President Donald J. Trump today issued a memorandum to the Secretary of Health and Human Services and the Administrators of the Centers for Medicare and Medicaid Services, directing immediate action to eliminate what his administration describes as “waste, fraud, and abuse” within the Medicaid program.
The memorandum, titled “Eliminating Waste, Fraud, and Abuse in Medicaid,” sharply criticizes practices allegedly encouraged under the previous administration, specifically targeting “State Directed Payments” that the President claims have allowed states and healthcare providers to “game the system.”
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“My Administration has been relentlessly committed to rooting out waste, fraud, and abuse in Government programs to preserve and protect them for those who rely most on them,” the memorandum states.
President Trump asserts that Medicaid, originally designed to provide compassionate care to vulnerable Americans with historically capped payments at Medicare levels, has deviated significantly. He alleges that some states have implemented a “gimmick” where they “taxed” healthcare providers only to return the same money as a “Medicaid payment.” This, he argues, unlocked additional federal “burden-sharing” payments, effectively allowing states to avoid contributing their share and removing any incentive for prudent reimbursement amounts.
The memorandum claims that this practice has led to many states paying healthcare providers “almost three times the Medicare amount,” a trajectory that has “rapidly accelerated, quadrupling in magnitude over the last 4 years and reaching $110 billion in 2024 alone.”
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President Trump warns that this trend “threatens the Federal Treasury and Medicaid’s long-term stability,” and creates an “imbalance between Medicaid and Medicare patients threatens to jeopardize access to care for our seniors.”
In response, the President has ordered the Secretary of Health and Human Services to “take appropriate action to eliminate waste, fraud, and abuse in Medicaid, including by ensuring Medicaid payment rates are not higher than Medicare, to the extent permitted by applicable law.”
The President reiterated his commitment to “protect and improve these important Government healthcare programs for those that rely on them,” emphasizing that “Seniors on Medicare and Medicaid recipients both deserve access to quality care in a system free from the fraud, waste, and abuse, that enriches the unscrupulous and jeopardizes the programs themselves.”
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The memorandum clarifies that it does not create any enforceable rights or benefits against the United States government.
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