The Trump administration will withhold $1.3 billion in federal Medicaid payments from California, Vice President JD Vance announced Wednesday, citing the state’s failure to adequately combat fraud within the public health insurance program. At a White House news conference, Vance stated, “The state of California has not taken fraud very seriously.”
Vance simultaneously revealed an upcoming audit of state-level Medicaid fraud control units, which are watchdog agencies tasked with identifying inappropriate spending. These units, Vance explained, received letters on Wednesday requiring them to demonstrate effective and aggressive efforts against Medicaid fraud, with the potential consequence of losing funds if they fail.
These announcements underscore the administration’s intensified focus on combating fraud across public health insurance programs. In March, President Trump formed a task force specifically to tackle the misuse of public funds in federal programs, appointing Vance to lead it. Notably, these recent crackdowns have primarily targeted Democratic states; for instance, in February, the administration suspended $259 million in payments to Minnesota following a major welfare scandal, a decision Minnesota is currently disputing in court.
California’s hospice industry has frequently been cited by Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services and a task force member, as a prime example of fraud. Oz highlighted that one-third of all hospice providers operate within Los Angeles, stating at a recent event hosted by the Paragon Institute, a conservative health policy think tank, “There is something clearly wrong.” Coinciding with Vance’s announcement, Medicare also declared a six-month moratorium on approving new hospice providers, as the agency launches an investigation to identify potential fraud cases.
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