RISE summarizes recent regulatory-related headlines and reports.
OIG audit: CMS urged to curb improper Medicare virtual check-in, e-visit payments
A new HHS Office of Inspector General (OIG) audit finds that Medicare paid for some virtual check-in and e-visit services that may not have met program rules, and recommends the Centers for Medicare & Medicaid Services (CMS) to add billing checks and provider education to reduce the risk of improper payments.
OIG flagged two areas where Medicare payments for these virtual services may have conflicted with timing and billing requirements:
- Virtual check-ins: OIG estimated $1.96 million in potential improper payments tied to 173,287 virtual check-in services billed too close in time to an evaluation-and-management (E/M) visit for the same patient and diagnosis code; OIG also noted many related E/M claims used an unnecessary modifier.
- E-visits: OIG estimated $298,200 in potential improper payments for 10,237 e-visit services provided within seven days of another e-visit for the same patient and diagnosis code.
The watchdog said the payments were at risk because CMS and Medicare contractors lacked certain automated claim edits to catch noncompliant billing and because provider education on the billing rules was insufficient.
OIG urged CMS to add system edits that could have saved up to $2.3 million during the audit period, clarify code descriptions for virtual check-ins in the Physician Fee Schedule, and further educate providers on billing requirements for virtual check-ins and e-visits. The agency agreed with two of the three recommendations and said it has taken, or plans to take, corrective actions; CMS did not agree with OIG’s recommendation related to strengthening certain code descriptions.
DOJ launches West Coast Health Care Fraud Strike Force
The U.S. Department of Justice (DOJ) announced it has established a West Coast Health Care Fraud Strike Force, a multi-district enforcement effort spanning Arizona, Nevada, and the Northern District of California. The initiative unites DOJ’s Health Care Fraud Section with the U.S. Attorneys’ Offices in the three districts and is designed to increase coordinated, data-driven investigations and prosecutions of health care fraud.
DOJ positioned the expansion as a response to analytics indicating a significant and accelerating rise in suspected fraud activity in the region, including technology-enabled schemes tied to the Northern California health care and digital health ecosystem and what it described as the migration of certain schemes into Arizona and Nevada. The enforcement agency noted that the broader Strike Force model has resulted in more than 6,200 defendants prosecuted nationally and allegations of more than $45 billion billed to federal programs and private insurers.
In the announcement, DOJ cited recent cases as illustrative of emerging risk areas, including a Northern District of California prosecution involving digital health technology executives tied to an alleged $100 million scheme, and Arizona prosecutions involving Medicaid, sober home/substance use treatment, and wound care arrangements.
Operationally, the Strike Force will coordinate with the HHS Office of Inspector General, the FBI, the DEA, and other partners, signaling increased scrutiny of controlled-substance prescribing/diversion issues alongside billing and kickback-related conduct..
DOJ also linked the West Coast expansion to broader national enforcement activity, referencing a record-setting 2025 that included the National Health Care Fraud Takedown and significant forfeiture recoveries, and it encouraged reporting of suspected wrongdoing and voluntary disclosure by companies under a department-wide corporate enforcement policy. Payers may wish to reassess fraud, waste, and abuse (FWA) controls in the three targeted districts, review vendor and provider oversight for digital health and specialty product billing, and ensure escalation pathways are in place for timely referrals when credible fraud indicators emerge.
Think tank: Medicaid’s improper payment rate is a misleading indicator of fraud
A new analysis by the conservate think tank, Paragon Health Institute, says the program that the Centers for Medicare & Medicaid Services (CMS) uses to produce the Medicaid improper rate is not designed to measure fraud and contains major gaps that make it misleading.
The policy brief, entitled Medicaid Waste, Fraud, and Abuse: Why CMS’s Improper Payment Rate Can’t Be Trusted, said that some states believe that a low improper payment rate is proof that there isn’t a major problem with fraud, waste, and abuse in their programs. But Paragon’s Chris Medrano legal research analyst, and Brian Nlase, Ph.D., president, say that the argument is flawed because the Payment Error Rate Measurement (PERM) program that CMS uses to produce the estimate isn’t designed to measure fraud and contains major gaps that make it misleading.
PERM is a statistical compliance measurement tool required under federal law, while fraud enforcement is carried out through a separate system of audits, investigations, and prosecutions by federal and state entities. These systems serve different purposes and rely on different methodologies, but are often conflated in policy discussions, they write.
Indeed, they say the improper payment rate (currently estimated at $37.4 billion annually, or 6.12 percent of all Medicaid payments, is “crude and does not capture the amount of waste, fraud, and abuse in Medicaid. Most of it is not counted in the improper payment methodology. Moreover, the current improper payment rate is essentially meaningless because of significant gaps in its methodology regarding eligibility and managed care. Given these limitations, PERM is not a good proxy for Medicaid misspending. It is a narrow, lagged audit of a subset of administrative errors.”
