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The oversight required by law isn't happening.
On September 29, 2026, Dr. Mehmet Oz, the administrator of the Centers for Medicare & Medicaid Services (CMS) gave Michigan and seven other states 30 days to explain why they reported zero Medicaid fraud referrals this year. Federal inspectors explained it in 2022: four referrals in three years, 31 people to police a $21 billion program, and an attorney general who wouldn't ask for more.
"How is that possible across states serving millions of Medicaid beneficiaries?" he asked. Michigan is one of the eight, alongside Arizona, California, Iowa, New York, Pennsylvania, Utah and Wisconsin." They have 30 days to answer. "Either the reporting is broken, or the oversight is," Oz said. "We're going to find out which."
He can skip the month. The federal government answered his question in 2022, in two reports its own inspectors wrote after taking Michigan's Medicaid fraud machinery apart link by link. What they found was a state that, at every point where somebody had to decide whether to enforce, decided not to.
How It Is Supposed To Work
Medicaid fraud enforcement in Michigan passes through three hands. The health plans the state pays to run Medicaid are required by federal rule to operate fraud units and refer suspected fraud to the state. The state's Medicaid agency, through the inspector general inside the Department of Health and Human Services (MDHHS-OIG), screens what comes in. The attorney general's Health Care Fraud Division, Michigan's Medicaid Fraud Control Unit, investigates and prosecutes.
Washington pays 75 percent of that unit's budget, recertifies it every year, and can cut it off. In June it did exactly that to Hawaii's unit, weeks after warning every state attorney general that it would enforce "rigid" compliance. Vice President JD Vance has put it plainly: "We are going to turn off that anti-fraud money."
Four
Start with the screen. Between fiscal years 2018 and 2020, MDHHS-OIG referred four cases of suspected provider fraud to the attorney general's prosecutors. Four, in three years, for a program approaching $21 billion a year. The HHS Office of Inspector General, which audited the prosecution unit in 2021, wrote that the figure "likely underrepresents potential Medicaid provider fraud" and noted that comparable units elsewhere received between 28 and 236 referrals from their Medicaid agencies. MDHHS-OIG's own annual report for 2018 says it in the agency's words: the division "referred four Medicaid providers to the Attorney General's Health Care Fraud Division."
The prosecutors received 2,699 referrals in those three years. Private citizens sent 1,968 of them. Another 357 arrived anonymously. Seventy-three percent of Michigan's Medicaid fraud tips came from the public. Four came from the agency that pays the claims.
The Memo
The prosecutors knew. In June 2018, under then-Attorney General Bill Schuette, the fraud unit sent a memo to all ten Medicaid health plans requiring them to send every fraud referral directly to the attorney general's office at the same time they sent it to MDHHS-OIG. Read that again: Michigan's prosecutors had to instruct private insurers to route around Michigan's Medicaid agency to get cases. It worked, on volume. Referrals from the plans went from one in fiscal 2018 to 47 in 2019 and 57 in 2020.
Then the state dropped those too. CMS reviewers reported in 2022 that the fraud unit "did not consider these to be actual referrals and therefore did not feel the need to formally accept or deny each referral." The written agreement between MDHHS-OIG and the prosecutors, which federal rules require be reviewed every five years, said nothing about health-plan referrals at all. Two state agencies, one answering to the governor and one to the attorney general, and neither wrote down who owned a fraud case once an insurer reported it. The memo itself is not public. We will be requesting that memo.
Thirty-One People
Then there is the unit itself. In 2011 Michigan's Medicaid Fraud Control Unit had 28 employees and the program spent $12.6 billion. In 2021 it had 31, and the program spent $21.3 billion. By 2023 it was 34 people for $23.7 billion. HHS-OIG's staffing model put the need at roughly 50. In February 2021 the unit's director asked for four more positions. Attorney General Dana Nessel did not forward the request to the legislature. The unit concurred with all nine of the federal report's findings.
The same review found the unit had worked 13 cases jointly with federal investigators in three years, one percent of its caseload, and did not participate in the Justice Department's Health Care Fraud Strike Force even though Detroit is one of the cities designated for it. Michigan reported nearly half of its convictions Washington late, which delays the federal exclusions that stop a convicted provider from billing in the next state over. And CMS found that until fiscal 2020 the state had not suspended payments to a single provider the plans had referred, a power federal rules had given it years earlier.
What Oversight Looks Like
None of this is what enforcement costs. Ohio sits next door with a Medicaid program nearly 40 percent larger. In fiscal 2023 Ohio's fraud unit had 102 people to Michigan's 34, carried 1,110 open investigations to Michigan's 511, brought 142 indictments to Michigan's 18, and won 183 convictions to Michigan's 11. Ohio's Medicaid agency sent its prosecutors 247 fraud referrals in 2022 alone; Michigan's sent four in three years. Ohio's health plans reported 420 fraud referrals to the state that year. Ohio is not on Oz's list, because Ohio reported its numbers.
Ohio has real fraud problems, and CMS said so in April. The difference is what kind of problem. Ohio's is what it finds. Michigan's is that it doesn't look.
Side By Side
Per $10 billion of Medicaid spending, Ohio fields 31 fraud-unit staff to Michigan's 14, and wins 56 convictions to Michigan's 5.
The Insurers Were Looking
The health plans, meanwhile, were looking, because under Michigan's contracts the money a plan recovers is generally the plan's to keep. Molina Healthcare's Michigan Medicaid fraud unit had 33 people, more than the state's entire prosecution unit. In fiscal 2019 Molina identified $37 million in overpayments and recovered $34.4 million. It referred between four and eight cases a year to the state. Meridian recovered $15.5 million. When Molina caught a bad provider, it didn't suspend payments. It put the provider on a "no pay" contract that zeroed out every claim.
That is as far as an insurer can go on its own. Everything after that requires a state willing to enforce.
Something Far More Serious
Oz said the zeros "could be a sign of something far more serious, that oversight isn't happening." In Michigan the sign has a price tag. The state pays each health plan a set amount per member per month, and that amount is built from what the plans spent the year before. When a plan claws money back from a crooked provider, federal rules say that money has to come off next year's bill. If the state counts zero recoveries, nothing comes off, and the plans get paid next year as though the fraud were real medical care. CMS warned Michigan about exactly this in 2022: without that accounting, "MHPs could be receiving inflated rates per member per month." The insurers keep the money and the rates.
It is also the system under which, as Restoration News reported in April, 21 dissolved Michigan corporations kept billing Medicaid for a combined $118.8 million after the state's own records showed them out of business, and roughly 80 Medicaid-billing entities shared a single Dearborn address. A chain that moves four referrals in three years is how that happens. Senate Republican Leader Aric Nesbitt and Rep. Jamie Thompson cited that reporting in May when they referred it to the Justice Department.
Oversight isn't happening in Michigan. The federal government's own inspectors said so four years ago, in reports that sat on a shelf while the state told Washington there was nothing to report. Oz gave Lansing 30 days to find out which is broken, the reporting or the oversight. In Michigan it is both, and it was broken long before he asked.
Reprinted with permission from Restoration News.
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
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