The Debt Dispatch just hosted a Capitol Hill event on Medicaid financing with Michael F. Cannon (Cato Institute), Chris Pope (Manhattan Institute), and Brian Blase (Paragon Health Institute).  It is clear that a Herculean effort will be required, not just physical strength but also ingenuity, perseverance, and the transformative power of overcoming challenges.  There will be no rivers of cash to divert to Medicaid:

https://debtdispatch.substack.com/p/fixing-medicaids-financing-structure

• placed a moratorium on new provider tax schemes and reined in existing ones by gradually lowering the “safe harbor” threshold in expansion states;
• limited state-directed payments by tying them to Medicare’s reimbursement rates rather than the far higher rates states had been allowing;
• established work and community engagement requirements, generally 80 hours per month of employment, education, or service, for able-bodied adults in the expansion population;
• required states to redetermine eligibility for expansion enrollees every six months rather than annually; and
• directed the Centers for Medicare and Medicaid Services to build a system that cross-checks enrollment across states to catch people signed up for benefits more than once.

Some providers used misleading or potentially fraudulent billing codes to get insurers to cover the interventions, according to HHS. The department identified nearly $ 50 million in claims for puberty blockers given to children aged nine to 17 under a general hormone-disorder code without a gender-related or early-puberty diagnosis on the same claim.

Hospitals and clinics identified in the report have been referred to the Department of Justice and investigators from the Department of Health and Human Services (HHS) for potential violations of federal law. According to HHS, the observed billing patterns require additional investigation.

Another $ 11 million was billed for puberty blockers for hundreds of patients aged 13 to 17 under a diagnosis for unusually early puberty. HHS said that this diagnosis does not apply at those ages.

The report said the procedures offered hospitals a long-term source of revenue, as minors who begin hormone drugs can remain in medical care for years. Citing outside estimates, it put lifetime costs at up to $ 75,000 without surgery and as much as $ 170,000 when operations are included.

Here is the HHS Executive Summary of this 64 page report:

https://www.hhs.gov/sites/default/files/hhs-wolves-white-coats-executive-summary.pdf

https://www.hhs.gov/sites/default/files/hhs-wolves-in-white-coats.pdf

EXECUTIVE SUMMARY

In the 2010s, financial incentives contributed to the rapid expansion of pediatric gender clinics and programs by creating long-term revenue opportunities for these medical establishments. Unlike most traditional pediatric services, which involve episodic or short‑term care, children receiving puberty blockers, cross-sex hormones, surgeries, and related services may require recurring endocrinology visits, laboratory monitoring, prescriptions, mental‑health services, surgical procedures, and follow‑up care extending into adulthood. This pediatric medical field effectively creates “captive patients.”

All‑payer claims and cost data indicate nearly $120 million in billed charges for sex‑rejecting procedures involving minors since 2019. These charges include more than 5,500 surgical procedures and 8,500 courses of hormones or puberty blockers. The analysis concludes that these continuing interventions have created financially valuable patient populations for hospitals and associated specialties.

• Cross-sex hormone therapy entails average yearly payer costs per patient ranging between $545 (androgens), $735 (estrogens), and $16,385 (for the more costly puberty-blocker GnRH). Surgical interventions, such as mastectomies, mammoplasties, and phalloplasties, can range from $12,000 to over $130,000.

Potentially Fraudulent Medical Coding

An analysis of the data suggests that some providers may have used diagnosis codes that did not accurately reflect patients' underlying conditions in order to obtain insurance coverage for sexrejecting procedures, particularly with ICD-10 code E34.9 (“endocrine disorder, unspecified”) and the ICD-10 codes for central “precocious puberty.”

• Between 2015 – 2025, public and private insurance was billed nearly $50 million for puberty blocking drugs in patients aged 9-17 with Endocrine Disorder diagnoses (excluding precocious puberty, the typical indication for puberty blockers).
• During this same timeframe, nearly $11 million was billed for puberty blockers, including to Medicaid and Medicare, for hundreds of patients between the age of 13 and 17 with a diagnostic code for precious puberty. By definition, anyone 13 or older cannot have a diagnosis of precocious puberty and should not be given puberty blockers at that age for this indication

Federal Policy and Institutional Pressure

The Biden Administration, particularly HHS, under the leadership of Secretary Becerra and Admiral Levine, contributed to the expansion and normalization of sex-rejecting interventions through nondiscrimination policies, insurance requirements, agency guidance, litigation positions, federal employee benefits, and other federal programs.

