JD Vance Defers $1.3 Billion In Medicaid Reimbursements To California Over Fraud Concerns

Vice President JD Vance announced Wednesday that the Trump administration is deferring $1.3 billion in Medicaid reimbursements to California over concerns the state is allowing “fraudsters” to drive up costs to taxpayers.

“Vance said Wednesday that the Trump administration is deferring $1.3 billion in Medicaid reimbursements to California”

Los Angeles Times

Vance said, “There are California taxpayers and American taxpayers who are being defrauded because California isn’t taking its program seriously,” while standing alongside Dr. Mehmet Oz, administrator for the Centers for Medicare and Medicaid Services.

CBS News

Oz said the administration is making the “largest deferral we’ve ever made” and urged California to explain “how these outlier payments have been generated,” as the CMS move escalates a feud with the state over hospice care.

Politico reported CMS Administrator Mehmet Oz said the $1.3 billion is the agency’s largest deferral ever, and that CMS recently suspended payments to 800 hospice facilities in California while less than 20 had complained.

NBC News added that the administration is also threatening to suspend federal funding to all states if they don’t aggressively prosecute Medicaid fraud in their Medicaid programs.

Vance said the administration is sending letters to all 50 states warning that if they do not “effectively and aggressively prosecute Medicaid fraud in their states,” they will see federal funding cut off.

At the White House, Vance framed the threat as turning off money for anti-fraud enforcement, saying, “We’re going to turn off the money that goes to these anti-fraud units,” if states fail to do their job.

CNN

NBC News reported that Vance warned, “And if we continue to find problems, we can turn off other resources within their state Medicaid programs as well,” while also saying the administration is notifying all 50 states it could freeze funding to Medicaid Fraud Control Units.

CNN reported that the Department of Health and Human Services Office of Inspector General sent letters to state attorneys general, including a letter to California Attorney General Rob Bonta that said, “Noncompliance with your MFCU obligations can take your State’s entire Medicaid program out of compliance.”

CNN also said Oz and Vance criticized blue states including California, Minnesota, New York and Hawaii for not taking fraud seriously enough, while warning states could lose federal support for the program that totals nearly $500 million.

Alongside the Medicaid deferral, the Trump administration enacted a six-month moratorium on new Medicare enrollments by hospice and home health agencies, with CMS Administrator Dr. Mehmet Oz saying, “There will be no new hospices or home health care open in this country.”

“There will be no new hospices or home health care open in this country”

CBS News

Oz said, “If you have the program now, you can keep it,” and CMS said the moratorium would include targeted investigations, advanced analysis of data, and a swifter removal of providers suspected of committing fraud.

CBS News reported that the U.S. Department of Health and Human Services Office of the Inspector General estimated suspected hospice fraud at $198.1 million in 2023, and said the moratorium follows CMS actions including suspending payments to hundreds of hospice and home care agencies in Los Angeles.

The Los Angeles Times reported that Oz said “at least half of the hospices, in the entire area around Los Angeles, are fraudulent,” and that the administration had shut down 800 of them that last year had “charged the federal taxpayer $1.4 billion,” which “will no longer be paid.”

In response to the federal actions, California officials pushed back, with Gov. Gavin Newsom’s office posting on X, “Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.”