The Trump administration issued a warning to state governments on Tuesday, declaring its intent to significantly increase oversight and enforcement to prevent Medicaid funds from subsidizing healthcare for non-citizens.
In a letter to state officials, the Centers for Medicare and Medicaid Services (CMS) announced it is “ramping up financial oversight activities” by closely scrutinizing state Medicaid programs to ensure beneficiaries are American citizens.
The heightened enforcement measures will include more rigorous reviews of quarterly spending reports, which determine federal reimbursement for state Medicaid costs, and audits of select states’ financial management systems. CMS is also actively reviewing eligibility rules for potential loopholes that may allow funds to flow to non-citizens and is urging states to conduct their own reviews of internal controls and IT systems.
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“Medicaid is not, and cannot be, a backdoor pathway to subsidize open borders,” stated CMS Administrator Dr. Mehmet Oz. “States have a duty to uphold the law and protect taxpayer funds. We are putting them on notice—CMS will not allow federal dollars to be diverted to cover those who are not lawfully eligible.”
This move follows the House of Representatives’ passage on May 22 of President Donald Trump’s comprehensive bill, dubbed by him as “one big, beautiful bill.” According to the Kaiser Family Foundation, this legislation includes provisions to curtail federal reimbursements for 14 states that have expanded Medicaid coverage to include individuals without legal immigration status.
The bill now moves to the Senate, where certain Medicaid changes have reportedly been a point of contention for Republican Senators Josh Hawley of Missouri, Lisa Murkowski of Alaska, and Susan Collins of Maine.
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The CMS letter explicitly stated the crackdown aims to ensure federal money will not subsidize healthcare “for individuals with an unsatisfactory immigration status in a manner contrary to federal law.”
It referenced a 1996 law underscoring the “compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits.” Furthermore, the letter cited a February 2025 executive order which reiterated the principle that “federal payments to states and localities do not, by design or effect, facilitate the subsidization or promotion of illegal immigration.”
Officials clarified that under existing federal law, Medicaid dollars can only be used to cover emergency medical care for individuals who do not have an eligible immigration status.
President Donald Trump has consistently emphasized his position that Medicaid resources should be directed towards American citizens. This latest initiative by CMS appears to be a direct step towards fulfilling that oft-stated goal.
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