WASHINGTON, D.C. — Defend Forgotten America (DFA) submitted formal comments to the Centers for Medicare & Medicaid Services (CMS), urging the agency to withdraw or significantly revise its proposed Medicaid payment rule, warning that it would centralize Medicaid decision-making in Washington and threaten the financial stability of rural and small urban hospitals.
DFA praised the Trump Administration’s targeted approach to combating Medicaid fraud through focused enforcement, including Vice President JD Vance’s White House Task Force to Eliminate Fraud and CMS’s actions against states with documented compliance issues. However, the organization argued that the proposed rule departs from that successful strategy by imposing broad federal payment limits on every state instead of focusing enforcement on those that violate the law.
“President Trump promised to return power to the states, not hand more authority to Washington bureaucrats,” said Jenn Pellegrino, Founder of Defend Forgotten America. “The Administration has shown that targeted investigations and accountability can root out fraud without punishing states that are following the law. This proposal moves in the opposite direction and risks undermining the rural hospitals and local healthcare systems that Forgotten America depends on.”
DFA’s comments argue that the proposed rule exceeds CMS’s statutory authority by expanding payment restrictions beyond what Congress authorized, limiting states’ ability to design Medicaid programs that meet local healthcare needs. The organization notes that Medicaid was deliberately established as a federal-state partnership and warns that replacing state flexibility with uniform federal payment policies would disproportionately affect rural communities and smaller cities.
The comments also warn that supplemental Medicaid payments are critical to sustaining emergency departments, maternity services, behavioral health programs, physician recruitment, and other essential healthcare services in rural America. DFA argues that reducing these payments could accelerate service reductions, eliminate critical care, and increase the risk of hospital closures, threatening both healthcare access and local economies.
Instead of imposing nationwide payment restrictions, DFA urged CMS to continue pursuing targeted enforcement through audits, investigations, and state-specific accountability measures that identify and address fraudulent arrangements without penalizing states that are complying with federal law.
