Federal government to defer $1.3 billion to California Medicaid says VP Vance
U.S. Vice President JD Vance said Wednesday morning the federal government will withhold $1.3 billion in Medicaid payments to California.
The announcement came at a news conference about the government’s ongoing efforts to combat what it says is widespread fraud in social services. In March, President Donald Trump signed an executive order called the “Establishing the Task Force to Eliminate Fraud.” He put Vance in charge and gave him the nickname “Fraud Czar.”
On Wednesday, Vance said the government would defer the Medicaid money because “we want California to get serious about this fraud.” Medicaid, known as Medi-Cal in California, is a joint federal-state healthcare program that helps lower income people afford health coverage.
Vance alleged that doctors in the state are prescribing medications for people who don’t need it because fraudsters have “false prescriptions and false administration of medications.” He also threatened to suspend funding to all states if they don’t aggressively prosecute fraud.
“We’re announcing that the federal government is deferring $1.3 billion in Medicaid reimbursements from the state of California,” Vance said near the start of the news conference. “The simple reason is because the state of California has not taken fraud very seriously.”
Vance did not provide specifics on the deferment, including a timeline or how many people it would affect. The Centers for Medicare and Medicaid Services announced Wednesday that it would temporarily halt new hospice and home health provider enrollments in Medicare.
Vance highlighted other states, including Hawaii and New York, which he said are also not tackling fraud aggressively. The Trump administration has repeatedly claimed that widespread fraud has mostly occurred in Democratic-led states. State officials have described the move as retribution and said such cuts will harm vulnerable populations.
“States like California, states like Hawaii, states like New York, have completely not taken the fraud issue seriously in the Medicaid program,” Vance said. “And so for those states that refuse to get serious about fraud, we are going to turn off that anti-fraud money. And if we continue to find problems, we can turn off other resources within their state Medicaid programs as well.”
In response to Vance’s claim, Gov. Gavin Newsom’s office directed The Sacramento Bee to three posts on X released by Newsom within the last few hours. The posts pushed back against the statements of Vance and Dr. Mehmet Oz, who also spoke at the news conference.
“We hate fraud,” said one post. “But that’s NOT what this is. Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.”
Both national and state-level Republican politicians have sought to make fraud, particularly in the hospice industry, a political issue for Newsom and California Democrats. Some of those accusations have stemmed from the conservative influencer Nick Shirley, who drew viral fame for accusing daycare centers in immigrant neighborhoods of Minneapolis of fraud — allegations that in some cases were disproven by local news organizations.
Shirley subsequently visited Los Angeles and posted videos of hospice businesses and offices he said appeared fraudulent. Oz, the head of the federal Centers for Medicare and Medicaid Services, visited Los Angeles in January and posted what he described as his own video investigation into Medicaid fraud in the city.
Last month, Shirley visited Sacramento and accused lawmakers of trying to block his investigations into Medicaid fraud in the state.
But state officials have labeled fraud a concern in California’s hospice industry for years.
In 2021, after the Los Angeles Times documented growing hospice fraud, Newsom and the Legislature put a freeze on new hospice licenses in place. The next year, the California State Auditor published a report noting weak safeguards and a rapid increase in the number of hospices registering in Los Angeles County.
The California Department of Public Health has been slow in implementing guidelines from the auditor’s report, according to critics, leading lawmakers this year to extend the moratorium into 2027.
Both state and federal law enforcement agencies have announced arrests of what they alleged were large, organized attempts at hospice fraud this year. California Attorney General Rob Bonta announced in April his department had charged 21 people over $267 million suspected hospice fraud.
“This isn’t a political game for us,” Bonta said in a news release announcing the arrests.
