CMS Gains New Authority in Medicare and Medicaid Enforcement

The Centers for Medicare & Medicaid Services (CMS) will gain new authority to exclude participants from federally funded health care programs, a role traditionally held by the HHS Office of Inspector General (HHS-OIG).

This transformative development was announced by the Secretary of the Department of Health and Human Services, Robert F. Kennedy Jr., on July 21, 2026. By extending exclusion capabilities to CMS, the federal government aims to enhance payment integrity and tighten enforcement mechanisms within Medicare and Medicaid. For insurance professionals, particularly those focused on claims management and compliance, this shift signals potential changes in the landscape of federal healthcare law and its enforcement.

Enhancing Enforcement: CMS's New Role

CMS already wields a series of tools designed to address payment issues, including the recoupment of overpayments and the suspension of Medicare payments. In 2025 alone, CMS executed 537 payment suspensions and revoked the billing privileges of 5,586 healthcare providers. The newly granted exclusion authority raises questions about procedural nuances, especially in how CMS will integrate this with existing legal frameworks, such as the False Claims Act (FCA).

Impact on the Social Security Act

Historically, the HHS-OIG has been tasked with exclusion powers under Sections 1128 and 1156 of the Social Security Act. This authority has proven financially significant, with $5.56 billion in recoveries reported by the HHS-OIG in its latest report, spanning from October 2025 to March 2026. The existing List of Excluded Individuals/Entities (LEIE) curated by HHS-OIG includes over 83,000 entities involved in misconduct, highlighting the extent of regulatory oversight.

• Mandatory exclusions: For felony convictions related to healthcare fraud.
• Permissive exclusions: For misdemeanors and specified infractions.
• Collaboration questions: Will CMS need reforms to execute exclusions?
• Potential overlaps: CMS's role might add complexity to FCA settlements.

Sector Implications and Industry Questions

CMS's expanded authority raises numerous implications for healthcare providers. Of particular concern is how this affects legal alignment and what reforms might be necessary for CMS to effectively implement exclusions. Questions also persist regarding procedural rights for providers under CMS, which remains to be clearly defined. This shift could further complicate civil settlements in FCA cases, where HHS-OIG often collaborates with the Department of Justice (DOJ).

Preparation and Compliance

Without detailed guidance on CMS's new role, healthcare providers and insurers must prepare for exclusions by either CMS or HHS-OIG. This means enforcing strict compliance protocols and enhancing internal auditing practices. Additionally, state Medicaid Fraud Control Units are now under increased federal scrutiny, heightening the need for vigilance in fraud prevention strategies across the healthcare industry.

For insurance professionals navigating this evolving regulatory landscape, staying informed is essential. As further details emerge regarding CMS's implementation strategies, stakeholders must adapt quickly to ensure compliance and mitigate risks associated with payment integrity enforcement.