NASDDDS Weekly news & updates | September 30, 2026 | Issue 31 | | |
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| Welcome to the weekly NASDDDS newsletter where we spotlight state and federal updates in the IDD field! Send submissions to cmcgraw@nasddds.org. | | | House Energy & Commerce Committee Release "Real Costs" of Fraud Report | | |
The House Energy and Commerce Committee yesterday released a Majority Staff Report titled "The Real Costs of Fraud: Examining Program Integrity Requirements and Exposing Fraud in Medicare and Medicaid." The report describes "emerging trends" in Medicare and Medicaid, including "reduced program integrity capacity at the U.S. Centers for Medicare & Medicaid Services (CMS) under the Biden Administration, increased utilization and spending in recent years, continued reliance on reactive program integrity rather than preventative oversight, and limited oversight of waivered Medicaid services." The report offers "a series of recommendations to strengthen federal program integrity guidelines, improve states’ capacity to prevent fraud before it occurs, more comprehensively share data and information to inform fraud investigations, and employ innovative tools to improve fraud detection capabilities."
Recommendations to states include:
- adopting False Claims Act statutes,
- expanding whistleblower protections,
- contractually requiring MCOs to refer potential fraud to the appropriate entities in a timely fashion with specific actions that will be taken if MCOs do not comply,
- increasing independent oversight of Medicaid programs,
- continuing to shift Medicaid program integrity toward a prevention-focused model by encouraging greater use of pre-payment reviews and payment suspensions when there are credible allegations of fraud,
- improving fraud referral processes, provider enrollment verification requirements, and encounter data validation efforts to identify and recover improper payments,
- regularly re-evaluating provider risk levels as a fraud prevention strategy, in addition to consideration of any changes in risk level designations required by CMS,
- investing in AI tools to streamline fraud detection in provider enrollment, revalidation, and pre- and post-payment claims processing,
- strengthening payment integrity by verifying provider enrollment, exclusion status, and claims information prior to payment and by improving oversight of high-risk services and providers.
Recommendations to Congress include:
- providing additional resources for fraud prevention, data analytics, investigations, and recovery activities to help agencies identify and stop fraud before improper payments occur.
- allowing MFCU resources to be used to investigate and prosecute instances of fraud related to the application for, or receipt of, Medicaid benefits,
- aligning federal financial incentives with program integrity performance, payment accuracy, and fraud recoveries.
Recommendations to CMS include:
- establishing minimum qualifications and screening risk standards for Medicaid providers, particularly high-risk provider types,
- implementing HHS-OIG’s 2016 recommendation to establish minimum federal qualifications and screening standards for PCS workers, including background checks,
- expanding guidance and training provided to SMAs on the specific risks of high-risk Medicaid provider types,
- supporting beneficiary education and engagement initiatives that empower Medicaid recipients to identify and report fraud, waste, and abuse,
- adopting HHS-OIG’s recommendation to support periodic information sharing among Medicare, Medicaid, and stakeholder groups to mitigate evolving threats of electronic fund transfer fraud schemes,
- strengthening information sharing across Medicaid, Medicare, and other federal programs to improve provider screening and identify fraud schemes that cross state and program boundaries, including developing more comprehensive provider ownership databases, expanding the use of existing federal data systems to identify excluded providers, facilitating routine information sharing among federal and state partners, and supporting government-wide initiatives to resolve persistent Medicaid audit findings that place federal funds at risk,
- strengthening regulatory guidance for SMAs to standardize Medicaid-only provider risk levels across more provider types,
- conducting more frequent nationwide screenings of Medicaid providers to ensure states are complying with federal provider screening and revalidation requirements,
- requiring states to include more information about program integrity, including the categorical risk levels assigned to Medicaid providers, in State Plans,
- establishing a nationwide provider registration database that gives SMAs access to information on Medicaid provider ownership in other states,
- requiring states to comprehensively report all pre- and post-payment audits including whether efforts are one-time or ongoing along with savings identified versus recovered (with explanations for variances) and details on vendor-proposed audits that were denied, including rationale.
