Terry Gerton: A new report has been released examining home and community-based care under Medicaid. The report begins with a straightforward premise: while fraud in Medicaid must be tackled, it should not come at the cost of the very people the program is designed to support. Could you explain who this program is intended for and how that balance is currently playing out?
Leslie Ford: Absolutely. Medicaid was established in 1965 under President Lyndon B. Johnson, and from the start, one of its core purposes has been to support individuals with disabilities. We’re talking about people with significant conditions—someone with cerebral palsy, a child with Down syndrome. The goal has always been to help them live within their communities rather than being isolated in institutions. That’s a foundational principle of Medicaid.
When Medicaid first launched, however, the only care options available were institutional—nursing homes or hospitals, often far from families and community life. These settings were impersonal and isolating. In the 1980s, President Ronald Reagan recognized this as inhumane. He encountered a young girl named Katie Beckett, who could have lived at home with the right support, but existing laws prevented it. Reagan changed those rules, paving the way for home and community-based services (HCBS). Today, HCBS is a critical lifeline for people with severe disabilities. Every state in the country operates a waiver program that allows federal Medicaid funds to be used for these essential services.
At the same time, there’s growing concern about widespread fraud in the program—especially when oversight is weak. So we’re trying to strike a balance: protecting a vital safety net for vulnerable Americans while ensuring taxpayer dollars are used responsibly.
Terry Gerton: One line in the report really stood out: “There is typically great inefficiency in state HCBS program administration, which involves layers of vendors or consultants contracted by states to manage eligibility, financial reimbursements, and care delivery.” When a system is this complex and serves such a vulnerable population, it creates openings for bad actors. In practical terms, what does waste, fraud, and abuse actually look like in this space?
Leslie Ford: Great question. When we speak with program administrators across the country—regardless of whether they’re in red or blue states—many describe the provider structure as a “lasagna of providers.” It’s not a simple chain from government official to provider to individual. Instead, there are often 10 to 20 intermediaries between the person with a disability and the state agency managing the budget. You’ve got providers monitoring other providers, others handling eligibility checks, and many more in between. This layered setup creates massive inefficiencies.
Now, let’s break down fraud, waste, and abuse—they’re often lumped together, but they mean very different things:
Fraud is outright illegal activity. For example, a provider bills Medicaid for services they never delivered. That’s fraud—plain and simple. If caught, they face heavy fines or jail time.
Waste refers to poor oversight that leads to unnecessary spending, even if it’s technically legal. Take New York as an example. Over the past eight years, its HCBS program tripled in size—but didn’t serve proportionally more people. One reason? They initially allowed eligibility based on just one “activity of daily living” (ADL)—like needing help getting dressed. But someone with severe cerebral palsy might need help with 20 ADLs just to survive each day. By lowering the bar to one ADL, New York expanded the program far beyond its original intent. In 2020, they corrected this by raising the threshold to three ADLs. That earlier approach wasn’t illegal, but it wasted significant public funds.
Abuse sits in a gray area—technically within the law, but clearly exploitative. We’re seeing this now in autism services. While diagnosis and treatment options have improved dramatically, some unscrupulous providers are taking advantage. Reports from the Wall Street Journal highlight cases in Indiana and elsewhere where providers bill $30,000 a day—or $900,000 a year—for a child’s autism care, while paying the actual caregiver (often someone with only a high school diploma) just $20 an hour. That’s not fraud in the legal sense, but it’s undeniable abuse of the system.
So to recap: fraud means no service was provided; waste stems from lax oversight; abuse exploits loopholes without technically breaking the law.
Terry Gerton: Leslie Ford is a senior fellow in the Able Americans program at the National Center for Public Policy Research. Leslie, that breakdown is incredibly helpful for understanding the scope of the problem. The report includes six recommendations for addressing waste, fraud, and abuse in Medicaid—something the Trump administration has prioritized. What are your key suggestions?
Leslie Ford: First and foremost, we need radical transparency. If you talk to any family enrolled in the program—or a parent of a child who’s participated—they’ll tell you the same thing: “I have no idea what’s going on.” Many are stuck on waitlists, especially those with intellectual disabilities, who make up about 75% of waitlisted individuals. They don’t know their position on the list, when they might get off it, or why delays occur. That lack of clarity breeds frustration and opens the door to mismanagement.
Leslie Ford: I might have to wait as long as eight years just to access the services I need to get by each day. We need full transparency about waitlists—who’s on them, how long people are waiting, and what providers are charging. That’s the first step: transparency.
Second, CMS—the Centers for Medicare & Medicaid Services—is the federal body that oversees how states run Medicaid. Right now, they monitor improper payments, but they lack an ongoing system to detect fraud. They should establish a continuous fraud oversight mechanism.
Third, states must take real responsibility for oversight. One effective way is by hiring third-party auditors. Currently, only three states use independent auditors to review billing codes. It’s not enough to say you’re “looking into it”—you need outside experts to double-check the numbers.
Fourth, we need to empower the people these programs are meant to serve: individuals with disabilities and their families. These families often provide 20 to 30 hours of care per week. They should control the funding and choose the providers that work best for them. Right now, they have almost no say—even though the tools exist to change that.
Fifth, we should measure whether these programs are actually working. Are states reducing waitlists? Are they keeping participants healthy? Are they even defining what success looks like? Without outcome tracking, we can’t improve.
Sixth, we need strong integrity safeguards for providers. Fraud, waste, and abuse mostly come from providers exploiting the system. A basic but powerful rule: any provider billing Medicaid anywhere in the U.S. must disclose every entity they operate under. Some bad actors create multiple LLCs across states to avoid detection. These are straightforward governance reforms Congress, the administration, or states can implement to curb misuse.
Terry Gerton: There’s always a tension in public benefit programs: tighter oversight can make it harder for people to access services. If CMS adopted your recommendations, how would you balance ensuring access while maintaining strong oversight?
Leslie Ford: As we developed these six ideas, our top priority was always the families and individuals who rely on these services every day. We started by asking them what they needed—and their answer was simple: “Just tell us what’s going on.” They want a list of providers, to know where they stand on the waitlist, and to understand what happens if they move to another state. These recommendations come directly from families in the program. At their core, they put people with disabilities and their caregivers in the driver’s seat.
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