A new rule created by CMS could be the key to stopping fraud, waste, and abuse of federally subsidized health insurance, with CMS director Dr. Oz saying he believes that the recently announced rule will stop states from using Medicaid funding for fraudulent purposes and stop illegal immigrants from getting free healthcare.
For context, on May 12, 2025, the Centers for Medicare and Medicaid Services (CMS) released a statement explaining that they had issued a proposed rule that would close a tax “loophole” that was being taken advantage of by states to commit fraud and free up federal funding for purposes unrelated to healthcare. In addition, CMS announced that the new rule could stop excess federal costs from getting even worse, saying that the rule will help Americans avoid an increase of “$74 billion over 5 years.”
In the official statement, CMS explained that the new program is “projected to save taxpayers more than $30 billion over five years and continues CMS’ work in ensuring this vital safety net continues to be available for the country’s most vulnerable populations in the future,” adding, “These arrangements allow states to benefit from a budget surplus to reinvest in unrelated programs.”
In addition, CMS Administrator Dr. Mehmet Oz described states as “gaming the system” and “creating complex tax schemes that shift their responsibility to invest in Medicaid and rob federal taxpayers.” He added that the new proposed arrangements stop the “shell game” by making sure that Medicaid funding goes exclusively “to pay for health care for vulnerable Americans who rely on this program, not to plug state budget holes or bankroll benefits for noncitizens.”
Furthermore, Drew Snyder, CMS Deputy Administrator and Director of Medicaid & Children’s Health Insurance Program (CHIP) Services, said, “This isn’t just wasteful—it’s wrong.” He added, “Medicaid was designed to protect low-income seniors, pregnant women, children, and people with disabilities—not subsidize coverage schemes that displace our most vulnerable. We are restoring Medicaid to its original purpose and ensuring the intent of the law is followed.”
Commenting on the new proposed rule in a May 13, 2025, X post, Dr. Oz wrote, “Partnering with States for a stronger Medicaid means re-aligning incentives.” He added, “Today’s action closes a loophole and ensures federal taxpayer dollars aren’t subsidizing health care for illegal immigrants.” In response, conservatives showed their support in the comments section, with the user Boost saying, “This is a huge win for taxpayers! 
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The announcement of the new CMS rule came shortly after the House DOGE Subcommittee announced that the Department of Government Efficiency had uncovered billions of dollars lost to fraud within agencies like CMS, with committee member Rep. William Timmons (R-SC) slamming the Biden Administration for letting the fraud go unchecked. In a February 12, 2025, press release, Rep. Timmons said that based on Biden’s apparent violation of checks and balances, he was “clearly experiencing cognitive decline.”
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In the same press release, Stewart Whitson, the Senior Director of Federal Affairs at the Foundation for Government Accountability, said that Biden’s Medicaid streamlining rule was “disastrous,” adding that new legislation could “strengthen the Medicaid program.” He continued, “Congress can help President Trump’s DOJ’s effort by ensuring that entrenched partisan bureaucrats don’t stand in the way of reform so much as [the] DOJ’s team of 30 found hundreds of billions of dollars funneled into wasteful, fraudulent, and flat-out insane projects. But they’ve only scratched the surface if this much fraud has been exposed in just a few weeks. Imagine what else is buried under layers of red tape and government excuses.”
Featured image credit: Dr. Mehmet Oz via X