CMS is hoping to partner with state tax authorities to strengthen state-federal enforcement against fraudulent Medicare providers. Under the Fraud Tax Project, which was announced on Nov. 25, 2025, health care providers who bill fraudulent insurance claims often fail to report the associated income on their tax returns, creating a dual-layered crime that drains both federal and state tax systems, according to CMS.
 
In a letter addressed to all 50 states and Washington, D.C, CMS Administrator Dr. Mehmet Oz encouraged states to partner with CMS and state tax authorities to target Medicare-related health care and tax fraud.  
 
“In short, we want to provide information that will help you get the tax revenue to which your state is entitled,” Oz stated in the letter. “Working together, we can use the tools available to each of us to hold these bad actors accountable." 
 
These partnerships will help states identify and prosecute fraudulent Medicare providers for state tax evasion, according to Oz, while CMS is able to revoke billing privileges following state convictions.  
 
Participating states will identify priority targets, with CMS providing relevant claims and financial data to support the state’s investigative efforts, Oz noted.  
 
To view Oz’s letter and learn more about the Fraud Tax Project, visit https://www.cms.gov/fraud.