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Texas lawmakers this week convened a lengthy hearing in Austin focused on potential weaknesses in the oversight of state-administered health and welfare programs, as federal and state leaders intensify scrutiny over fraud, waste, and improper payments in safety-net systems.
The session, held over roughly nine hours, was led by state Sen. Lois Kolkhorst, who chairs the Texas Senate Committee on Health and Human Services. The hearing followed interim directives from Lt. Gov. Dan Patrick and reflected broader national attention on program integrity, including calls from federal leadership for states to strengthen eligibility verification and reduce improper payments in Medicaid and nutrition assistance programs.
At the center of the discussion were federal requirements tied to the Supplemental Nutrition Assistance Program (SNAP) and Medicaid. Texas currently reports an SNAP error rate of about 8 percent, which is lower than some states but still above new federal thresholds. Under recent federal policy changes associated with the One Big Beautiful Bill Act, Texas will be required to bring that rate down to 6 percent or less or risk financial penalties. Medicaid eligibility accuracy standards are also tightening, with a required error rate of 3 percent or lower. Lawmakers and witnesses warned that failure to comply could result in significant fiscal exposure for the state budget.
Kolkhorst emphasized during the hearing that states are entering a new era in which they will assume greater financial responsibility for SNAP costs. She noted that payment errors and eligibility mistakes could translate into hundreds of millions of dollars in additional state spending, increasing pressure on agencies to modernize verification systems and reduce administrative mistakes.
Testimony from policy analysts and healthcare stakeholders highlighted several areas of concern in Medicaid administration. Kaitlyn Finley of the Foundation for Government Accountability raised issues related to Texas’ “reasonable opportunity period,” a policy allowing new Medicaid applicants up to 90 days to verify immigration status. According to her testimony, some individuals remain in temporary eligibility status far beyond that window, in some cases spanning multiple years without finalized documentation. She also presented data indicating a sharp rise in related administrative spending in recent years, along with large expenditures tied to emergency Medicaid services.
Finley further argued that parts of the eligibility system rely heavily on self-reported information for income, household composition, and residency, suggesting that limited verification controls may increase the risk of improper payments. She recommended reforms such as stricter eligibility definitions, improved reporting standards, and enhanced coordination with federal immigration enforcement mechanisms.
Representatives from the managed care industry also addressed oversight mechanisms already in place. Jamie Dudensing, president and CEO of the Texas Association of Health Plans, described how prior authorization requirements have reduced inappropriate utilization in certain Medicaid-funded services, including orthodontic care, by a significant margin. She credited closer coordination between managed care organizations and the Texas Health and Human Services Commission with improving program integrity in specific areas.
However, Dudensing also warned that maintaining effective oversight requires continuous system updates and stronger administrative capacity within the Texas Health and Human Services Commission. She suggested that enforcement tools and fraud detection mechanisms need to evolve alongside program growth, particularly as enrollment systems become more complex.
One area drawing increased attention was Texas’ expanding hospice sector. Lisa McNair, representing Hospice Brazos Valley and the Hospice Alliance, raised concerns about rapid growth in provider numbers and unusual operational patterns among some facilities. She reported that the number of hospice providers in Texas has nearly doubled since 2020, reaching more than 1,300 statewide. McNair pointed to cases in which multiple hospice providers appear to operate from the same physical locations, sometimes with overlapping ownership structures and staffing arrangements.
She also flagged data suggesting unusually high rates of “live discharge,” where patients leave hospice care despite the expectation that most patients are terminally ill with a prognosis of six months or less. In some cases, she noted, certain providers reported discharge rates near or at 100 percent, which she indicated may warrant closer regulatory review.
National attention to hospice fraud has also intensified following enforcement actions in other states, including a recent case in California involving alleged fraudulent billing schemes totaling hundreds of millions of dollars. Law enforcement officials there are continuing investigations into coordinated schemes involving multiple providers.
Throughout the Texas hearing, witnesses and lawmakers offered a range of policy responses aimed at improving oversight. Recommendations included establishing a centralized provider identification database, strengthening income verification for SNAP households, and standardizing eligibility definitions across programs. Some participants also called for new task forces within state agencies to reassess Medicaid administration and identify inefficiencies.
Technology modernization was another recurring theme. State Sen. Charles Perry suggested that Texas could benefit from expanded use of data analytics and artificial intelligence to detect anomalies in billing and eligibility systems. He contrasted advanced technological capabilities with current agency practices that, in some cases, still rely heavily on manual spreadsheet-based tracking.
Not all testimony focused on expanding enforcement. State Sen. Molly Cook raised concerns that an overemphasis on fraud prevention could unintentionally restrict access to care for vulnerable populations. She argued that Medicaid primarily serves groups such as children, new mothers, and individuals with severe disabilities, and warned that overly aggressive administrative controls could create barriers for legitimate beneficiaries. She also pointed to broader healthcare cost pressures driven by private insurance markets and pharmaceutical pricing.
As the hearing concluded, lawmakers appeared divided on how to balance program integrity with access. While there was broad agreement that error rates and improper payments must be reduced, disagreement remained over the extent of enforcement measures and the potential impact on eligible recipients.
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