Influence of Professional Medical Organizations

Organizations like World Professional Association for Transgender Health, the Endocrine Society, the American Psychological Association, and the American Academy of Pediatrics contributed to the promotion of pediatric sex-rejecting interventions, even while undercutting their own evidence base. This professional network created an institutional environment in which sex-rejecting medical interventions became increasingly accepted, while opposing clinical perspectives, uncertainties, and potential risks that caused irreversible damage received insufficient consideration.

Patient and Parent Experiences

Eight first-hand testimonies from patients and parents illustrate weakness in clinical safeguards and informed-consent processes. Common themes include distress related to a child’s sex and rapid medical interventions, insufficient examination of underlying psychological, developmental, social, or trauma-related factors, limited discussion of irreversible damage, pressure placed on parents to
approve “treatment,” adverse physical and psychological outcomes, and difficulty obtaining appropriate medical care after stopping treatment or detransitioning. These testimonies underscore the imbalance between the structured healthcare pathways available for initiating medical transition and the comparatively limited clinical infrastructure available to patients seeking to discontinue treatment, address complications, or detransition.

Conclusion

The expansion of pediatric sex-rejecting procedures resulted from an interaction among financial incentives, potentially illegal billing practices, ideological and professional influences, federal policy, and inadequate oversight. The medical establishment and the government failed innocent children. This report exposes how these calculated financial and political efforts left children irreversibly harmed and abandoned at the very moments when they needed real support.

New York and California have the largest numbers of ineligible enrollees.  Approximately 62% of people enrolled in California are not eligible.  A thirty-five page report, so here are the Executive Summary, Introduction, and Conclusion:

https://paragoninstitute.org/medicaid/medicaid-expansions-growing-improper-enrollment-crisis-nearly-half-of-expansion-enrollees-likely-do-not-meet-eligibility-requirements/

https://paragoninstitute.org/wp-content/uploads/securepdfs/2026/08/Growing-Improper-Enrollment-Crisis_RELEASE_V4.pdf

EXECUTIVE SUMMARY
What This Paper Covers

This paper examines improper enrollment in the Medicaid expansion under the Affordable Care Act (ACA) in 2024. It builds on Paragon Health Institute’s earlier research, “Ineligible Enrollment in the ACA’s Medicaid Expansion: Evidence, Costs, and Remedies,” which estimated that roughly one in three expansion enrollees—4.9 million people—did not qualify for the program in 2019. With states’ post-COVID eligibility redeterminations now complete, this paper provides the first comprehensive assessment of how improper expansion enrollment has evolved since the pandemic.

Using Census Bureau’s American Community Survey (ACS) data, administrative enrollment data from the Medicaid Budget and Expenditure System (MBES), and per-enrollee spending figures from the Medicaid and CHIP Payment and Access Commission (MACPAC), the paper compares actual enrollment in the expansion group at the state level against estimates of the number of eligible individuals plausibly enrolled. The difference between the two reflects improper enrollment. Improper enrollees include people receiving expansion coverage despite income above the eligibility limit; people failing to meet citizenship, immigration, or residency requirements; and people who are qualified for Medicaid through traditional pathways.

The paper also examines:

• the structural features of Medicaid expansion’s financing—including the 9:1 federal match rate and state financing schemes such as provider taxes—that weaken states’ incentives to ensure proper eligibility determinations;
• the fiscal costs of improper enrollment for the federal government and the states, including the cost-shifting produced when traditional enrollees are misclassified into the expansion group;
• how improper enrollment changed between 2019 and 2024 both nationally and state by state; and
• post-unwinding enrollment trends, which show that expansion enrollment remains far above pre-pandemic levels even as traditional Medicaid enrollment has largely returned to pre-pandemic levels.

• Rectifying the central structural flaw in Medicaid financing by reducing the 90 percent federal matching rate for expansion enrollees to the rate states receive for traditional enrollees, ensuring that improper enrollment imposes real costs on state budgets
• Strengthening income verification at enrollment by tightening “reasonable compatibility” thresholds for self-attestation and broadening real-time wage and income data checks
• Eliminating the federal requirement that states conduct passive (
• Extending the Payment Error Rate Measurement (PERM) program by requiring independent, annual eligibility audits in every state, enabling swifter penalties and corrective action

Without structural reform—including, above all, reforms to the financing arrangement that insulates states from the costs of their own eligibility failures—improper enrollment is likely to remain an embedded feature of Medicaid expansion rather than an isolated anomaly.

