
• Denying 122,658 Medicare claims for unnecessary items and services because they failed to satisfy Medicare’s preliminary approval checks that confirm medical necessity and other coverage requirements;
• Revoking the ability of 5,586 providers and suppliers to bill the Medicare program due to inappropriate behavior;
• Sending 372 fraud referrals encompassing $3.7 billion in billing to law enforcement for potential legal action; and
• Initiating a CMS-State Tax Fraud partnership with 28 states and the US Virgin Islands to strengthen state-federal enforcement against healthcare providers and suppliers who commit healthcare and tax fraud.

My bet on Michigan's trouble spots: ABA Autism and Substance Use Disorder.

https://paragoninstitute.org/newsletter/pervasive-medicaid-fraud-hhs-crowdsourcing-a-new-policy-brief/

Pervasive Medicaid Fraud: HHS Crowdsourcing + A New Policy Brief

February 18, 2026

Medicaid waste, fraud, and abuse are back in the spotlight following the Department of Health and Human Services’ (HHS) bold decision to open source a massive amount of Medicaid data. The dataset covers roughly $1.1 trillion in Medicaid claims—slightly more than one-fifth of total Medicaid spending from 2018 through 2024.

Waste, fraud, and abuse are pervasive in Medicaid because the federal government reimburses a large share of every state’s spending—without limit. On average, the federal government pays about 70 percent of Medicaid expenditures. As a result, states—which administer Medicaid or contract the work to managed care organizations—have little incentive to ensure proper payments. Obamacare exacerbated these bad incentives. Washington finances nearly the full cost of Medicaid expansion enrollees, creating incentives for states to prioritize able-bodied adults over traditional enrollees such as children and people with disabilities and encouraging profligacy.

The Trump administration’s decision to release Medicaid data is a welcome and long overdue step toward more transparent and accountable government. Transparency is essential to exposing systemic waste and realigning incentives with accountability. Open sourcing Medicaid data will enable independent auditing and pattern detection, allow researchers to identify abnormal billing spikes, expose suspicious provider growth trends, and increase deterrence by raising the probability of detection. Enterprising and conscientious private citizens have already identified aberrant billing patterns. The volume of questionable claims suggests significant opportunities for investigation, deterrence, prosecutions, and recoveries.

Today’s newsletter builds on this transparency moment by highlighting new Paragon work on structural problems in Medicaid and particular vulnerabilities. First, I highlight a new policy brief that I coauthored with Chris Medrano, “Beyond Minnesota: Four Medicaid Services Vulnerable to Fraud and the Case for Stronger CMS Enforcement.” I also highlight an op-ed I coauthored with Chris Medrano on an emerging Medicaid money-laundering scam that the Centers for Medicare and Medicaid Services (CMS) should take steps to close. And I conclude with a new Paragon PIC analyzing the Congressional Budget Office’s (CBO) latest Medicaid projections—confirming that the One Big Beautiful Bill (OBBB) did not cut Medicaid and that federal Medicaid spending will steadily increase over the next decade.

Four Areas of Medicaid Particularly Vulnerable to Fraud
The rampant welfare fraud uncovered in Minnesota is not an anomaly. In our policy brief, Chris and I identify four service categories where structural vulnerabilities and weak oversight have consistently produced elevated fraud risk.

Home- and Community-Based Services (HCBS)

HCBS spending has grown explosively, and its decentralized delivery model and weak verification controls make it one of Medicaid’s most fraud-prone categories. Care is often delivered in people’s homes by loosely supervised aides, frequently relatives. Many states allow “self-direction,” meaning beneficiaries effectively control Medicaid dollars and hire family members as caregivers.

Medicaid HCBS spending reached $95 billion in 2019 and surged further during the pandemic. In some states, workforce growth itself raises red flags. In FY 2024, HCBS was the largest fee-for-service spending category, totaling approximately $130 billion. New York, for example, has roughly three times as many home health and personal care aides per capita as the national average.

Non-Emergency Medical Transportation

Medicaid reimburses routine transportation to medical appointments—a recipe for both unnecessary utilization and fraud. Fraud schemes have included billing for trips that never occurred and manipulating phone GPS data to falsify ride locations. Between 2015 and 2020, there were more than 200 criminal convictions, civil settlements, or judgments against transportation providers across 25 states.

