OPINION:
Medicaid now covers roughly 1 in 5 Americans and accounts for nearly one-third of total state spending nationwide.
It is the country’s largest health insurer for children, low-income adults and people with disabilities. The Congressional Budget Office projects $8.2 trillion in Medicaid spending over the next decade.
A program this large and this complex requires robust oversight infrastructure. Getting it right is an obligation to the people whom the program exists to serve.
In fiscal year 2025, the 53 state Medicaid Fraud Control Units recovered nearly $2 billion in criminal and civil cases and secured 1,185 convictions.
Those recoveries are significant. Still, federal auditors have separately found improper payment rates as high as 27%, a figure that points to a much broader challenge. Extend that across a decade of federal spending, and the cumulative waste is staggering.
What that waste actually means is straightforward, even if it gets buried in budget debates. Fraud is not a victimless crime against a government ledger. Every dollar billed for a service that never happened is a dollar unavailable for a family that genuinely needs care. One person’s abuse becomes another person’s subsidy, paid for in tighter networks, lower reimbursement rates and diluted services.
Honest clinicians who play by the rules are squeezed out by bad actors willing to game the system, undercutting the very practitioners on whom the program depends. The people the program was built for end up on waiting lists and with less care.
The pattern shows up across service categories, but behavioral health has become a particular pressure point. Applied behavior analysis therapy for children with autism is among the fastest-growing Medicaid expenditures in the country, and with that growth has come significant fraud exposure.
In May, the Justice Department announced the indictment of 15 defendants in Minnesota as part of a $90 million healthcare fraud takedown. Federal auditors have separately found hundreds of millions in improper payments for applied behavior analysis in Indiana, Wisconsin, Maine and Colorado, with three more state audits underway.
Criminal cases have also been brought in Connecticut and South Carolina.
The Georgia Department of Community Health has identified applied behavior analysis therapy as a high-risk service category and is proposing new policy enhancements to address it. The state’s attorney general has also pursued a steady stream of related cases.
What is happening in Georgia is playing out in states across the country. Medicaid’s waste and fraud problem is a tax on every honest patient and provider in the program, and Washington is beginning to take notice. The Centers for Medicare & Medicaid Services has further issued a formal request on how to more effectively combat it.
Addressing this fraud, waste and abuse requires tedious work. States need clear standards for who may deliver services, meaningful documentation requirements and the authority to ask, before paying, whether a service was medically necessary, whether the provider was qualified and whether it actually happened.
Yet states too often overlook the fact that managed care plans are already positioned to do much of this work — and are being underused. Managed care plans are private insurers that states contract with to coordinate Medicaid benefits, and when empowered to do their job, they often deliver better-coordinated care, reduce unnecessary spending and drive better quality outcomes than fee-for-service alternatives.
Managed care plans cover roughly 75% of Medicaid enrollees, have trained investigators and, unlike fee-for-service, have real financial skin in the game. A dollar lost to a fraudulent applied behavior analysis provider comes out of their operating margin, not out of what seems like an unlimited government account.
When states carve behavioral health out of managed care, restrict prior authorization or block prepayment review of high-risk billing, they are dismantling the very layer of the system built to catch fraud before a check goes out.
States that want to get serious about Medicaid fraud do not need to build new infrastructure. They need to use what they are already paying for, and that means giving managed care plans the authority to actually manage.
The families and clinicians who depend on this program the most are the ones most harmed when it is gamed. The tools exist. States must let managed care plans use them. It is an obligation to the children, families and communities Medicaid was built to serve.
• Lauren Melo is a Florida state representative who chairs the House Human Services subcommittee that oversees Medicaid policy.
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