INTRODUCTION

The expansion of Medicaid under the ACA, broadly implemented in 2014, has become a central feature of the U.S. health system, covering about 10 percent of non-elderly adults.1 Yet the program is marred by high taxpayer costs, mediocre health outcomes,2 and pervasive deficiencies in program integrity.3 Enrollment in the expansion group has far exceeded initial projections, prompting concerns that large numbers of people who do not qualify for Medicaid may be receiving benefits under the ACA’s expansion.4 Enrollees can be ineligible for expansion coverage for a variety of reasons, including having income in excess of eligibility limits, failing to meet requirements related to citizenship/immigration status or state residency, or qualifying for Medicaid through traditional pathways. Whatever the reason, improper enrollment erodes public trust in government, diverts resources away from intended beneficiaries, and imposes unwanted costs on taxpayers.

There are strong reasons to believe that Medicaid expansion may be particularly vulnerable to this type of abuse. The structural design of the program encourages lax eligibility enforcement. One of the core flaws is that while the states are responsible for monitoring their Medicaid rolls and preventing improper enrollment, the fiscal costs of improper enrollment are paid almost entirely by the federal government, which covers at least 90 percent of the cost of expansion enrollees—far more than the approximately 60 percent average federal match states receive for traditional enrollees such as low-income children and people with disabilities.5 As a result, when ineligible individuals receive benefits through the expansion group, states bear almost none of the cost.6 Furthermore, high enrollment under Medicaid expansion—regardless of enrollees’ true eligibility—delivers political benefits to state policymakers. These misaligned incentives are compounded by financing arrangements—such as provider taxes and intergovernmental transfers—that allow states to capture additional federal matching dollars while further reducing their effective share of program costs. Under the ACA’s 90 percent federal reimbursement rate, the rate of return on these financing schemes is roughly six times higher for expansion enrollees than for the traditional Medicaid population. These two factors raise serious concerns that states may not adequately invest in program integrity measures.

The same incentive structure also creates fiscal motives for states to misclassify individuals eligible for Medicaid under traditional pathways into the expansion group. Because the federal match for expansion enrollees is roughly 30 percentage points higher than the average for traditional enrollees, states stand to save thousands of dollars per enrollee per year by placing them in the expansion group. Research suggests these reclassifications may be widespread, affecting millions of enrollees and substantially inflating federal Medicaid spending.7

Federal investigations into expansion states’ Medicaid records provide direct evidence of improper enrollment in the expansion group. In an audit of New York’s Medicaid program, investigators reviewed eligibility documentation for a random sample of Medicaid enrollees New York had classified as belonging to the expansion group and for whom New York had received federal funding. The review found that 28 percent of these enrollees were ineligible.8 Similar audits in California9 and Colorado10 found that 18 percent and 23 percent, respectively, of randomly sampled enrollees in the expansion group were ineligible. In some states, auditors identified large numbers of additional enrollees who, based on incomplete records, may not have met Medicaid eligibility requirements.11

Additional evidence of improper enrollment in the expansion group comes from statistical studies using publicly available data on income, family composition, and Medicaid enrollment. Using 2012–2017 Census Bureau data, one study showed that Medicaid take-up after the ACA’s implementation rose not just among eligible adults but also among those above the income threshold. The analysis suggested approximately 522,000 seemingly income-ineligible enrollees across nine expansion states.12 Because the study focused on a small subset of expansion states in the early years of the expansion, its results likely severely underestimate the current scale of improper enrollment nationally. A broader study using a similar methodology uncovered “egregious eligibility errors in many states,” including between 2.23 million and 3.25 million improper Medicaid expansion enrollees who had income above the eligibility threshold in 2017.13

Last year, the Paragon Health Institute published the most recent quantitative assessment of the scope of improper enrollment under Medicaid expansion. Combining actual enrollment in the expansion group with an estimate of the number of eligible people plausibly enrolled derived from Census Bureau data, I calculated that approximately one in three expansion enrollees—4.9 million people—likely did not qualify for the program in 2019, imposing an annual cost to the federal government of $23.8 billion in improper Medicaid spending.14 The report also used the estimated rate of improper enrollment in each state in 2019 to generate estimates of improper enrollment in 2024. The extrapolation yielded an estimated 6.6 million improper enrollees in 2024 and a federal cost of $36.9 billion.

