Missouri officials are launching an expanded effort to find fraud in the state’s Medicaid system as part of a broader effort pushed by the Trump administration to root out fraud.
Gov. Mike Kehoe announced that Missouri’s Medicaid compliance office, alongside the MO HealthNet Medicaid program as a whole, would begin revalidating providers that the state has identified as “high risk.”
The first step will be to revalidate about 2,500 providers across the state, with a focus on adult daycare services, applied behavior analysis and other autism services and some home-based healthcare providers to ensure they are compliant with federal and state laws.
The state is also developing a larger two-year plan to apply more scrutiny to healthcare providers caring for Medicaid patients.
Missouri’s effort was announced in tandem with the Centers for Medicare and Medicaid Services, which recently sent letters to all 50 states and their Medicaid Fraud Control units, asking for demonstration that officials are “effectively and aggressively prosecuting Medicaid fraud.”
The letters went out to states in late April and gave them 10 business days to respond with how they would tackle suspected fraud in the long term and their strategy for revalidating high-risk providers.
If not, CMS officials and Vice President JD Vance warned, states could risk federal funding for their Medicaid programs.
“We’re kind of following along with CMS initiatives to thwart off fraud at the front door,” said Rich Ferrari, director of the Missouri Medicaid Audit and Compliance division within the Department of Social Services.
The effort comes after the federal government criticized suspected levels of Medicaid fraud in Democratic-led states. Recently, the Trump administration paused $1.3 billion in payments to California and another $259 million to Minnesota.
On May 21, the U.S. Department of Justice announced criminal charges against 15 people allegedly involved in fraud that targeted more than $90 million in taxpayer funds.
The House Energy and Commerce Committee also sent letters to Colorado, Massachusetts, Maine, Nebraska, New York, Oregon, Pennsylvania, Vermont and Washington over concerns about fraud in their states.
Some observers noted the focus on states led by Democrats.
“There is fraud against the Medicaid program in every state. There is fraud against the Medicare program in every state,” said Andy Schneider, a research professor at the Georgetown University Center for Children and Families.
“The issue is how do you run a large public insurance program like Medicare or Medicaid and do it in a way that minimizes the damage that bad actors can do?” he said.
Medicaid providers already undergo screening and reevaluation under federal law, a system that expanded in tandem with the Obama administration’s Affordable Care Act.
Missouri officials say the latest push is less about creating a new anti-fraud framework and more about accelerating fraud-finding efforts that are already in place.
What’s changing in MO HealthNet?
Medicaid providers are required to be reevaluated every five years under federal law.
All in all, not much is actually changing about how Missouri treats fraud. Rather, the process is just speeding up how often providers are validated in state systems, Ferrari told The Beacon.
Missouri is hastening the approach by following the federal directives to revalidate high-risk providers on an annual basis.
It’s a similar approach taken by Ohio Republican Gov. Mike DeWine, who last week signed an executive order requiring more frequent revalidation of certain Medicaid providers.
Throughout the month of May, Ferrari said, Missouri is working on a public information campaign and notifying the providers identified as high-risk that another round of revalidation is on the way.
“They’re just going through the same process they’ve always gone through, just at a quicker rate,” Ferrari said.
The federal government gives guidance on how to screen different types of providers from low to high risk. But it doesn’t define what providers fall into those categories — states do.
CMS is requiring states to revalidate all providers without a national provider identification number, which could include cash-based healthcare services, non-HIPPA covered services, trainees or other nonclinical healthcare providers like billing services, admissions staff or housekeeping services.
“CMS recognizes the significant challenges that states face in administering their Medicaid programs and that the majority of Medicaid providers are honest, hardworking and dedicated to rendering high-quality care to beneficiaries,” CMS Director Mehmet Oz wrote in the letter to states.
“Nevertheless, our analysis of national trends strongly suggests a persistent and growing Medicaid threat posed by sophisticated actors knowingly exploiting these complex systems for financial gain,” Oz said.
State officials don’t anticipate needing extra help to accelerate the revalidations, Ferrari said. Like every other state, Missouri already has the Medicaid Fraud Control Unit, which is housed in the attorney general’s office, and other anti-fraud efforts in place across the Department of Social Services.
