CMS tightens oversight of Medicaid use for immigrants

CMS said it will increase federal oversight to prevent states from using Medicaid dollars to cover healthcare for undocumented immigrants.

Currently, states are only permitted to use Medicaid funds on undocumented immigrants for emergency medical services. Data show that from 2017 to 2023, emergency Medicaid spending represented less than 1% of the fiscal year's total Medicaid spending.

On May 27, 2025, CMS stated in a press release that "some states have pushed the boundaries, putting taxpayers on the hook for benefits that are not allowed," prompting it to tighten its oversight of Medicaid.

Specifically, CMS plans to conduct focused evaluations of select state Medicaid spending reports, or CMS-64 form submissions, and assess existing eligibility rules to close any loopholes. Additionally, CMS will conduct reviews of select states' financial management systems to crack down on potential misuse of Medicaid funds.

CMS urged all states to update their internal controls, eligibility systems and cost allocation policies to ensure compliance with federal law.

"Any improper spending on noncitizens will be subject to recoupment of the federal share," CMS stated.

The announcement aligns with President Trump's February 2025 executive order, "Ending Taxpayer Subsidization of Open Borders," which aims to prevent undocumented immigrants from being able to use taxpayer-funded benefits.

"Medicaid is not, and cannot be, a backdoor pathway to subsidize open borders," said CMS Administrator Mehmet Oz. "States have a duty to uphold the law and protect taxpayer funds. We are putting them on notice -- CMS will not allow federal dollars to be diverted to cover those who are not lawfully eligible."

Jill McKeon has covered healthcare cybersecurity and privacy news since 2021.