Applied Behavioral Analysis (ABA) for Autism

Following CMS guidance in 2014 clarifying Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) coverage requirements, state Medicaid spending on ABA services exploded. In Indiana alone, Medicaid ABA spending reportedly increased from $21 million in 2017 to $611 million in 2023. Federal audits found at least $185 million in improper payments in Wisconsin and $56 million in Indiana. In Indiana’s audit sample, 95 of 100 enrollee months lacked required documentation. Rapid coverage expansion and diagnostic growth created ideal conditions for inflated or unsupported billing.

Substance Use Disorder (SUD) Services

Medicaid SUD coverage expanded substantially over the past decade through Section 1115 waivers. In Arizona, state officials acknowledged that fraud in sober living and treatment facilities may have cost taxpayers up to $2.5 billion.

CMS Must Consistently and Aggressively Use Its Enforcement Authorities
For decades, Medicaid oversight has relied primarily on guidance and corrective action plans rather than financial accountability. That approach has failed. Encouragingly, CMS is now signaling a shift by using its Section 1904 authority to preemptively withhold funds. Consistent use of its statutory authorities can materially change state incentives and improve program oversight.

Section 1904 of the Social Security Act allows CMS to withhold federal matching funds when a state fails to comply with basic stewardship obligations. This is a forward-looking compliance tool designed to compel systemic correction. CMS’s actions in Minnesota, including potential withholding of federal funds, represent a major shift away from tolerance toward accountability.

Not only should CMS continue to use Section 1904 authority, but it should also use complementary authority under Section 1903, which allows the agency to deny or recoup federal matching funds tied to improper expenditures. Disallowances correct past violations and ensure states do not retain misspent federal funds. Federal law already requires disallowances when improper payment rates exceed 3 percent. Historically, that mandate has not been enforced. CMS should use Payment Error Rate Measurement (PERM) findings as enforcement triggers, and CMS should bolster PERM by including managed care claims in its evaluation of proper Medicaid program spending.

Incentives drive behavior. The federal government has a responsibility to hold states accountable for how they manage the program and federal taxpayer dollars by embedding real financial consequences into Medicaid’s structure—restoring stewardship and protecting the program for those it is meant to serve.

Stop Another Major Medicaid Money-Laundering Scam Before It Spreads
In a new op-ed in The Federalist, Chris and I explain how states are exploiting intergovernmental transfers (IGTs) to inflate Medicaid payments and shift costs to federal taxpayers—often to the detriment of patient outcomes. In December, we coauthored a policy brief on IGTs.

Here is the IGT scheme: The state makes a large Medicaid payment to a government provider. Next, the state invoices the federal government, and Washington sends the state money according to the state’s reimbursement percentage. Then, the state requires the provider to transfer funds back to the state through an IGT. In sum, the state can use almost entirely federal funds to make those large payments to providers. The IGT is circular with the funds going from the state and then back to the government provider—but the federal matching funds are real.

The result is massive payment disparities for identical services. In California, public ambulance providers receive Medicaid payments three times higher than private providers for the same transport. In Indiana, IGT-driven arrangements led to the rapid conversion of nursing homes into “public” facilities, with inflated Medicaid payments tied to higher rates of nursing home deaths.

CMS has clear statutory authority to require Medicaid payments be consistent with efficiency, economy, and quality of care. CMS should enforce payment parity for identical services and prevent IGT schemes from becoming the next multibillion-dollar Medicaid loophole.

CBO’s New Baseline Confirms OBBB Did Not Cut Medicaid
In a new Paragon PIC, John R. Graham analyzes CBO’s latest forecast for federal Medicaid spending, which contains significant policy-related and technical changes. The updated baseline confirms that the OBBB did not cut Medicaid; rather, it slowed the program’s projected growth. Even so, CBO now projects that federal Medicaid spending will be higher a decade from now than it projected before President Biden took office. The PIC contrasts CBO’s projections of federal Medicaid spending from 2021 (pre-Biden), 2025 (pre-OBBB), and 2026.

Federal Medicaid Spending Will Remain Above Pre-Biden Projected Levels, Per CBO

CBO estimates that the OBBB’s reforms reduced projected Medicaid spending by roughly $1.1 trillion over the next decade. However, technical updates increased projected spending by approximately $500 billion, reflecting higher-than-expected behavioral health, home health, and prescription drug costs.