Applying a similar methodology to more recent data, this paper estimates the magnitude of improper expansion enrollment in 2024. As enrollment in the expansion group has grown (from 14.7 million in 2019 to 20.2 million in 2024), my central estimate implies that improper enrollment has surged to nearly one in two expansion enrollees in 2024. Large increases in per-enrollee costs have further amplified the fiscal consequences, imposing additional Medicaid costs on the federal government of approximately $54.3 billion in 2024—more than double what the federal government spent on improper enrollees in 2019.15 Using a more expansive methodology that accounts for spillover effects of improper Medicaid enrollment on the ACA exchanges, I estimate that the net federal cost of improper expansion enrollment was approximately $32.9 billion in 2024.16 Moreover, the updated 2024 results presented in this paper substantially exceed the extrapolated 2024 estimates cited above from my prior analysis, indicating that program integrity has deteriorated since 2019.

<Snip>

CONCLUSION

The harm from improper enrollment extends beyond the federal budget. Improper expansion enrollees crowd out intended beneficiaries, including the traditional Medicaid population—children, pregnant women, the elderly, and people with disabilities—for whom the program was originally designed. Studies have documented that expansion exacerbated health system strain, resulting in longer waits for medical appointments, reduced health spending on low-income children, and worse access to emergency care.25 Restoring eligibility integrity to Medicaid expansion is not merely a matter of fiscal responsibility; it is a matter of fairness to the vulnerable populations that the program was built to serve.

<Snip>

https://www.michigan.gov/mdhhs/inside-mdhhs/newsroom/2026/08/05/wic-revised-income-guidelines

Michigan WIC Program increases income threshold, more families may now qualify
By Laina Stebbins - August 05, 2026

The income guidelines for the Michigan Women, Infants, and Children (WIC) Program were recently adjusted due to federal guidelines, and more Michigan families may now qualify for benefits. Under the updated WIC income eligibility guidelines, a family of four can now qualify with an annual income of up to $61,050, an increase of more than $1,500.

WIC, a U.S. Department of Agriculture (USDA) program administered by the Michigan Department of Health and Human Services (MDHHS), provides vital support to families by offering supplemental foods, nutrition education, breastfeeding support and referrals to health and social services. WIC serves low- and moderate-income pregnant, breastfeeding and postpartum women, infants and children under age 5.

“MDHHS is committed to helping residents put food on the table for their families,” said Amy Epkey, MDHHS acting director. “Individuals in need of assistance who were not eligible in the past are encouraged to check the updated WIC income eligibility guidelines to see if they now qualify.”

WIC has been demonstrated to lessen the number of fetal deaths, reduce infant mortality, decrease low birth weight deliveries, lower the prevalence of iron deficiency anemia and increase immunization rates.

Each month, approximately 187,000 Michigan residents benefit from WIC services, helping families access the resources they need to remain healthy and strong. In addition to improving health outcomes, WIC contributes to local economies by supporting Michigan retailers and farmers.

“For more than 50 years, WIC has helped families build healthier futures by providing nutritious foods, nutrition education and personalized support during pregnancy and early childhood,” said Christina Herring, Michigan WIC Program director. “With the recent income guideline adjustments, even more Michigan families may now be eligible for these important services. We encourage anyone who is pregnant, has young children or is caring for an infant to check their eligibility and discover how WIC can make a meaningful difference for their family.”

To learn more or start your application, visit Michigan.gov/WIC or download the free WIC Connect app.

USDA is an equal opportunity provider, employer, and lender.

https://www.michigan.gov/mdhhs/inside-mdhhs/newsroom/2026/07/23/medicaid-work

MDHHS alerts Healthy Michigan Plan beneficiaries of steps to prepare for federally required changes to Medicaid
By Lynn Sutfin - July 23, 2026

State working to ensure families keep their health care coverage

LANSING, Mich. - The Michigan Department of Health and Human Services (MDHHS) is preparing to implement federally required changes to Medicaid due to the passage of H.R. 1. Among the changes are new work requirements and more frequent eligibility checks for some individuals enrolled in the Healthy Michigan Plan (HMP).

