Bringing you the latest news impacting our network from Congress and the Administration.
In this Edition:
Join Us for Our Capitol Conversations Webinar
New Medicaid Pressures as Waste, Fraud, & Abuse Efforts Escalate
Further Medicaid Risks Loom in Budget Reconciliation 3.0
21st Century Road to Housing Act? Go or no go?
What We Are Reading
Join Us for our Capitol Conversations Webinar
With so much happening on the Medicaid front, please join us this Thursday 5/21 for this month's "Capitol Conversations" webinar at 1 p.m. Eastern for the latest news.
New Medicaid Pressures as Waste, Fraud, & Abuse Efforts Escalate
Recent weeks have brought significant escalation in federal actions targeting “waste, fraud, and abuse” (WFA) across Medicaid and Medicare—building on earlier directives to intensify provider screening and revalidation. Taken together, the developments suggest a more aggressive federal posture that could have immediate operational and financial implications for Medicaid stakeholders, particularly in home- and community-based services (HCBS).
Fraud Czar Speaks Amidst New Funding Freeze
On May 13, Vice President Vance, in his role as “fraud czar,” announced the Administration’s decision to withhold approximately $1.3 billion in Medicaid payments to California, citing concerns about inadequate oversight of fraud, particularly in hospice care. He also announced that federal officials have notified all 50 states that funding for their Medicaid Fraud Control Units (MFCUs) could be frozen if they do not “aggressively prosecute” provider fraud. This new directive effectively places MFCUs, which operate in every state, under direct federal pressure.
Six Month Hold on Medicare Home Health and Hospice
At the same time, CMS has imposed a new six-month, nationwide moratorium on new Medicare enrollment for hospice providers and home health agencies, effective May 13, 2026. The agency has framed the moratorium as a necessary step to prevent new fraudulent actors from entering sectors it considers “high-risk,” while intensifying investigations into existing providers.
What It Means for Providers
For providers, recent actions further highlight ongoing concerns about access, workforce strain, and administrative burden. The California funding freeze, in addition to Minnesota, illustrates how enforcement decisions can disrupt state financing and potentially delay payments downstream to providers. The hospice and home health enrollment moratorium, while driven by a bad fraud case in California, if not reconciled in a timely manner could further constrain access to care in underserved areas by limiting the ability of new or expanding providers to enter the market.
CMS Work Requirement Guidance Due Out June 1
At the same time, attention is turning to expected CMS guidance on Medicaid work reporting and community engagement requirements under H.R. 1, which is due out by June 1. While formal guidance has not yet been released, we are hearing that the White House is pressing CMS to take a more stringent approach in key areas, including:
Tie medical frailty exemptions more directly to an individual’s inability to work, potentially narrowing eligibility for exemptions that are currently broader and less clearly defined in statute and prior guidance.
Limit states’ use of self-attestation for verifying compliance, which would likely increase documentation requirements and administrative complexity for beneficiaries and states alike.
If incorporated, these changes will impact how states design their programs and how beneficiaries maintain coverage, particularly for populations with complex health needs who may not neatly meet stricter exemption criteria.
Now What?
Taken together, these developments underscore a shifting policy landscape in which fraud enforcement, changes in eligibility rules, and program administration are becoming more tightly linked and signal continued federal efforts to reshape Medicaid oversight and spending. For providers and states, the months ahead will likely require more careful monitoring, rapid operational adjustments, and sustained engagement with policymakers to ensure that program integrity initiatives do not further undermine access to care.
Take Action and send messages to your lawmakers urging them not to make further harmful cuts to Medicaid funding, using our quick, easy advocacy tool.
Further Medicaid Risks Loom in Budget Reconciliation 3.0
Congressional focus is increasingly shifting toward a potential third budget reconciliation package (“Reconciliation 3.0”), which is expected to carry far greater implications for Medicaid than earlier efforts. Discussions signal broader policy changes tied to Medicaid affordability, spending reductions, and program integrity. .
