Eighty Medicaid-billing entities operating out of a single address in Dearborn, Michigan. Twenty-one dissolved corporations in the state still submitting claims. Federal inspectors flagged $118.8 million in payments to those defunct companies back in 2022.
Michigan reported zero Medicaid fraud.
Zero. As in none. As in the state where federal inspectors found 80 providers sharing one address four years ago now claims there is no fraud happening whatsoever. Dr. Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services, had a reasonable question: "How is that possible across states serving millions of Medicaid beneficiaries?"
Eight states in total reported zero fraud and zero overpayments to CMS: Arizona, California, Iowa, Michigan, New York, Pennsylvania, Utah, and Wisconsin. Dr. Oz gave each of them 30 days to respond. "Either the reporting is broken, or the oversight is," Oz said. "We're going to find out which."
The federal government covers 75 percent of Medicaid costs. That means three-quarters of every fraudulent dollar billed in these states comes out of the pockets of taxpayers in all 50 states. The states themselves have a financial incentive to not look too hard — they're spending someone else's money. When fraud gets caught, the money has to be clawed back under 42 CFR 438.608. When fraud doesn't get caught, the budget just grows.
These are some of the largest and most complex Medicaid systems in the country. New York and California alone serve tens of millions of enrollees across sprawling networks of providers, managed care organizations, and billing intermediaries. The idea that not a single improper payment occurred is not a testament to good governance. It's a confession that nobody checked.
Michigan's record is particularly instructive. Federal inspectors had identified the Dearborn address cluster and the dissolved corporations years ago. The state did NOTHING. In May, Michigan Senate Republican Leader Aric Nesbitt and Representative Jamie Thompson referred the findings to the Justice Department. The state's own reporting system, meanwhile, continued to show a clean zero.
Dr. Oz has been clear about what CMS intends to do: "could be a sign of something far more serious, that oversight isn't happening." He's being diplomatic. The oversight isn't happening because the states don't want it to happen. Finding fraud means admitting the program is being looted. It means Trump is right, it means he scores another win against Democrats. Admitting the program is being looted means explaining how it happened under Democrat leadership. Easier to file a zero.
California, New York, and Michigan collectively account for an enormous share of national Medicaid spending. These are also states that aggressively expanded Medicaid eligibility, adding millions of enrollees and billions in federal claims. More enrollees. More providers. More billing complexity. And somehow, less fraud than a rural county clinic.
The pattern is straightforward. Expand the program. Bill the federal government. Don't audit the billing. Report zero problems. Repeat. The states filing zeroes aren't the ones with the cleanest programs. They're the ones with the least interest in looking.
