State Medicaid Program Integrity: Examining Fraud Risks and Oversight Deficiencies

Benefits Fraud and Improper PaymentsHouse Energy and Commerce Subcommittee on Oversight and Investigations · 2026-06-25 · 119th Congress
The House Energy and Commerce Subcommittee on Oversight and Investigations convened this hearing to examine Medicaid program integrity and fraud risks in four states — Minnesota, California, New York, and Ohio — following months of subcommittee investigation, letters to 11 states, and review of over 90,000 pages of documents [0:17:32]. Begins at 0:14:24
Transcript
Highlights

Title

State Medicaid directors testify on fraud oversight and CMS funding disputes

Purpose

The House Energy and Commerce Subcommittee on Oversight and Investigations convened this hearing to examine Medicaid program integrity and fraud risks in four states — Minnesota, California, New York, and Ohio — following months of subcommittee investigation, letters to 11 states, and review of over 90,000 pages of documents0:17:32. State Medicaid directors from those four states testified about their anti-fraud efforts, while Democrats used the hearing to challenge CMS funding deferrals and withholdings targeting Democratic-led states. Begins at0:14:24

Who spoke

Chairman John Joyce (R-PA)0:14:24: Opened by citing state-specific fraud takedowns — $90 million in Minnesota autism therapy fraud0:15:13, $270 million in California prescription drug fraud0:15:39, $226 million in New York social adult day care fraud0:15:39, and $42 million in Ohio behavioral health fraud0:16:11; later pressed Tyler Sadwith on California's "limited risk" classification for all Medicaid-only providers0:56:06 and Amir Bassiri on New York's delayed document production1:07:43.

Ranking Member Katherine Clark (D-MA)0:19:18: Accused CMS and the Trump administration of politically motivated funding threats against blue states, citing a threatened $2 billion withholding from Minnesota0:19:48 and a CMS math error that overstated New York home care recipients by nearly 11 times0:22:02; later got Bassiri to confirm the error was between 4 million and 450,000 people1:04:19.

Full Committee Chairman Brett Guthrie (R-KY)0:25:13: Cited California fraudster Paul Randall's $270 million guilty plea and purchases of luxury items with stolen funds0:26:08; defended CMS's suspension of payments to roughly 400 LA County home health providers, saying only 12 were legitimate0:27:37; later questioned John Connolly on Minnesota's autism therapy fraud takedown1:10:44.

Full Committee Ranking Member Frank Pallone (D-NJ)0:29:51: Argued the "big ugly bill" cut health care by $1 trillion and would strip coverage from 15 million Americans0:30:19; said CMS deferred $1.34 billion from California's home and community-based services based solely on program growth, not identified fraud0:32:30.

John Connolly, Temporary Commissioner/State Medicaid Director, Minnesota DHS0:36:45: Said Minnesota has conducted over 4,000 investigations with more than $50 million in recoveries and 1,150 law-enforcement referrals since 20200:37:34; testified CMS deferrals total roughly $350 million on top of a $2 billion annual withholding1:14:13; confirmed CMS gave no advance notice before announcing the $2 billion withholding1:25:33 or a subsequent $259 million deferral1:25:54.

Tyler Sadwith, State Medicaid Director, California DHCS0:41:29: Said Medi-Cal serves about 14 million people, with roughly 20% of staff dedicated to program integrity and over $1 billion recovered in five years0:43:17; confirmed no Medicaid-only provider types have ever been classified above "limited risk"0:58:34; said the $1.1 billion deferral for in-home supportive services is "unprecedented" and CMS has cited no specific instances of fraud1:06:06.

Amir Bassiri, State Medicaid Director, New York DOH0:46:02: Said New York's program serves over 6.4 million residents, with the Office of Medicaid Inspector General completing 2,500+ audits and generating about $4 billion in recoveries in 20240:48:41; confirmed CMS's claim that nearly 3-in-4 beneficiaries received personal care services was inaccurate — the real figure was about 450,000, not 4 million1:03:50.

Scott Partika, Director, Ohio Department of Medicaid0:51:21: Described a six-month moratorium on new home health providers and Senate Bill 315 reforms following a $42 million behavioral health fraud takedown0:53:54; said Ohio's PERM error rate has been reduced to 2%0:52:15.

Rep. Diana DeGette (D-CO)1:23:46: Pressed all four witnesses on CMS communication, establishing Minnesota received no advance notice of a $259 million deferral despite weekly meetings1:25:54 and that California received no concrete guidance on what would release its $1.3 billion deferral1:26:55.

Rep. Gary Palmer (R-AL)1:28:53: Questioned witnesses on data-sharing with Medicare, Treasury's Do Not Pay system, and cross-state databases, noting inconsistent or unclear answers from several directors1:29:23; pressed Connolly on Minnesota's revalidation process after 2,100 of 3,400 disenrolled providers had billing privileges restored on appeal1:31:15.

Rep. Paul Tonko (D-NY)1:34:05: Asked Bassiri about the importance of CMS acting as a "good faith partner"1:35:03 and had Connolly detail Minnesota's proactive outreach to CMS predating the December 5 compliance letter1:38:56.

