WASHINGTON — The Trump administration will withhold $1.3 billion in federal Medicaid payments from California, Vice President JD Vance announced on Wednesday, saying the state had failed to combat fraud in the public health insurance program.
“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, which are meant to ferret out inappropriate spending. The administration sent letters to the offices on Wednesday, asking them to prove that they were “effectively and aggressively” combating Medicaid fraud, Vance said. He added that they could also lose funds.
The announcements were part of the administration’s growing focus on fraud in public health insurance programs. In March, President Donald Trump established a task force to crack down on the misuse of public funds in federal programs, appointing Vance as the leader of the group.
So far, the actions have focused on Democratic states. In February, the administration halted $259 million in payments to Minnesota, after a major welfare scandal. Minnesota has challenged that decision in court.
Dr. Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services and another task force member, has frequently pointed to California’s hospice industry as a prime example of fraud, noting that a third of all hospice providers were in one city: Los Angeles.
“There is something clearly wrong,” Oz said at a recent event hosted by the Paragon Institute, a conservative health policy think tank.
On Wednesday, Medicare announced it was enacting a six-month moratorium on approving new hospice providers, as the agency aims to investigate and identify possible cases of fraud.
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