“Health care coverage plays a critical role in helping people access preventative care, manage chronic conditions and stay healthy,” said Amy Epkey, MDHHS acting director. “Our priority is helping beneficiaries understand these new requirements so they can comply and we can keep as many eligible Michiganders covered as possible.”

Beginning in January 2027, certain HMP members between the ages of 19 and 64 may need to meet new work requirements or qualify for an exemption to maintain coverage. People who are not exempt will be able to meet the requirements through various approved activities including working, volunteering, going to school or participating in a work program. Most HMP beneficiaries will also transition from annual renewals to six-month renewals.

Individuals who qualify for an exemption will not be subject to the new work requirements. Exemptions include, but are not limited to, women who are pregnant or newly postpartum, American Indians and Alaska Natives, some individuals with complex health needs and certain caregivers.

“Even with these new federal bureaucratic hoops, no one should assume they will lose coverage,” said Meghan Groen, MDHHS Health Services chief deputy director and state Medicaid director. “Many who need to meet this new eligibility requirement may already be doing so through work, school or other approved activities. Many others may qualify for an exemption.”

MDHHS is reviewing newly released federal guidance and working to update systems, train staff and develop educational materials to prepare for these changes. As part of that effort, MDHHS has launched a community partner toolkit with resources organizations can use to share information with constituents and help beneficiaries prepare for these upcoming changes. MDHHS has also launched a public awareness campaign and plans to further expand outreach efforts as implementation of Medicaid changes approach.

Implementation of the new rules will happen over time and not everyone will be affected right away. HMP beneficiaries will receive information and notices as changes approach and additional details become available.

At this time, MDHHS encourages anyone with Medicaid coverage to:

• Make sure their information is current in their MI Bridges account.
• Watch for and read notices from MDHHS regarding their health care coverage.
• Respond promptly to any requests for information from MDHHS.
• Visit Michigan.gov/HMP for updates and additional information about work requirements.

https://www.reuters.com/world/us-health-secretary-kennedy-says-cms-is-pausing-medicaid-payments-california-2026-07-21/

Trump administration pauses $1 billion in Medicaid payments to California, Minnesota
By Ahmed Aboulenein - July 21, 2026

WASHINGTON, July 21 (Reuters) - The Trump administration is ​pausing over $1 billion in Medicaid payments to California ‌and Minnesota "because of suspected fraud and noncompliance," U.S. Health Secretary Robert F. Kennedy, Jr. said on Tuesday.

"If those ​states want that money they need to provide ​documentations that these payments are legitimate," Kennedy ⁠said at a news conference alongside CMS Administrator Dr. ​Mehmet Oz.

The pause is the latest in a ​series of payment suspensions mostly at Democratic-run states as Vice President JD Vance, Kennedy, and Oz spearhead a campaign ​the White House has called an "unrelenting" war on ​fraud.

Kennedy said the administration suspects that much of the questionable spending ‌in ⁠California involves in-home services, and 14 high risk areas that Minnesota's own legislative auditor identified as vulnerable to fraud.

Oz and Kennedy did not provide ​evidence of ​the alleged ⁠fraud.

Kennedy said he was also expanding exclusion authority both to the Centers ​for Medicare and Medicaid Services and ​the health ⁠department's Office of the Inspector General, allowing them to remove "bad actors" from federal healthcare programs and potentially ⁠ban ​them permanently from returning.

https://mihealthfreedom.org/community/medicaid/hhs-ig-moves-to-defund-nyss-lackadaisical-medicaid-anti-fraud-unit/#post-3111

Fair to say Michigan's leadership doesn't want to be next?

I'd say so.

https://www.michigancapitolconfidential.com/news/ag-nessel-charges-4-in-federal-healthcare-fraud-sweep

AG Nessel charges 4 in federal healthcare fraud sweep

Detroit outreach worker charged with improperly taking $234K in autism funds

Scott McClallen | July 8, 2026

Michigan Attorney General Dana Nessel announced criminal charges against four Michigan individuals in June as part of the U.S. Department of Justice’s National Health Care Fraud Takedown.

The campaign is a nationwide law enforcement action targeting healthcare fraud. In most cases, the defendants are accused of billing taxpayers for goods or services that were never provided.

