Pennsylvania is scrutinizing fraud prevention as the feds investigate Medicaid

In the coming weeks, a federal audit of Medicaid programs across the country will begin the next steps to root out fraud following investigations in other states. But Pennsylvania leaders say the Commonwealth is already proactive when it comes to protecting programs from abuse.

“The Shapiro Administration takes fraud prevention extremely seriously, and we are proud of the processes we use to regularly verify provider enrollment and monitor service delivery – processes that have been approved by the federal government and that have helped Pennsylvania be recognized as a national leader in identifying and prosecuting Medicaid fraud,” Gov. Josh Shapiro’s office told the Capital-Star in a joint statement with the Department of Human Services.

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A federal report last year pointed out that Pennsylvania’s Medicaid fraud control unit, which reports to state Attorney General Dave Sunday state of the highest rank in the number of convictions and third overall in charges against people committing Medicaid fraud. The Commonwealth’s Office of the Inspector General said earlier this month that it had charged 310 people in 2025 with public benefits fraud totaling more than $3 million.

In an effort to combat Medicaid fraud, the feds now want to audit Pennsylvania and 49 other states

Department of Human Services Secretary Val Arkoosh said last week that the state is committed to protecting Medicaid and food assistance benefits for eligible Pennsylvanians while combating misuse. She spoke before a panel of Democrats in the House of Representatives on Thursday in Philadelphia.

“The phrase ‘fraud, waste and abuse’ is now common in public discourse. It is typically framed as an accusation of mismanagement or misuse of social service programs by individual public benefit recipients, with suggestions that states are not paying attention to these concerns,” Arkoosh continued. “These allegations bear no relation to the reality of what the Pennsylvania Department of Human Services does every day.”

She stressed that most fraud comes from suppliers, not registered individuals.

Inspector General Michelle Henry expanded on this point, adding that combating vendor fraud is “not a hypothetical issue.”

“These include health care providers who bill Medicaid for services never provided, providers who misrepresent the nature of their work, and contractors who falsify records to obtain payments from the government,” Henry said.

Long-discussed anti-fraud tools receive little attention

Centers for Medicare and Medicaid Services letters to the state provided to the Capital-Star show that the agency was particularly concerned about claims from “high-risk” providers or those without a National Provider Identification (NPI) number.

Last week, Arkoosh revealed that the state will now require everyone to have an NPI within the next two to three years. Direct Care workers employed by the agency have traditionally used their employer’s number rather than their own, which means hundreds of thousands of people will need to register, she added as an example.

“We literally have to expand our system to handle this amount of volume. That’s why we are purchasing and implementing modules from new suppliers that will handle this amount of volume,” Arkoosh said. “We will really be able to take a closer look at this work.”

Register managed at national level not required all Medicaid providers are required to have NPI, although states can make it the rule. Arkoosh said newly added providers will be required to register.

As for a timeline for full implementation, her agency alluded to staffing shortages in several areas of health care.

“Many providers have indicated that Medicaid enrollment is costly and that additional requirements may delay filling vacancies and exacerbate ongoing staffing issues. This transition is being done in a way that does not overwhelm providers or create access issues for recipients,” the spokesperson said.

The state “revalidates” – or inspects – all providers every five years to meet federal requirements, but the federal government is now calling for “rapid revalidation” on a shorter time frame.

The state has talked for years about requiring the NPI or a state-level version, even though a previous law required it failed to obtain support after his master left office. Shapiro oversaw the grand jury when he previously served as state attorney general which recommended such an anti-fraud measure AND personally pushed for the “False Claims Act.”

Despite long-standing bipartisan support, the state did not join 30 states with its own False Claims Act, which encourages whistleblowers to report fraud by offering a portion of recovered property as a reward. Most programs clearly focus on Medicaid, although some states, such as New York, also have tax compliance laws.

The state Senate version — which has both Republican and Democratic sponsors — There has not been a committee hearing yet. The House billwhich has only Democratic sponsors, passed the House in July 2010 136-67 votes over the republican opposition. It was also not adopted in the Senate.

Henry, the state inspector general who previously worked with Shapiro in the attorney general’s office, said Pennsylvania is the largest state without such protection.

“(At the attorney general’s office) I saw firsthand what Pennsylvania was missing without the False Claims Act. The difference was not theoretical,” Henry said. “It was a repeated, frustrating limitation of what we could do for the people of Pennsylvania.”

Shapiro renewed his efforts to pass the bill in his February speech and Republican senator asked Arkoosh about it in March, which means some members are still thinking about it despite the lack of movement.

What is needed to combat fraud

Arkoosh said that every six to 12 months, individual applications are checked against 15 databases to check accuracy and check for flags such as income, citizenship, residence, household composition, disability status and others.

Names and information are also checked against death records.

Of the 3.3 million applications or redeterminations, on average, about 20,000 go to the Office of the Inspector General. Last year, the office handled 674 cases worth USD 179 million.

Henry said this proactive approach to reviewing claims before paying benefits was “unique” given her conversations with leaders in other states.

“I think Pennsylvania is ahead of the curve in many ways,” she said. “The preventive element is a really important part of this. Many states look into this and it usually happens after the fact. Once the benefits are gone and the taxpayer dollars are gone.”

Providers are also cross-referenced with death records, although these investigations are referred to the attorney general’s office or other agencies, as the case may be.

Some workers with more pliant arrangements, such as those working in a Medicaid member’s home, must log their activities through electronic visit verification – either by calling a number or using an app. According to Arkoosh, in fiscal year 24-25, the state identified 657 cases of fraud related to this requirement, resulting in $584,000 in recoveries.

“We are also exploring innovative practices such as the use of data analytics, predictive monitoring and artificial intelligence support to review billing patterns for anomalies or trends, with particular attention being paid to services that have been frequently subject to fraud in the past,” a Department of Human Services spokesperson told the Capital-Star.

Arkoosh warned that 2027 would make the agency’s work more arduous when the federal “One Big, Beautiful Bill Act” takes effect. Under the Trump-led effort, the 750,000 low- and moderate-income Pennsylvanians covered by the Medicaid “expansion” will have to file every six months, rather than annually, and meet community engagement requirements.

“Adding this level of complexity to these programs will only make them more susceptible to misuse, simply due to the volume and complexity of the work,” Arkoosh said.

States will have to record whether each member worked, volunteered or went to school part-time for at least 80 hours a month, although the law provides exceptions for certain medical conditions, full-time caregivers and others.

“This is all going to really put a strain on all of our systems, and I can imagine that (Henry’s office) will get a lot more than 20,000 referrals as we now start to apply these additional levels of screening of individuals,” Arkoosh continued. “It’s going to be quite difficult.”

Previous attempts to implement work requirements have resulted in an enhance in the number of uninsured residents without increasing the number of employees. Arkoosh estimated the state would spend $50 million on technology improvements alone, not including the 250 people who would need to be hired to do the work.