The data underscore two realities. First, Biden-era policies that ballooned enrollment and exacerbated an explosion of state-directed payments fueling Medicaid rates near average commercial rates turned Medicaid into a vehicle for money laundering, corporate welfare, and rampant waste, fraud, and abuse. Second, those policies so expanded Medicaid’s spending baseline that even after the crucial reforms in OBBB, CBO projects federal Medicaid spending will remain above the pre-Biden baseline level of spending—reinforcing the need for further reforms.

Brian Blase, Ph.D., is the President of Paragon Health Institute. Brian was Special Assistant to the President for Economic Policy at the White House’s National Economic Council (NEC) from 2017-2019, where he coordinated the development and execution of numerous health policies and advised the President, NEC director, and senior officials. After leaving the White House, Brian founded Blase Policy Strategies and served as its CEO.

https://www.oregonlive.com/health/2026/02/oregon-shelves-medicaid-reform-bill-despite-looming-federal-deadline-for-big-changes.html

Oregon shelves Medicaid reform bill despite looming federal deadline for big changes

By Kristine de Leon    |    Feb. 14, 2026

Oregon lawmakers have shelved a bill that would have rewritten how the state decides what Medicaid covers, following a wave of opposition led by the architect of the system it sought to change.

House Bill 4003 grew out of a federal mandate requiring Oregon to phase out key features of one of its signature health policy experiments — and one of its most nationally recognized and controversial tools — the Medicaid “prioritized list” of services.

Rep. Rob Nosse, D-Portland, who introduced the bill, said the proposal was meant to align state law with new federal rules that prohibit Oregon from using the list’s “funding line” — essentially the cutoff point on its ranked treatment list as the legal basis for approving or denying care.

Under a 2022 agreement with the Centers for Medicare & Medicaid Services, Oregon must transition away from that structure and operate under standard Medicaid state plan rules by Jan. 1, 2027.

The effort to write that transition into state law, however, quietly died in committee Thursday during the short 35-day legislative session.

The deadline did not. That means the Oregon Health Plan — the state’s Medicaid program — must still change how it makes coverage decisions over the next two years, Nosse said.

For the 1.4 million Oregonians who rely on the Oregon Health Plan, the rules around what’s covered — and how those decisions are made — are still set to shift.

What is the ‘prioritized list’?
For more than three decades, Oregon has used something no other state does: a ranked list to help decide what Medicaid covers.

Under this system, medical conditions are paired with treatments and ranked based on scientific evidence and public input. A state panel called the Health Evidence Review Commission reviews medical evidence and develops the rankings.

That panel then draws what’s known as a “funding line.” If a treatment falls above that line, Medicaid generally covers it. If it falls below, it usually doesn’t — unless an exception applies.

That structure has shaped the Oregon Health Plan since the 1990s, when the list was created under former Gov. John Kitzhaber. Although the funding line hasn’t moved since 2012, it has long defined the framework for what the Oregon Health Plan covers.

The list includes both federally required services — such as hospital and physician care — and optional benefits that states are not obligated to cover. Oregon covers many optional services, including adult dental care services, prescription drugs, optometry services and physical therapy, because they rank above the funding line.

Now federal regulators say Oregon cannot continue using that line as the legal basis for denying care.

In written exchanges this winter, officials with the Centers for Medicare and Medicaid Services told the Oregon Health Authority that the state cannot continue to make coverage decisions “based on the ranked position of a treatment-condition pair relative to the funding line.”

Instead, federal officials said coverage decisions must be grounded in what is written in Oregon’s Medicaid state plan and whether a service meets the state’s definition of medical necessity.

Oregon Health Authority Director Dr. Sejal Hathi told lawmakers in a letter Wednesday that the state “must transition away from ranking services on a single list and using a funding line for denial purposes”.

That directive set the stage for HB 4003.

Why the bill failed
Kitzhaber, a former emergency physician who helped design the Oregon Health Plan as an effort to expand coverage while making difficult benefit decisions transparent and evidence-based, argued the bill went too far and moved too fast.

“I don’t think this legislation is necessary,” he told lawmakers during a House Committee on Health Care hearing last week. “I think it is a solution looking for a problem.”