To access the full report: READ MORE
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- The National Health Law Program, Democracy Forward, Legal Council for Health Justice, Indiana Justice Project, and Legal Aid of Western Missouri this month filed a lawsuit, Taylor et al. v. Kennedy, Jr. et al, challenging provisions of a federal rule implementing Medicaid work requirements. The lawsuit alleges that the rule unlawfully narrows who is excluded from work requirements because they are “medically frail or otherwise have special medical needs,” in violation of the Administrative Procedure Act.
The lawsuit claims the Interim Final Rule (IFR) improperly restricts the statutory definition of “medical frailty” in several respects since the IFR:
- requires individuals who are medically frail to further prove that their condition significantly impairs their ability to comply with the Medicaid work requirements; and,
- denies some individuals with a substance use disorder an exclusion from work requirements; and,
- establishes “unduly burdensome” procedures to verify medical frailty.
NHeLP has issued an explainer that outlines the challenged policies, the plaintiffs’ legal claims, and the potential implications for Medicaid enrollees with serious health conditions. READ MORE.
- On October 1st, 2026 changes made by HR 1 to Medicaid eligibility for noncitizens take effect. Beginning October 1, federal financial participation (FFP) for full scope Medicaid and CHIP will only be available for the following narrow groups of non-citizens as a federal baseline: lawful permanent residents (LPRs); Cuban-Haitian entrants; and Compact of Free Association (COFA) migrants. Full scope Medicaid and CHIP will generally no longer be available to refugees, asylees, victims of human trafficking, humanitarian parolees, and others who have long been eligible for coverage through these programs.
- Last week, the federal judge in Texas v. Kennedy vacated the community integration requirements in the Department of Health and Human Services’ (HHS) Section 504 rule, resolving the lawsuit. The resolution approved by the judge was proposed by the Department of Justice (DOJ) on behalf of the defendant (HHS) and the remaining plaintiffs (Texas, Florida, Alaska, Louisiana, and Montana). The final motion orders HHS to change the 2024 regulations implementing Section 504 of the Rehabilitation Act, but does not have broader application. READ MORE
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Registration is now open for the 2026 NASDDDS Directors Forum and Annual Conference, November 2–5 in Chicago! Join state I/DD leaders, federal partners, subject-matter experts, and industry representatives for four days of learning, connection, and collaboration. This year’s conference will spotlight technology and innovation alongside timely discussions on workforce, policy, service delivery, and emerging priorities shaping state I/DD systems. Register today and join colleagues from across the country to exchange ideas and help shape the future of more person-centered systems.
FIND OUT MORE
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- ACL has awarded Northwestern University a $3 million Project of National Significance grant to increase awareness and use of Achieving a Better Life Experience (ABLE) accounts. Through a three-year cooperative agreement, Northwestern will lead a national effort to help increase enrollment in ABLE accounts and improve financial literacy among people with intellectual and developmental disabilities (I/DD) and other disabilities. Financial education will be part of the project to help people with disabilities and their families make informed financial decisions and use ABLE accounts to build greater financial security, independence, and opportunity. Northwestern’s RISEI Lab is partnering with nonprofit TransCen, Inc. to carry out Project ReachABLE.
- On October 14 from 1:30–3:00 p.m. ET, CMS invites states to join a webinar exploring how the new 1915(c)(11) Home and Community-Based Services waiver authority can support improved access, outcomes, community integration, and cost-effectiveness. The session will provide an overview of the new authority, share practical examples of how states may use it, and highlight key program integrity considerations. Participants will also have an opportunity to ask questions following the presentation. READ MORE
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The National Association of State Directors of Developmental Disabilities Services (NASDDDS) does not exclusively endorse any sponsor, product, or service referenced in this newsletter. Likewise, the views, information, and content presented in this newsletter do not constitute endorsement by any sponsor. All editorial content is developed independently by NASDDDS to inform and support its members.
For accessible or alternate versions of this information, please email cmcgraw@nasddds.org.
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