While the offices fulfill different responsibilities, they collaborate to share information to combat fraud, Ferrari said.
While Missouri officials say the anti-fraud efforts are accelerating processes already in place under federal law, Medicaid experts like Schneider say the broader directive from the federal government marks a shift in the amount of pressure on states to find and address fraud.
“If you’re trying to manage the program in a way that actually achieves results, you might want to go the collaborative route,” Schneider said.
Historically, CMS works more collaboratively with states when fraud concerns emerge, Schneider said. Before it jumps to cutting off funding, CMS will take states through audits or corrective plans. Addressing systemic issues like fraud can take a while to resolve, and if there is a dispute over funding, it can go on for years.
More recently, though, the Trump administration has threatened or paused funding before fraud concerns are resolved.
“I don’t think there is any track record which would suggest that their current approach works,” Schneider said. “I think there is a track record that collaboration can work.”
Where Missouri falls
Medicaid fraud investigations are the responsibility of the Medicaid Fraud Control units in every state, which get federal funding to help run their offices.
In fiscal year 2025, Missouri’s Medicaid Fraud Control Unit opened 354 fraud investigations and secured 33 fraud convictions.
Overall, Missouri’s Medicaid Fraud Control Unit spent $4.3 million investigating fraud claims and recovered $4.5 million in the cases they investigated.
Medicaid fraud can appear in a number of ways, Schneider said. It could range from using provider identification numbers of deceased doctors and billing for patients who were never seen to ordering more X-rays than a patient needs to get payment from the federal government.
“We, certainly in today’s budget times, support things that might identify individuals or groups that somehow get Medicaid provider status that don’t deserve it, or aren’t providing quality care,” said Brent McGinty, the CEO of the Missouri Behavioral Health Council. “We certainly support any efforts to identify that, while we also continue to do everything we can to make sure we’re doing what’s right.”
Supporters of the administration’s approach say starting with care provided outside of a traditional hospital or clinic is a smart approach. Things like in-home health or community-based services can be hard to track, said Niklas Kleinworth, a state Medicaid policy analyst at the Paragon Health Institute, a health policy think tank focused on free market solutions.
“They’re very difficult to verify, being that the services aren’t provided in a nursing home or clinical setting,” Kleinworth said. “It’s really difficult to determine that the patient actually received the service that was billed for. That makes (these providers) a higher risk.”
Ferrari said that although the state is working in phases to revalidate providers, the response to potential fraud will depend on the situation. Some providers may just need more information about billing in Missouri, while others may get more scrutiny.
“Every credible allegation of fraud that we find gets referred to the Medicaid Fraud Control Unit at the attorney general’s office,” Ferrari said. “That is required by statute, and it’s something that we do every day of every year, and we will continue to do that effort.”
Ferrari said he doesn’t anticipate needing extra financial or administrative help with the new workload, but said that officials within DSS are available to offer extra help if needed.
But, the state’s accelerated fraud review at the direction of the federal government comes as Missouri prepares to tackle a larger overhaul of how social services are run in Missouri.
As a result of the Trump administration’s reconciliation bill, known as the One Big Beautiful Bill Act, Medicaid enrollees are required to undergo more frequent enrollment checks to ensure they are meeting the new work requirements set in place by the legislation. For small providers across the state, the extra administrative lift could present challenges, McGinty said.
“If we take revalidation and it’s isolated into one thing, it probably wouldn’t be too big of a lift for our agencies to get done,” McGinty said. “My concern is … you stack any other things that are coming down from CMS or the feds, and the cumulative effect of all those things — if done in a way that requires more administrative work — the effect of that altogether could be devastating.”
Schneider said states are being asked to take on multiple new directives from the federal government, often with tight timelines and little guidance from federal agencies.
As the Trump administration increasingly ties federal Medicaid funding to anti-fraud efforts, questions remain about how aggressive the federal government’s approach toward states will actually be, and whether the nationwide accelerated reviews will meaningfully reduce fraud inside the program.
“You try to do this understanding that states have administrative limitations,” Schneider said. “They can’t turn around on a dime.”
This story was originally published by The Beacon, an online news outlet focused on local, in-depth journalism in the public interest.
