Fighting Medicare and Medicaid Fraud Requires Persistent Vigilance: Skin Substitute Reform Worked, but State Risk Classification Failures Show More Work Remains
Source: Christopher Jacobs. "One Ongoing Scam Cost Medicare $15 Billion." November 3, 2026. thefederalist.com
The Gist
Fraudsters keep finding new loopholes, so government has to keep closing them. A loophole letting providers charge unlimited prices for wound-care products cost Medicare billions and has now been closed, saving seniors money. But states aren't even doing basic risk-checking of Medicaid providers, so the fight is far from over.
Conclusion
Combating waste, fraud, and abuse in government health programs requires ongoing vigilance and incremental, adaptive reforms; recent progress on Medicare skin substitutes is real, but states' failures to classify Medicaid provider risk show Washington still has significant work to do.
Premises
- Scammers adapt and migrate to new schemes whenever lawmakers close loopholes or law enforcement cracks down, so fraud prevention is a continuous fight.
- A Medicare policy that put no cap on charges for new skin substitutes in their first six months led to a more than 60-fold spending increase, from $256 million in 2021 to an estimated $15.4 billion in 2025, as providers kept introducing 'new,' pricier products.
- After the Trump administration's CMS reformed skin substitute payment policy, the Medicare trustees project spending will fall by more than 90 percent in 2026, which CMS Administrator Oz says lowers Part B premiums by $11 per month ($132 per year).
- The House Energy and Commerce Committee found that states, including New York, are not classifying Medicaid providers by risk level as federal regulations require, especially for Medicaid-only services such as in-home personal care and applied behavior analysis for autism that are highly vulnerable to fraud.
- Risk classification is a common-sense tool because it focuses scarce oversight, such as background checks, fingerprinting, and license verification, on the highest-risk providers; failing to do it shows a cavalier attitude toward taxpayer money.
- Committee members introduced 14 anti-fraud measures alongside the report, indicating that substantial gaps remain.
Assumptions
- The projected drop in skin substitute spending reflects reduced fraud and waste rather than legitimate care being denied to patients with chronic wounds.
- The reduction in spending is attributable to the CMS policy change rather than other factors.
- The skin substitute spending surge was primarily fraud or abuse rather than legitimate market growth or clinical adoption.
- Failure to formally classify risk levels implies inadequate fraud protection and leads to more fraud in practice.
- Federal oversight and regulation, including more anti-fraud legislation, are an effective way to address these problems.
- The Oz-cited premium savings are accurately and fully attributable to the skin substitute reform.
- Incremental reform is a better approach than a decisive, one-time fix.