“Our Health Care Fraud Division works every single day to protect the hard-earned money of Michiganders from Medicaid fraud,” Nessel announced June 23. “They do exceptional work delivering for our residents, and these four cases are no exception. We will continue to protect taxpayer dollars and this vital program.”

The four Michigan cases include:

Wayne White, 63, of Detroit, was charged with three felony counts of larceny by conversion – $20,000 or more, in the 36th District Court in Detroit. Each count carries up to 10 years in prison. Between August 2024 and April 2025, it is alleged White, while working as a part-time community outreach contractor for Detroit Wayne Integrated Health Network, improperly received more than $234,000 intended for autism services.

Claudia Payne, 47, of Mt. Pleasant, was charged with five felony counts of Medicaid Fraud — False Claim in the 54B District Court in East Lansing. Each count is punishable by up to four years in prison. The state alleges that Payne was paid by Medicaid to provide caretaking services for an elderly disabled man in Mt. Pleasant between October 2023 and November 2024. Despite receiving payment, Payne allegedly failed to provide these services and left the victim severely neglected.

Kurt Hammond, 56, of Ann Arbor, was charged with one count of Medicaid Fraud — False Claim in the 54B District Court in East Lansing. Hammond, a pharmacist at Central Pharmacy located in Lansing from 2020 to 2024, allegedly dispensed and billed for a significant number of female condoms that the pharmacy never acquired from any wholesaler.

John Kempainen, 43, of Oak Park, was charged with six counts of Medicaid Fraud — False Claim in the 54B District Court in East Lansing. Kempainen allegedly billed Medicaid for care he agreed to provide to a vulnerable adult who lived alone in a senior living complex in Oak Park. Kempainen reportedly failed to provide any care for her for at least four months between February 2026 and June 2026, when he was living out of state.

These cases are being handled by the Department of Attorney General’s Health Care Fraud Division. The cases against Hammond and Kempainen will be prosecuted by Assistant Attorney General Dennis Pheney Jr., while Division Chief David Tanay will prosecute the cases against Payne and White.

As part of the federal sweep, the U.S. Department of Justice’s Eastern District of Michigan has also charged seven individuals and extracted a $1.9 million fine from McLaren Health Care Corporation to resolve a False Claims Act lawsuit. Among neighboring states, Illinois saw the highest number of prosecutions, with 16 people charged by the state and two by federal prosecutors. In Indiana, eight people are facing state charges, while Wisconsin saw two people charged by the state and three by the federal government. Eight Ohioans have been charged by the state and one by the Justice Department.

One way to commit healthcare fraud is by abusing programs meant to help people who are on the autism spectrum. From October through January 2025, 10 prepaid inpatient health plans in Michigan cost more than $130 million, according to a March 1, 2025, report. Many of those services are legitimate, but some aren’t.

In June, the state charged a dentist with 43 felony counts of Medicaid fraud for allegedly billing the state for dental procedures she never performed.

The Health Care Fraud Division is the federally certified Medicaid Fraud Control Unit for Michigan, and it receives 75% of its funding from the U.S. Department of Health and Human Services under a grant award totaling $5.5 million for fiscal year 2026. The remaining 25%, totaling $1.8 million, comes from the state budget.

https://thehill.com/policy/healthcare/5949815-ny-medicaid-fraud-unit-funding/

Trump moves to freeze funding to New York’s Medicaid fraud unit
By Nathaniel Weixel - July 1, 2026

The Trump administration said it is freezing millions of dollars in federal funding for New York’s Medicaid Fraud Control Unit (MFCU), the state division that investigates and prosecutes healthcare provider fraud and patient abuse or neglect in Medicaid-funded facilities.

In a letter sent Tuesday to state officials, Department of Health and Human Services Inspector General T. March Bell said the state MFCU failed to secure enough indictments and was not doing enough to protect taxpayer funding.

“Enough is enough,” Bell wrote. “The New York MFCU has failed to comply with the terms and conditions of its MFCU grant award.”

The New York MFCU was the poorest performing unit “by a wide margin” among similar-sized units from 2023 to 2025, Bell wrote.

New York’s fraud control unit only secured eight or nine criminal indictments in fiscal 2025 and fiscal 2023, while other similar-sized units have secured hundreds, even though they oversee Medicaid programs that are half the size of New York’s, Bell wrote.