Kitzhaber said Oregon already agreed in 2022 to move the prioritized list into its regular Medicaid state plan. Any changes needed to comply with federal requirements, he argued, could be handled administratively through a state plan amendment — without rewriting state law.

“Nowhere in any written communication I’ve seen between CMS and the agency does it state that we have to change our statutes,” he said.

He also criticized the timeline. The original Oregon Health Plan framework was debated publicly for more than a year before passage in 1989, with town halls and statewide surveys. HB 4003, by contrast, was set for consideration during a compressed 35-day session, with amendments still being drafted days before the hearing.

“A policy change of this magnitude deserves far more public attention and public scrutiny,” he said.

He warned that removing the funding-line framework from statute could create “major disruption in the system and confusion about what is and is not covered.”

The opposition gained traction. Lawmakers chose not to advance the bill.

What it means for patients
For Oregon Health Plan members, benefits do not change today.

But over the next two years, the way coverage is defined and defended will shift.

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Going forward, Nosse said, Oregon will have to spell out benefits clearly in its Medicaid plan, including any limits on amount, duration and scope. Denials would have to be based on medical necessity and follow federal appeal rules.

For consumers, that could mean clearer written definitions of covered services and more standardized appeals.

It also means the state will have to make explicit choices about optional benefits instead of relying on a decades-old ranking structure.

https://www.justice.gov/usao-edmi/pr/oakland-county-sleep-specialists-agree-pay-76395474-settle-false-claims-act

OAKLAND COUNTY SLEEP SPECIALISTS AGREE TO PAY $763,954.74 TO SETTLE FALSE CLAIMS ACT ALLEGATIONS
Friday, February 6, 2026
For Immediate Release
U.S. Attorney's Office, Eastern District of Michigan

DETROIT - United States Attorney Jerome F. Gorgon Jr. announced today that Troy Sleep Center PLC, Care One Medical Equipment and Supplies, Inc., Michel Alkhalil, M.D., and Peggy Rahal, M.D., have agreed to pay a total of $763,954.74 to the United States and the State of Michigan to resolve allegations that they violated the False Claims Act.

Troy Sleep Center PLC (“TSC”) provides medical services for persons experiencing sleep disorders, including persons enrolled in healthcare programs funded by federal and state governments. Care One Medical Equipment and Supplies, Inc. (“Care One”) provides medical supplies for individuals experiencing sleep disorders, including individuals enrolled in healthcare programs funded by federal and state governments. Dr. Alkhalil and Dr. Rahal are co-owners/members of TSC, while Dr. Rahal owns Care One.

The settlement announced today resolves three sets of allegations. First, from January 1, 2018, through December 31, 2024, TSC, Dr. Alkhalil, and Dr. Rahal improperly billed federal healthcare programs for sleep studies administered without properly trained and certified sleep technicians, as required by federal regulations. Second, TSC, Dr. Alkhalil, and Dr. Rahal obtained $480,000 in Paycheck Protection Program loans while engaged in the alleged improper billing. Third, from January 1, 2018, through May 31, 2024, Care One improperly billed Medicaid for accessories to positive airway pressure (“PAP”) machines, which Medicaid does not permit to be charged separately from the rental rate of PAP machines.

“Billing federal health care programs for services that do not meet required standards compromises patient care and erodes public trust,” said Mario M. Pinto, Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Together with our law enforcement partners, we remain steadfast in our commitment to identify and stop fraud that threatens patient well-being and misuses taxpayer dollars.”

The civil settlement includes the resolution of claims brought under a qui tam or whistleblower lawsuit under the False Claims Act: United States ex rel. Kreiner v. Troy Sleep Center PLC, case no. 24-11073, (E.D. Mich.). Under the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of any recovery.

The resolution obtained in this matter was the result of a coordinated effort among the United States Attorney’s Office for the Eastern District of Michigan, the Michigan Attorney General’s Health Care Fraud Division, and the U.S. Department of Health and Human Services - Office of the Inspector General. The matter was handled by Assistant United States Attorneys John Postulka and Gregory Dickinson from the U.S. Attorney’s Office for the Eastern District of Michigan.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the U.S. Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only; there has been no determination of liability.

The U.S. Senate only confirmed Detroit native Jerome Gorgon as U.S. Attorney for the Eastern District of Michigan in December.  This case languished, waiting on the Senate so the defendants could not pull a Letitia James and get the prosecutor removed.