CMS announced in a letter released on Tuesday, May 27, 2025 (CMS Letter) that it will ramp up financial oversight of states to detect misuse of federal Medicaid funds “[t]o ensure that federal money is not used to pay for or subsidize healthcare for individuals with an unsatisfactory immigration status in a manner contrary to federal law ….” The CMS Letter states that the plain text of “the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Public Law 104-193) (PRWORA)[ ] generally prohibits illegal aliens from obtaining most taxpayer-funded benefits” “and that ‘it is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits.’”
The CMS Letter takes the position that under federal law, Medicaid funding for noncitizens with unsatisfactory immigration status is generally only available for treatment of emergency medical conditions—including emergency labor and delivery—for those individuals who would otherwise be Medicaid-eligible but for their immigration status.
As part of this heightened oversight, CMS announced that it will conduct focused reviews of each state’s reported Medicaid expenditures and financial management reviews to ensure compliance with federal laws on Medicaid spending. CMS encouraged states to review their policies, internal controls, public assistance cost allocation plans, and IT systems to ensure that medical assistance claimed by the state and administrative expenditures are in accordance with federal law. CMS also stated that it will be reviewing existing eligibility requirements in federal regulations and will, if necessary, propose revisions to such requirements.
This letter follows President Donald Trump’s February 19, 2025 Executive Order titled “Ending Taxpayer Subsidization of Open Borders,” which claims that using Medicaid funds to provide unauthorized immigrants with nonemergency care goes against the PRWORA.
A copy of the CMS Letter can be found here, and the related press release can be found here. President Trump’s executive order titled “Ending Taxpayer Subsidization of Open Borders” can be found here.