New York receives approximately $60 million per year from the federal government for fighting fraud and has a staff of more than 270 people. Bell said that funding would be suspended through at least Sept. 30.

The MFCU “must take immediate action to demonstrate that it is capable of effectively carrying out its statutory fraud fighting responsibilities” before the administration considers any additional funding, Bell wrote.

The move is the second suspension of a state Medicaid fraud unit this year, part of recent ramped-up efforts to attack alleged Medicaid fraud across the country. The administration announced a similar move against Hawaii earlier this month.

President Trump launched an anti-fraud task force in April and put Vice President Vance in charge. So far, its efforts have targeted primarily blue states.

New York Attorney General Letitia James (D) in a statement called the investigation a “political distraction.”

“During my time as Attorney General, my office has recovered more than $627 million for Medicaid and was recognized by this very administration for leading the nation in anti-fraud efforts,” James said. “We are considering all legal options to stop this outrageous action.”

According to Bell’s letter to James and New York MFCU Director Amy Held, the state is moving too slowly to clear cases.

“The Unit must reassess its approach and determine what needs to change or improve so that it can make progress on its cases,” Bell wrote.

According to Bell, a major factor in the state’s poor performance was a deliberate leadership choice to focus on “high-impact, complex fraud cases” rather than individual criminal fraud and patient abuse cases.

“This shift in focus has not resulted in the New York MFCU achieving significantly improved results for its civil cases,” Bell wrote.

Multiple departments, courts, and 4,000+ wronged Michigan recipients allegedly are involved in this fiasco.

https://www.michigancapitolconfidential.com/news/state-health-worker-sues-michigan-after-being-punished-for-refusing-to-bill-illegal-debts-to-seniors

State health worker sues Michigan after being punished for refusing to bill 'illegal' debts to seniors

Whistleblower says state retaliated against her for reporting internal problems

Scott McClallen   |   May 20, 2026

A 28-year veteran of the state health department has filed a lawsuit in the Wayne County Circuit Court claiming the state retaliated after she reported wrongful efforts to recoup reported overpayments from thousands of residents.

Minnie Cordell’s 75-page lawsuit targets the state of Michigan, the Michigan Department of Health and Human Services, and her supervisors Monica Shumaker, Elyse Williams and Jody Anderson.

The lawsuit claims that the state gave thousands of state residents benefits from 2019 to 2026 and is now trying to recoup that money by seizing tax returns, garnishing wages and fining them. The suit claims that the benefits were rightly awarded and that the state is now trying to recoup Food Assistance Program debt through the Michigan Combined Application Project, a practice Cordell says was prohibited by a 2020 administrative court ruling.

Cordell warned those in the highest levels of state government about the alleged wrongdoing, according to the lawsuit.

She alerted Gov. Gretchen Whitmer to the problem on Feb. 26, 2024, the suit claims; on March 8, 2024, she warned Attorney General Dana Nessel’s office; on Aug. 26, 2025, she complained to the Department of Licensing and Regulatory Affairs.

The lawsuit claims that the defendants retaliated and discriminated against Cordell.

Starting in January 2023, according to the lawsuit, Cordell protested “unlawful and or discriminatory directives and practices” within the department’s Overpayment Establishment Section that charged overpayment debts to many sick, elderly, and disabled residents under the Michigan Combined Application Project and the Food Assistance Program.

From fiscal year 2023 to 2024, the number of MiCAP overpayments jumped from 440 to 8,588 — an 1,852% increase. In dollar terms, the overpayment spike — from $123,980 to $441,083 — comes to a 256% increase, according to a document that Michigan Capitol Confidential obtained through a records request.

After Cordell protested the recoupment effort, around Feb. 14, 2024, Anderson allegedly assigned Cordell about 240 referrals from 2021 — a three-year backlog — while other employees in her position used a shared mailbox to tackle the workload, the lawsuit said. Cordell’s supervisors at the Overpayment Establishment Section were Shumaker, Williams and Anderson.

Cordell is represented by the firm Mungo and Mungo at Law.

“She refused to participate in falsely charging these individuals with overpayments and engaging in collection against them,” attorney Leonard Mungo said at the Friday morning news conference. “We’re here today to let the public know that there are thousands of vulnerable citizens in Michigan today, and I mean upward of 14,000, who are recipients of the food assistance program, who are being falsely charged with not qualifying for the program.”

