Legislation Targeting Fraud in Federal Financial Assistance Passes the House

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The House of Representatives on June 10, 2026, passed HR 8464, Stopping Fraudulent Payments Act, aimed at strengthening oversight of federal payments. The bill would allow an agency administering federal financial assistance or a public benefit program to temporarily delay, condition, or segment a disbursement request if: the agency has sufficient reason to determine that the payment presents an elevated risk of fraud based on a fraud-risk indicator or improper payment resulting in financial loss to the government; or the agency receives a notification from Treasury ordering the return of a certified payment voucher where the Secretary of the Treasury determines that the payment presents an elevated risk of fraud based on a fraud-risk indicator or improper payment based on the output of the Do Not Pay system. The bill defines "fraud-risk indicator," in part, as an "objective data point or analytic signal that indicates an anomalous payment pattern or increase in the volume amount…that would result in financial loss to the Government." Basing fraud on an "increase in volume amount" of payment could potentially target Medicaid Home and Community Based Services (HCBS), even if the increase in Medicaid spending legitimately reflects greater use of HCBS due to the general preference to live in the community, as opposed to an institution.

The bill provides notice and review procedures that would allow the payee to contest any factual inaccuracy or provide clarifying information and also allows for the segmentation of routine payment amounts while temporarily holding the unusually large or high risk portion of the payment. Even though the bill provides timeframes for the release of payment based on corrective action, the release is ultimately conditioned upon the agency's determination that the payment does not present an elevated risk of fraud or improper payment resulting financial loss to the government. The bill also prohibits officers or employees of the federal government from being personally liable for actions taken in good faith under the bill.

We will continue to monitor this bill as it moves to the Senate.