Reconciliation 2.0 Still Going
The second reconciliation package—focused on immigration and border enforcement—remains under active consideration in the Senate and continues to face procedural challenges. Senate leadership is focused on advancing this bill before turning to any additional reconciliation efforts, reinforcing that legislative bandwidth is currently constrained.
Reconciliation 3.0: When & Where?
House Republicans are actively exploring a summer timeline for Reconciliation 3.0, with some aiming to move a package before the July or August recess. The bill is being framed as a major pre-midterm election policy vehicle focused on affordability and broader conservative priorities.
However, the path forward is uncertain. Advancing a third reconciliation bill would require agreement on a new budget resolution, and Senate Republicans have expressed clear skepticism about both the timeline and the likelihood of passage, particularly while the current package remains unfinished.
What It All Means for Medicaid
Unlike Reconciliation 2.0, a third package is widely expected to include committees with jurisdiction over Medicaid and other health programs, placing healthcare squarely in scope. Early signals point to a mix of anti-fraud initiatives and deeper spending cuts across social programs, with Medicaid viewed as a key source of potential savings.
With reconciliation allowing passage by a simple Senate majority, these proposals could advance more easily than under regular order—significantly increasing the risk of substantive Medicaid changes.
What's Next
While significant uncertainty remains, the policy conversation is clearly shifting: Medicaid is likely to be a central focus of a potential third reconciliation bill. Stakeholders should expect continued momentum in the House, tempered by Senate caution, as the state of play comes into sharper focus in the weeks ahead.
New 21st Century ROAD to Housing Act: Go or no go?
The bipartisan 21st Century ROAD to Housing Act remains stalled in the House, despite growing pressure from the White House, Senate Republicans, and industry stakeholders to move the bill forward. While the Senate overwhelmingly passed the legislation in March by an 89–10 vote, House action has slowed amid internal GOP disagreements and shifting political dynamics.
Changes to House Version
Speaker Mike Johnson has confirmed that the House will move forward with amendments rather than take up the Senate bill unchanged, working with Rep. Maxine Waters (D-CA-43) to identify revisions that could preserve bipartisan support while addressing conservative concerns. These concerns center on provisions requiring large institutional investors to sell certain single-family rental homes within seven years along with a temporary ban on a central bank digital currency—issues that continue to divide House Republicans.
External Pressure Mounts
At the same time, pressure to act is intensifying. President Trump has publicly urged the House to pass the bill as a response to housing affordability challenges, and Senate Republicans have expressed frustration with the continued delay. Lawmakers in both chambers increasingly view housing as a key political issue heading into the midterms, heightening the urgency to deliver a legislative win.
Uncertainty looms
Despite pressures, the path forward remains uncertain. House leadership faces a narrow margin for passing the bill, and even a small number of defections could derail progress. Efforts to amend the legislation risk reopening negotiations with the Senate, adding more delays. In short, while momentum is building to advance housing legislation, the combination of policy disagreements, political timing, and procedural constraints continues to leave the bill in limbo.
This Thursday: Join Us for the Next "Capitol Conversations" Webinar
Reconciliation 3.0 and What’s Further at Stake for Medicaid
May 21, 2026 | 1–2 p.m. ET
Join us on May 21 to discuss Congressional efforts related to a third round of budget reconciliation and what it might mean for Medicaid. We’ll explore the likelihood of any further action as the House presses forward with the midterm elections also in sight.
We will also hear from your Lutheran Services in America network peers about what they are doing to protect and strengthen Medicaid in their respective states and districts.
For more information, please contact Sarah Dobson, Senior Director of Public Policy and Advocacy.
Lutheran Services in America is one of the nation’s largest national networks of health and human service providers with a mission to cultivate caring communities that advance health and opportunity for all. With 300 nonprofit organizations across 1,400 U.S. communities and more than $26 billion in combined annual services, the Lutheran Services in America network advances equitable outcomes for children, youth and families, improves independence and choice for older adults, champions meaningful services and support for people with intellectual and developmental disabilities, and strengthens stability and purpose for veterans and others. Formed in 1997, Lutheran Services in America brings together a network of leaders, partners and funders to catalyze innovation, strengthen organizational capacity and advance public policy.
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