The Trump administration will withhold $1.3 bn in federal Medicaid payments from California, Vice President JD Vance said Wednesday. He said the state had failed to address fraud in the public health insurance program.
Vance announced the decision during a White House news conference. He said California had not taken Medicaid fraud seriously.
The vice president also announced an audit of state-level Medicaid fraud control units. Those watchdog offices are responsible for finding inappropriate spending in the program.
The administration sent letters to the offices Wednesday, asking them to show they were effectively and aggressively combating Medicaid fraud. Vance said those units could also lose funds.
The announcements fit the administration’s broader focus on fraud in public health insurance programs. In March, President Donald Trump created a task force to target misuse of public funds across federal programs.
Trump appointed Vance to lead the group. Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, also serves on the task force.
So far, the actions have focused on Democratic states. In February, the administration halted $259 mn in payments to Minnesota after a major welfare scandal.
Minnesota has challenged that decision in court. California now faces a larger funding hold tied to Medicaid oversight.
Oz has often cited California’s hospice industry as an example of suspected fraud. He has noted that one-third of all hospice providers were located in Los Angeles.
At a recent event hosted by the Paragon Institute, a conservative health policy think tank, Oz said something was clearly wrong. On Wednesday, Medicare announced a six-month moratorium on approving new hospice providers.
The agency said the pause will allow officials to investigate and identify possible fraud cases. The moratorium adds another federal action tied to concerns over hospice billing and Medicaid program integrity.
