From a business standpoint, restricting Medicaid because of the “fraud and waste” is, essentially, the same thing CVS did. To prevent theft, they locked everything up. As a result, they lost business because paying customers didn’t want to deal with the hassle.
However, this mentality is also exactly what the GOP is hoping for: if the Medicaid recipients get frustrated enough with the new hoops, they’ll stop applying/utilizing. The GOP can plausibly claim they didn’t actually cut these people off, they stopped their own usage.
Then, they can also start claiming that the people who stopped applying were the “fraudsters” with no evidence to back that up (and what news outlet would ask anyway).