Trump Administration Halts $1.3B Medicaid Funding for California

WASHINGTON—The federal government will indefinitely withhold $1.3 billion in Medicaid reimbursements to the state of California as part of a Medicaid fraud initiative, Vice President JD Vance and Administrator for the Centers for Medicare and Medicaid Services (CMS) Mehmet Oz announced.

“The state of California has not taken fraud very seriously,” Vance said at a White House news conference.

The vice president also announced an audit of state-level watchdog agencies called Medicaid fraud control units with the purpose of finding and stopping fraudulent spending. Vance said the Trump administration sent letters to these agencies on Wednesday, asking them to prove that they were “effectively and aggressively” combating Medicaid fraud.

At the conference, Vance cited instances of healthcare providers allegedly prescribing people medications “they don’t need,” as one of the areas the fraud units are focusing on.

“It’s a defrauding of the American taxpayer, but it’s a violation of the trust that should exist between every American and the people who prescribe the medications,” Vance said.

The announcements are extensions of the administration’s recent steps toward promoting anti-fraud regulations in public health insurance programs. In March, the administration established an anti-fraud task force led by Vance whose sole purpose is to crack down on fraudulent use of public funds in federal programs.

In relation to these efforts, on May 13, Medicare announced a six-month moratorium on approving new hospice providers, as the agency aims to investigate and identify possible cases of fraud.

The United Domestic Workers (UDW) organization released a statement declaring these actions as direct attacks on California’s In-Home Support Services (IHSS) program and that these actions would cause a crisis for people who rely on the IHSS program services.

“It’s clear that the Trump administration is using a politically motivated attack to try and create a fraud scandal where none exists,” said UDW Executive Director Doug Moore. “In the process, the most vulnerable Californians—seniors, people with disabilities and their caregivers—are being used as political pawns. These are not numbers on a page—these are real people with serious health needs being cast aside for a cheap political stunt.

“The real scandal is the carelessness with which politicians disregard our community members in order to line the pockets of their billionaire friends,” Moore continued. “Last year, the Trump administration and Republicans in Congress gave away $4.5 trillion in tax cuts to millionaires and billionaires, by cutting vital social service programs like Medicaid and SNAP. Our communities rely on these services for survival. Restore the Medicaid funding now and stop playing games with life-saving care.”

The organization Jewish Family Service LA (JFSLA) also expressed alarm at the decision, saying the withholding puts more than 900,000 elderly and disabled people who rely on IHSS at risk. 

“IHSS is designed to allow frail seniors and disabled individuals to continue to live in their communities, avoiding institutionalization, which is also less costly,” the organization said. “For JFSLA, this is not a policy dispute. It is a direct threat to the people we serve every single day across Los Angeles. IHSS caregivers help our clients get out of bed in the morning, prepare safe meals, bathe and remain in their own homes. Without this funding, those arrangements are in jeopardy—and there is no adequate substitute waiting on the other side.

“JFSLA stands with the State of California in calling on the federal government to restore these funds immediately,” JFSLA continued. “We will continue to monitor this situation closely and take every necessary step to protect our clients’ access to the services they need and deserve.”