Vance announces suspension of $1.3 billion in Medicaid payments to California

Vice President JD Vance announced Wednesday that the Trump administration is withholding $1.3 billion in Medicaid payments to California and threatening to withhold federal funding from all states if they do not aggressively pursue fraud in their Medicaid programs.

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In his role as fraud enforcer, Vance said the administration is targeting California because the state doesn’t take fraud seriously.

“There are California and American taxpayers who are being defrauded because California is not taking its program seriously, but there are also people who have been prescribed medications that they don’t even need. They have been given medications that they don’t need because the fraudsters have actually encouraged false prescriptions and false administration of medications,” Vance said at the White House.

This decision is similar to one the administration made in February suspending Medicaid payments to Minnesota.

Vance said the administration is also notifying all 50 states that it may freeze funding for their Medicaid fraud control units “if they do not aggressively pursue Medicaid fraud.” The units, which exist in every state, investigate and prosecute Medicaid provider fraud. “We are going to cut off the money going to these anti-fraud units,” he said, if they fail to do their job.

He also warned: “And if we continue to have problems, we may also disable other resources within the state’s Medicaid programs. »

“Now we have red states and blue states that are aggressively going after fraud. But we also unfortunately have some states – mostly blue states, unfortunately – that are not taking Medicaid fraud very seriously,” the vice president said.

“We want to protect Medicare. But we can’t do that if the states that administer these programs allow these programs to be ripped off by fraudsters,” Vance said. “So we encourage, whether it’s California or New York or Maryland or Ohio, we encourage people to work with us. We want to help you use technology and other tools to get rid of fraud, to get to the root of fraud.”

Addressing the delay in reimbursements to California, Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, said the state’s Medicaid records “have given us some major red flags.” Oz said the administration needs California to clarify $630 million in billings, $500 million in home health services and $200 million in “questionable spending” related to coverage for undocumented immigrants, he claimed. However, they are not eligible for Medicaid.

“This is the largest deferral we’ve ever made,” Oz said of the decision to pause $1.3 billion in Medicaid payments. “We’re doing this for good reason. We would at least like the state to come to the table and explain to us how these aberrant payments were generated.”

The offices of California Gov. Gavin Newsom and California Attorney General Rob Bonta, both Democrats, did not immediately respond to requests for comment. NBC News also contacted the California Department of Public Health.

Oz also announced as part of these anti-fraud actions that CMS would impose a six-month moratorium on new Medicare enrollment for hospices and home health agencies (HHAs). CMS said that during this period it will “intensify targeted investigations, deploy advanced data analytics, and accelerate the removal of hospice and HHA providers suspected of committing fraud from the Medicare program.”

The White House and CMS did not immediately respond to requests for additional comment.