Feds Save $42 Billion in Fraud Crackdown

Medicare and Medicaid program integrity efforts and a new FAFSA identity-fraud tool are reshaping how federal agencies combat improper payments.

Updated on Nov. 6, 2026 in Financial Aid

Isometric editorial illustration of a single steel turnstile gate in a plain concrete corridor, lit by a thin beam, with sealed vault doors receding behind it. — The Centers for Medicare & Medicaid Services says its fraud program saved $42 billion a year, while the Education Department's new FAFSA tool is on track to block $1.2 billion in fraudulent aid. AI Illustration. Upload story photo >

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Do you trust the federal government to effectively stop fraud in public programs?

The Centers for Medicare & Medicaid Services says its Center for Program Integrity achieved $42 billion in annual savings. The Education Department has also introduced a real-time identity fraud detection tool for the Free Application for Federal Student Aid (FAFSA), which is on track to prevent $1.2 billion in fraud.

Why it matters

Federal aid programs handle enormous volumes of money, and agencies are shifting from paying claims and chasing fraud afterward toward stopping suspicious payments and applications in real time. For students and families, that means the FAFSA process now includes added identity checks.

CMS reports $42 billion in annual savings from program integrity work on roughly $2 trillion in yearly Medicare and Medicaid spending. The FAFSA tool's $1.2 billion fraud-prevention figure is a projection, and the financial services partner has not been named.

The players

Centers for Medicare & Medicaid Services (CMS)

The federal agency that administers Medicare and Medicaid and runs the Center for Program Integrity that reports the $42 billion in savings.

U.S. Department of Education

The federal agency that oversees the Free Application for Federal Student Aid and introduced the real-time identity fraud detection tool for it.

The details

CMS's fraud system uses more than 300 models to monitor providers continuously and flag behavior outside the norm for investigators, and it can halt payments during an investigation when it has a credible allegation of fraud. CMS has also set up a Fraud Defense Operations Center and a Medicaid Fraud War Room. The FAFSA tool screens applicants in real time as they complete the form, and a small share of applicants must complete additional identity steps.

- Earlier in 2026: the White House launched its Task Force to Eliminate Fraud.
- Earlier this year (2026): Education introduced the real-time FAFSA fraud detection tool.
- Nov. 5, 2026: CMS and Education officials discussed the effort at a NextGov webinar.

Big Picture

Federal agencies are moving away from the pay-and-chase model of recovering improper payments after they are made. Education's FAFSA tool and CMS's pre-payment controls both aim to stop fraud before money leaves the government.

Students and families completing the FAFSA may be asked to finish additional identity verification steps, which can add time to the application. The changes are aimed at reducing identity fraud that could otherwise delay or divert federal aid.

The takeaway

Applicants should expect extra identity checks on the FAFSA and should keep their personal information and documents ready to complete them. Federal officials say these steps are designed to protect legitimate aid recipients from fraud.