Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz sent letters Thursday morning to every governor in the country, directing them to take immediate action against Medicaid provider fraud and warning that states unwilling to cooperate face tougher federal scrutiny. The letters, first reported by Fox News Digital, give governors just 10 business days to tell CMS whether they will commit to a swift revalidation of high-risk Medicaid providers, and 30 days to submit a full two-year strategy for cleaning house.
A separate letter went to each state Medicaid director, reiterating the same demands and tailoring the call to each state's particular vulnerabilities. The message from CMS was blunt: billions of taxpayer dollars are disappearing into the hands of fraudulent providers every year, and the federal government expects the states to prove they are serious about stopping it.
Oz framed the directive in terms that left little room for delay. In the letter, a copy of which Fox News Digital obtained for Alabama, he wrote:
"Corrupt individuals and organizations masquerading as health care providers are defrauding Medicaid, and American taxpayers, of billions of dollars each year, placing valuable resources out of reach for those the program was intended to serve: low-income senior citizens, children, and disabled individuals."
He called it "urgent that action be taken immediately."
The directive is specific. Within 10 business days, governors and state Medicaid leaders must tell CMS whether they will commit to conducting a fast revalidation of high-risk providers and provide a proposed timetable. Within 30 days, each state must submit a broader two-year strategy outlining how it will review healthcare providers for legitimacy and compliance.
The letters target providers at "high risk of waste, fraud, abuse, and corruption", particularly those with less rigorous enrollment and billing requirements. States must also flag any provider operating without a National Provider Identifier, a basic federal credential that legitimate providers carry.
The required proposals must include a methodology and timeline for off-cycle provider revalidation, metrics to measure effectiveness and progress, including public reporting, processes for ongoing verification of provider information, strategies to ensure consistency and accuracy of provider data across fee-for-service and managed care systems, and coordination with relevant law enforcement partners.
That last point matters. Medicaid fraud does not happen in a vacuum. It thrives in states where oversight agencies, law enforcement, and program administrators fail to talk to each other, or choose not to.
The letters arrive against the backdrop of one of the largest fraud scandals in recent memory. Minnesota's "Feeding Our Future" scheme, which surfaced in 2022, involved an estimated $250 million in stolen funds and has led to a wave of convictions in recent years. That scandal became a national flashpoint for the kind of systemic failure Oz is now targeting.
But the problem in Minnesota went far beyond a single program. A state-commissioned review of Minnesota's Medicaid program this year identified vulnerabilities across 14 high-risk services and estimated that up to $1.7 billion in payments over four years may have been improper. That is not a rounding error. That is a systemic breakdown in a single state.
CMS has already halted about $243 million in Medicaid payments to Minnesota over fraud concerns, as Breitbart reported. The agency has also imposed a six-month block on certain new Medicare supplier enrollments to address fraud risks nationally.
Oz did not leave enforcement to the imagination. His letter warned governors directly:
"Failure to commit to the revalidation plan will be considered as we evaluate the likelihood of fraud in each state moving forward."
In plainer terms: states that drag their feet will draw more aggressive federal attention. The Washington Times reported that Oz told reporters states need to "own" the problem of healthcare fraud and warned that those who do not take it seriously could face escalated federal audits.
CMS is already weighing Medicaid deferrals, essentially withholding federal reimbursement payments, in states including California, New York, and Maine. Those are not red states with small Medicaid rolls. Those are some of the largest and most expensive Medicaid programs in the country.
The scale of the problem in California alone has drawn bipartisan alarm. Federal prosecutors have publicly confronted California's attorney general over the state's fraud enforcement failures, and congressional testimony has painted a picture of fraud operations so brazen they defy belief.
The 50-state letter campaign is not a standalone gesture. It fits into a broader Trump administration push to confront waste and fraud across federal healthcare programs. Medicaid fraud has been of particular interest to the administration, and CMS has already investigated multiple states over possible fraud.
A Washington Examiner analysis found that states paid more than $380 million in Medicaid funds to providers later caught defrauding the program. That figure alone should prompt every governor to take the CMS directive seriously, it represents money that went to criminals instead of patients.
Oz described the revalidation demand as a concrete test of state seriousness. "It's an example of what we'd like them to do to prove that they're serious about this," he told reporters, as AP News reported. He added: "I believe this audit and others like it will save the programs we care most about."
That framing is worth noting. Oz positioned the crackdown not as an attack on Medicaid itself but as a defense of it, an effort to protect the program's resources for the low-income seniors, children, and disabled individuals it was designed to serve.
Recent congressional hearings have underscored just how far the rot extends. Robert Kennedy Jr. told Congress that hospice fraud in Los Angeles alone may have cost taxpayers $5 billion, a staggering figure that illustrates why a state-by-state reckoning is overdue.
The letter to state Medicaid directors laid out the analytical basis for the demand. Oz wrote that CMS sees a growing threat from organized actors who exploit the complexity of Medicaid billing systems for financial gain:
"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."
He also argued that revalidation itself would serve as a deterrent, that the act of scrutinizing provider credentials would push fraudulent operators out of the system before they could steal more.
"While the factors contributing to fraud are multifaceted and require a comprehensive approach to address, a revalidation process for high-risk providers will immediately deter criminal actors from continuing their fraud schemes, as the federal and state governments closely review and scrutinize the qualifications of providers to suspend or terminate clearly abusive actors from the program."
The initiative focuses on revalidating providers in high-risk areas while trying not to disrupt care for Medicaid enrollees, a balance that will test whether states can move quickly without harming the patients who depend on the program.
Several questions remain unanswered. The letters do not specify which enforcement mechanisms CMS would deploy against states that refuse to cooperate, beyond the warning that noncompliance will factor into future fraud assessments. The precise categories of "high-risk" providers are not fully detailed in the publicly available text. And the methodology behind Minnesota's $1.7 billion estimate, a number that could shape federal policy toward the state, has not been publicly explained.
Some of the administration's anti-fraud actions have drawn pushback. AP News noted that CMS previously acknowledged a significant error in figures used to justify a fraud probe in New York, a misstep that gave critics ammunition to question the rigor of the broader campaign. Whether that error was an isolated mistake or a sign of haste will matter as the 50-state effort unfolds.
Political friction is likely. California's governor has already clashed publicly with Dr. Oz over his role as a federal health official, and blue-state leaders may frame the revalidation demand as federal overreach. But the numbers make that argument difficult to sustain. When a single state review turns up $1.7 billion in potentially improper payments, the question is not whether the federal government should act, it is why it took this long.
Taxpayers fund Medicaid. Patients depend on it. Neither group is well served when the money flows to criminals. If governors have a better plan for stopping that, they have 10 business days to say so.