LTC Bullet: An Open Invitation to LTC Fraud

Friday, May 29, 2026

Seattle—

LTC Comment: Government’s good intentions opened the flood gates for LTC fraud. We explain after the ***news.***

*** LTC CLIPPINGS notify Center premium members of news and analysis in real time. Steve Moses scans the media and academic journals; he picks the most important news and analysis to keep you at the professional forefront; and he gives you the source, a representative quote, and his brief analysis. A couple examples follow. Find our “Membership Levels and Benefits Schedule” here. Join the Center and become a premium member here. Or contact damon@centerltc.com for details.  

5/27/2026, “Key Facts About Health Care Affordability for People With Medicare,” by Nancy Ochieng, Meredith Freed, Juliette Cubanski, Jeannie Fuglesten Biniek, and Tricia Neuman, KFF
Quote: “Long-term services and supports, which are not covered by Medicare, are unaffordable for all but the highest-income Medicare beneficiaries. In 2025, the median annual costs of common long-term services and supports in the U.S were $80,080 for full-time non-medical caregiver services (including home health aide and homemaker services for people who need help with instrumental activities of daily living such as preparing meals and doing laundry), $129,575 for a private room in a nursing home, and $305,760 for round-the-clock home health aide services (Figure 9). These costs greatly surpass median income ($43,200) and savings ($110,100) among people with Medicare. Long-term care services are generally not covered by Medicare, regardless of whether a beneficiary is enrolled in traditional Medicare or Medicare Advantage.”
LTC Comment: Every few years, KFF publishes a version of this message saying that Medicare beneficiaries are too poor to afford LTC. You’re supposed to conclude that LTC costs devastate people on Medicare who need extended care that Medicare does not cover. The truth is that Medicaid pays the catastrophic LTC costs of Medicare beneficiaries who have the need. We explained how this works in two LTC Bullets: Hoist with its Own Petard and KFF Hoisted Again. Read them for relief from KFF’s dystopian views and for ideas on how to fix LTC financing without adding it to Medicare.

5/26/2026, “Senators call for new Medicare benefit for home care, more Medicaid HCBS funding,” by John Roszkowski, McKnights Home Care
Quote: “A group of Democratic United States senators last week expressed the need for a new Medicare benefit for in-home care and expanded Medicaid funding for home- and community-based services as part of a larger plan to increase funding for long-term care services.”
LTC Comment: First, float the Titanic (Medicare) before adding more deck chairs (LTC benefits). ***
 

LTC BULLET: AN OPEN INVITATION TO LTC FRAUD

LTC Comment: Health care fraud is all over the news lately. Medicaid and Medicare are the fraudsters’ favorite targets. Medicaid LTC is especially vulnerable because most of it (87.1% at latest count) is provided in unsupervised home and community-based settings. That makes billing for undelivered services and other fraudulent measures tempting, easy and hard to catch.

The Centers for Medicare and Medicaid Services (CMS) is fighting a rearguard action to rein in health care fraud. The Administration’s Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) initiative and a Task Force to Eliminate Fraud aim to curtail fraud in CMS programs estimated to cost $100 billion per year. Some say these measures are too little, too late. Why hasn’t the government fought fraud more aggressively up to now?

Efforts to fight fraud in public benefit programs face many obstacles. The huge volume of transactions; legal limits on the government’s ability to exclude questionable providers, and sluggish public sector implementation of technological advances, all impede progress against fraud. Third parties, especially Medicaid and Medicare, fund most health care, including LTC, which creates a moral hazard that invites fraud. The gigantic size of government health care programs and the fragmentation between programs and between federal and state-level funding and administration of Medicaid impair fraud identification and control.

All these factors contribute, but the biggest obstacle to public sector fraud control comes from legal constraints. Medicaid and Medicare were created in 1965 as part of Lyndon Johnson’s Great Society war on poverty. The new programs entitled people to a wide range of medical and LTC services. After enactment, their costs exploded immediately. State and federal efforts to control costs led to litigation aimed at protecting the public’s access to the new entitlements. Two major court cases addressed this issue.

In Goldberg v. Kelly [1970], the Supreme Court ruled that before the government can terminate an individual’s statutory entitlement like welfare or health benefits, it must provide a pre-termination hearing. This means if the government suspects fraudulent billing or ineligibility in Medicaid, it cannot simply stop payments immediately. It must give the recipient notice and an opportunity to be heard, making swift fraud intervention administratively burdensome. Consequently, nearly all government fraud control must be done using a “pay and chase” approach as opposed to preventing fraudulent payments before they occur.

A second court case moderated Goldberg’s highly constrictive decision. In Mathews v. Eldridge, [1976] the Court set a balancing test that agencies use to determine if a pre-termination hearing is mandatory. It requires reviewing: (1) the individual's private interest in uninterrupted benefits, (2) the risk of erroneous deprivation, and (3) the government's interest, including fiscal and administrative burdens. Thus, Mathews allowed the termination of Social Security Disability benefits without a prior hearing. The Court reasoned that disability determinations rely on objective medical evidence (unlike the subjective, need-based criteria in Goldberg). Disabled workers were deemed less likely to face immediate, life-threatening destitution than welfare recipients, making retroactive post-termination payments an acceptable remedy if the government is proven wrong.

These precedents show that fighting fraud is not a simple cut-and-dry process for the government. Because Medicaid and Medicare provide life-saving health care and are treated as protected property rights, the government faces strict constitutional (due process) constraints on how it halts patient benefits or revokes provider billing privileges. Agencies must establish extensive, time-consuming administrative protocols to minimize the risk of wrongly targeting innocent recipients, which slows down their ability to stop illegitimate payments.

Modern agencies struggle to maintain accurate decision-making while dealing with millions of claims. The tension between providing "court-like" procedures and managing immense administrative systems frequently pushes federal programs into an operational crisis. Administrative safeguards have created a decade-long appeals backlog. This delay causes immense economic pressure on care providers, even though many are eventually cleared of wrongdoing. Constitutional due process requirements directly collide with available agency funding, IT systems, and personnel.

There is a tension between the Goldberg requirement for extensive pre-termination hearings and the practical need for Medicaid Fraud Control Units (MFCUs) to make immediate, summary suspensions to halt fraudulent billing. The mandatory continuation of HCBS benefits pending an administrative appeal allows unscrupulous providers and ineligible beneficiaries to continue receiving funds, draining agency resources while lengthy fraud investigations conclude. Goldberg v. Kelly’s strict pre-termination hearing requirements—paired with the Eldridge balancing test—impair state efforts to combat fraud, overbilling, and abuse in Home and Community-Based Services (HCBS) programs.

Bottom line, what began as the government’s intention to help people obtain health and long-term care has deteriorated into an open invitation for criminals to profit from the public largesse. This outcome is only one example of a larger problem. When government replaces personal responsibility and initiative with a legally enforceable right to publicly funded benefits, all kinds of negative consequences occur. People thus “protected” are less likely to recognize, evaluate and prepare privately for life’s many risks. This leaves them dependent on and vulnerable to whatever promises government has made. The sad irony is that after decades of the U.S. government promising Social Security, Medicare and Medicaid, the American public is unprotected today against the increasingly likely retrenchment of those programs. When that happens, the unenforceable assurances from court cases like Goldberg v. Kelly and Mathews v. Eldridge will be cold comfort.