Rep. Rick Allen (R-GA)1:39:50: Asked all witnesses whether elected officials in their states were obstructing fraud investigations, and each answered no1:42:14; also asked whether the Biden administration had previously flagged the same fraud issues2:04:35.

Rep. Lori Trahan (D-MA)1:45:06: Cited a New York State Comptroller estimate that H.R. 1 implementation will cost New York $13 billion annually1:46:30 and Georgia GAO data showing 70% of red-tape program spending went to administrative costs rather than care1:48:44.

Rep. Diana Harshbarger (R-TN)1:50:28: Asked each director to describe intake, referral, and payment-suspension timelines for fraud investigations, eliciting that timelines vary widely by state and case1:53:35.

Rep. Lizzie Fletcher (D-TX)1:56:11: Argued the administration's fraud claims are pretextual, citing roughly 70 Trump pardons of people convicted of defrauding the government, including Medicaid fraud cases1:59:05, and the firing of 20 inspectors general who found $50 billion in waste in FY20242:00:00.

Rep. Mike Rulli (R-OH)2:01:22: Criticized Minnesota Gov. Walz for touring the country rather than addressing fraud, and asked Partika to detail Ohio's fraud findings and Attorney General/Auditor partnership2:02:44.

Rep. Kevin Mullin (D-CA)2:06:16: Pressed Sadwith on how California exceeds federal provider-screening requirements2:07:39 and the rationale for IHSS program growth despite the $1 billion-plus deferral2:09:23.

Rep. Randy Weber (R-TX)2:11:18: Questioned Connolly on Minnesota's 14 high-risk service designations2:11:36 and pressed Sadwith on California's Medicaid Fraud Control Unit referring only 300 of an estimated $3.5 billion in fraudulent LA County hospice billing2:14:44.

Rep. Greg Landsman (D-OH)2:16:56: Asked each director to list new anti-fraud investments, drawing out Minnesota's 450 new program-integrity staff2:18:22 and unanimous agreement that Congress could invest more in state fraud-fighting capacity2:21:20.

Rep. Gus Bilirakis (R-FL)2:22:09: Introduced the Medicaid RAC Improvement Act and questioned all three directors on whether recovery audit contractor programs cover managed care payments, confirming they are currently limited to fee-for-service2:24:03.

Key moments

Bassiri confirmed CMS Administrator Oz's social-media claim that nearly 3 in 4 New York Medicaid enrollees received personal care services was off by a factor of roughly 9 — the real number was about 450,000, not 4 million1:03:501:04:19.

Guthrie and Pallone directly clashed over CMS's suspension of ~400 LA County home health providers: Guthrie said only 12 of 400 were legitimate and got paid0:28:28, while Pallone framed the same deferral as an indiscriminate, politically motivated $1.3 billion action against California0:32:30.

Sadwith testified California's $1.1 billion IHSS deferral is "unprecedented," that the state proactively disclosed concerns to CMS before the deferral, and that CMS has not identified any specific instance of fraud, waste, or abuse in its review1:06:061:07:02.

Connolly confirmed Minnesota received no advance warning before CMS announced a $2 billion withholding hours after a January 6 meeting1:25:33, nor before a subsequent $259 million deferral despite four February meetings1:25:54.

Palmer's rapid-fire questioning on data-sharing (Medicare/Medicaid cross-checks, Treasury's Do Not Pay system, interstate enrollment checks) drew inconsistent or "I'd have to confirm" answers from Bassiri and Partika, in contrast to confident yes answers from Connolly and Sadwith1:29:231:29:52.

Weber highlighted that California's Medicaid Fraud Control Unit referred only 300 credible fraud allegations over five years against an estimated $3.5 billion in fraudulent LA County hospice billing (18% of national hospice billing)2:14:442:16:07.

Fletcher cited roughly 70 Trump pardons or commutations for people convicted of defrauding the government, including Medicaid fraud, alongside the firing of 20 inspectors general who had identified over $50 billion in waste in FY20241:59:052:00:00.

Palmer noted that of Minnesota's 3,400 initially disenrolled high-risk providers, over 2,100 had billing privileges restored on appeal, and Connolly could not confirm whether any had previously been flagged for fraud1:31:151:32:12.

All four directors agreed, when asked directly by Landsman, that Congress could and should invest more in state-level fraud-fighting capacity2:21:20.

Guthrie noted New York had not fully responded to a March 3 document request even by the June 25 hearing date, and California provided over 1,300 pages of audit documents only at 7 p.m. the night before the hearing1:07:431:09:32.

Metadata

CommitteeHouse Energy and Commerce Subcommittee on Oversight and Investigations
Chamber / CongressHouse · 119th Congress
Date2026-06-25
TypeHearing
Witnesses
Amir Bassiri — State Medicaid Director, New York State Department of Health
Scott Partika — Director, Ohio Department of Medicaid
Tyler Sadwith — State Medicaid Director, California Department of Health Care Services
John Connolly — Temporary Commissioner and State Medicaid Director, Minnesota Department of Human Services
Videoyoutube
Transcript308 caption blocks · 21,381 words · 2:28:41 runtime
EventCongress.gov 119405