The administration of Donald J. Trump has issued a memorandum aimed at addressing issues of waste, fraud, and abuse within the Medicaid program. The President has emphasized the need to preserve government programs for those who rely on them, citing concerns over practices that have allowed states and healthcare providers to manipulate funding mechanisms.
Medicaid was established to allocate taxpayer dollars to healthcare providers offering care to vulnerable Americans. Traditionally, payments were capped at Medicare levels, with both state and federal governments sharing costs. However, under the Biden Administration, certain practices allegedly allowed states to bypass financial contributions by using tactics such as taxing healthcare providers and returning funds as "Medicaid payments." This method unlocked additional federal payments without requiring state expenditure.
According to the memorandum, these State Directed Payments have increased significantly over recent years, reaching $110 billion in 2024 alone. This increase poses a risk to federal finances and Medicaid's sustainability while also affecting access for Medicare patients.
President Trump reiterated his commitment to protecting government healthcare programs from exploitation that could compromise their integrity. He stated that actions would be taken to ensure Medicaid payment rates do not exceed those of Medicare where applicable by law.
The directive calls on the Secretary of Health and Human Services to implement measures preventing excessive Medicaid payments compared to Medicare rates.
The memorandum clarifies it does not establish any legal rights enforceable against the United States or its entities.
Donald J. Trump