The best way to reduce waste, fraud, and abuse is to reform the programs, they write, but policymakers should also take steps to accurately identify and reduce improper payments. “If CMS holds states accountable for improper payments, states will take steps to reduce them, which in turn will reduce waste, fraud, and abuse. But if the federal government continues to use a flawed program that signals that improper payments are low, states will use these numbers as a reason not to invest in program integrity,” they say.
Senate committee schedules more hearings on how to make health care more affordable, improve mental health treatment
The U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee will hold two field hearings in Louisiana next week to discuss how Congress can make health care affordable and improve mental health and substance use disorder treatment. The Committee will hear from patients, providers, and local subject matter experts.
The first hearing, Making Health Care Affordable Again Part 2: Perspectives from Employers, Patients, and Providers, will take place on Tuesday, May 5 at 10 a.m. ET and can be watched live here. The second hearing, From Crisis to Care: Mental Health and Substance Use Treatment Across the Continuum of Care, will be held at 10 a.m., Wednesday, May 6, and can be watched live here.
KFF survey offers early look at states’ differing approaches to implementing Medicaid work requirements
A new KFF survey of state Medicaid officials and focus groups in eight states captures the different choices states are making about how to implement Medicaid work requirements, with seven states planning for a more restrictive approach to verifying work or exemption status or to implement work requirements early. These implementation plans are taking shape as states encounter time, cost, and other constraints as well as uncertainty about how to define and verify certain exemptions due to delayed federal guidance, the survey announcement said.
The 2025 reconciliation law requires adults in the 43 states (including the District of Columbia) covered through the Affordable Care Act (ACA) Medicaid expansion and partial expansion waiver programs (Georgia and Wisconsin) to meet work requirements starting January 1, 2027.
Though planning for the implementation of work requirements continues, states have reported making several important policy choices—all of which can affect the level of burden placed on Medicaid enrollees and applicants as well as Medicaid staff capacity:
- Additional verification: Four states (Arkansas, Idaho, Indiana, and New Hampshire) currently plan to adopt more restrictive compliance verification policies than required by law by applying longer look-back periods at application or renewal. Two of these states (Indiana and New Hampshire) will also conduct more frequent (quarterly) compliance checks.
- Early implementation: Three states report plans to implement work requirements earlier than required by law: Iowa, Montana, and Nebraska. Arkansas says it will launch a “soft implementation” of work requirements in 2026, with no disenrollments occurring until the official start in January 2027.
- Automating verification: Eighteen states say they will use new data sources to further automate verification of work requirements and non-medical exemptions, including data sources to verify school attendance, community service, and exemptions for veterans and individuals recently released from incarceration, while half of states have not yet made a decision. States are also exploring ways to verify who is medically frail and exempt from work requirements, with most indicating they will use Medicaid claims data and other data sources to automate the process. Many would also like to allow “self-attestation” from enrollees and applicants. States will not be able to implement the exemption until they have a detailed federal definition of who qualifies as medically frail and whether statements that attest to medical frailty (known as “self-attestation”) will be allowed under federal rules.
- Hardship exceptions: Twenty-nine states plan to adopt at least one of four types of hardship exception for individuals facing extenuating circumstances, including exemptions for individuals who live in high-unemployment areas or areas experiencing a natural disaster, individuals receiving care in a hospital or nursing facility, and those who must travel for medical care. Only two states (Iowa and Indiana) do not plan to adopt any hardship exceptions.
Amid these early implementation decisions and plans, states face a variety of challenges and uncertainties:
- Resource constraints: To reduce Medicaid enrollee and administrative burden, states are required to use data from available and reliable sources to check for compliance with or exemption from work requirements. However, states say their efforts to leverage new data to automate verification processes are constrained by time, costs, staff capacity, and other limitations.
- Federal guidance: States are waiting for federal guidance about how to define certain exemptions as well as community engagement activities and what verification methods will be accepted. In particular, states would like more federal guidance on who qualifies as medically frail and as a caregiver as well as how to define caregiving. Even as they move forward with new systems and other changes, states expressed concerns about the risks and added costs of making decisions before guidance has been finalized.
In addition to information on work requirements, KFF’s survey collected information on a wide range of eligibility, enrollment, and renewal policies, some of which may affect how states implement work requirements. Those findings are included in a related report, some of which are highlighted below:
- Artificial intelligence: Six states (Arkansas, California, Maryland, Missouri, New Mexico, and Oklahoma) say they are using artificial intelligence (AI) to assist with implementing work requirements, while most other states are still exploring options. A small but growing number of state Medicaid programs are also using AI to support consumer assistance, most often through a chatbot to answer questions or by assisting enrollees in updating their contact information, saving eligibility or call center workers time in manually collecting and updating the information.
- SNAP data: Fifteen states use verified income data from the Supplemental Nutrition Assistance Program (SNAP) to enroll individuals into or renew enrollees’ Medicaid coverage. SNAP data can also be used to verify compliance with work requirements or exemptions.