Fraud Prevention: Understanding Fraud in Federally Funded Programs Run by the States

The Subcommittee on Government Operations held a hearing on April 16, 2026, focused on fraud prevention in federally funded programs administered by states, such as Medicaid, SNAP, and unemployment insurance. The discussion centered on the significant fraud risks and improper payments in these programs, with estimates of billions lost due to weak controls and oversight. Witnesses, including GAO officials, state auditors, and former inspectors general, highlighted challenges such as inadequate fraud risk management, legacy IT systems, lack of real-time data sharing, and cultural issues within state agencies. They emphasized the need for stronger leadership, enhanced technology adoption, improved federal-state coordination, and legislative reforms to prevent fraud before payments are made. The hearing also addressed the importance of maintaining independent oversight bodies like the Pandemic Response Accountability Committee (PRAC) and concerns about budget cuts to inspector general offices. Several recommendations were made, including mandating real-time eligibility verification, creating a public dashboard for transparency, and making PRAC permanent. The committee expressed bipartisan commitment to advancing legislation to strengthen fraud prevention and accountability in these programs.