The errors, if continued, could subject Michigan to federal penalties of up to $320 million because of a high payment error rate, Mungo said.

“Because of her above described activity, advocacy and refusals to participate in unlawful practices, Defendants subjected Plaintiff to a continuous and escalating pattern of retaliation that caused severe harm to her health, career, and livelihood,” according to the suit.

Michigan allegedly collected improper MiCAP-to-FAP debts, although a binding administrative law judge order in 2020 told the department to delete these debts and to complete FAP eligibility using actual income and expenses, according to the lawsuit.

Since 2020, thousands of disabled and elderly residents have been subjected to unlawful collections, Mungo said.

“We’re asking that as many as those individuals who have been subject to these aggressive, abusive collection actions, who may be great witnesses in Ms. Cordell’s prosecuting her case as a whistleblower protecting these individuals, to come forward,” said Mungo.

“The state, my department, is making people pay debts, maybe $20,000 to $30,000 maybe even more,” Cordell said during the press conference. “Michigan citizens have been subjected to debt that’s illegal and fraudulent. These people are our seniors. We should be looking out for our seniors, but no, the state of Michigan is harming our seniors by making them pay illegal and fraudulent debts.”

Michigan’s health department did not respond to a request for comment.

“These citizens were entitled to their benefits,” Cordell told CapCon in a text message. “The department know, and they still let the harm continue.”

Document available at the link.

https://www.michigancapitolconfidential.com/news/michigan-charges-dentist-with-43-counts-of-medicaid-fraud

Michigan charges dentist with 43 counts of Medicaid fraud

State alleges Livonia practice billed taxpayers for phantom procedures

Scott McClallen   |   June 16, 2026

A Northville dentist has been charged with 43 felony counts of Medicaid fraud for allegedly billing the state for dental procedures she never performed, according to Attorney General Dana Nessel.

Demetra C. Kazanis, 55, was arraigned May 27 before Judge Molly E. Hennessey Greenwalt of the 54B District Court in East Lansing. The 43 felony counts relate to an alleged Medicaid fraud scheme.

Kazanis has been charged with one count of conducting a criminal enterprise, punishable by up to 20 years in prison and/or a fine of up to $100,000. She is charged with 42 counts of Medicaid fraud, each punishable by up to four years of incarceration and/or a fine of up to $50,000.

Kazanis, who was practicing at the New You Dental clinic in Livonia, allegedly billed the taxpayer-funded Medicaid program repeatedly for fillings that were either not performed or were performed as less invasive preventive resin restorations.

Preventive resin restorations are limited to the tooth’s enamel surface and do not require drilling into the dentin or using anesthesia. Fillings, by contrast, are more extensive procedures reimbursed by Medicaid at a higher rate.

“Abuse of the Medicaid program diverts critical funds from those in need,” Nessel said. “Patients should be able to trust their dentist to provide appropriate care, just as taxpayers should be able to trust Medicaid providers to bill honestly. My department remains committed to prosecuting fraudsters who exploit the system.”

Kazanis was given a $50,000 personal recognizance bond. She was due in court June 5 for a probable cause conference.

The Attorney General’s Health Care Fraud Division, which is handling this case, is the federally certified Medicaid Fraud Control Unit for the state of Michigan. It receives 75% of its funding from the U.S. Department of Health and Human Services under a $5.5 million grant for the 2026 fiscal year.

The remaining 25%, or $1.8 million, comes from the state budget.

Finding Medicaid fraud can be difficult unless it is reported by an employee at the organization committing fraud or detected by the state or federal government through data analysis. The latter route is a challenge, given the sheer number of providers billing the government.

There were 261,833 Medicaid providers in Michigan as of late April 2026, according to a document Michigan Capitol Confidential obtained through a records request. Of those Medicaid providers, only 416 were validated between April 1 and April 21.

The Medicaid providers must be revalidated to keep their authority to bill Medicaid for services. Between April 1, 2023, and March 31, 2024, more than 53,100 Medicaid providers were revalidated, according to the document.

The longest time that any current Medicaid provider has gone without revalidation is 60 months, or five years. In the last five years, 89,932 Medicaid providers were not revalidated, meaning they are supposed to have been disqualified for Medicaid payments.

Among the 150 providers that billed Medicaid the most, billings ranged from $12 million to $323 million, according to a separate document obtained through a records request.