Vance says $1.3 billion in Medicaid payments to California will be deferred over fraud concerns

Vice President JD Vance said Wednesday that the Trump administration is delaying $1.3 billion in Medicaid reimbursements to California over concerns that the state is allowing “fraudsters” to increase costs for taxpayers, including by offering unnecessary drugs to unsuspecting patients.

“There are California and American taxpayers who are being defrauded because California doesn’t take its program seriously. But there are also people who have been prescribed medications that they don’t even need,” Vance said. “Sometimes they are injected into their bodies with medications that they do not need because the fraudsters have actually encouraged fake prescriptions and administrations and medications.”

Vance, alongside Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, said the administration is also sending letters to all 50 states informing them that if they do not “effectively and aggressively pursue Medicaid fraud in their states,” they will also have federal funding cut.

“We want California to take this fraud seriously,” said Vance, whom President Trump named his “fraud czar” last month.

Oz exposed what he called widespread fraud in hospice and similar home health programs nationwide — and particularly in the Los Angeles area — and announced a six-month moratorium on new Medicare enrollment for hospice and home health agencies.

“A third of all these programs in the entire country are in Los Angeles. Ask yourself, how is that possible? It’s not,” Oz said. “There’s not a lot of people dying in Los Angeles. We’re not talking about California, just Los Angeles.”

He said he and others in the administration had determined that “at least half of the hospices, in the entire area around Los Angeles, were fraudulent” and had closed 800 that last year had “billed the federal taxpayer $1.4 billion,” which “will no longer be paid.” That’s a significant increase from the 450 providers the administration said it suspended last month.

The announcement is the Trump administration’s latest attempt to expose and curb fraud in federal health benefit programs, particularly in blue states. These actions were immediately rejected by Californian authorities.

“We hate fraud. But that’s NOT what this is about,” Governor Gavin Newsom’s office posted on the social media site

Newsom’s office said the growth in home support placements in California was “simple” and due to California “keeping more people OUT of much more expensive nursing homes!” »

These services cover assistants who help people with daily tasks such as bathing, laundry or cooking; provide necessary care such as injections under the direction of a healthcare professional; and accompany them to and from doctor’s appointments. A 2020 report from the California State Auditor found that nearly three-quarters of IHSS caregivers help a family member.

Newsom’s office wrote that IHSS care costs $30,000 per year, while nursing home care costs $137,000 per year. “SAVE TAXPAYERS: $107,000 per person,” he wrote.

California Atty. Gen. Rob Bonta also criticized the administration’s actions.

“Once again, California appears to be targeted purely for political reasons,” Bonta said. “The Trump administration plans to defer more than $1 billion in Medicaid funding for vital programs that help seniors and people with disabilities stay safe in their homes.

“My team is carefully reviewing all available information. We have not hesitated to challenge the Trump administration’s illegal actions, and we will continue to act whenever Californians’ rights or access to essential services are threatened,” he said.

Democratic Senator Alex Padilla also attacked the Trump administration.

“The Trump administration is attacking California by claiming it cannot back it up,” Padilla wrote on social media. “Let’s be realistic, this isn’t about fraud, this is about punishing a state that didn’t vote for him. Pure and simple political retaliation.”

Fraud in California’s hospice industry has been a problem for years.

State officials vowed to crack down on the problem after a Times investigation in late 2020 found that unscrupulous providers were billing Medicare for hospice services and equipment for patients who were not actually dying — with the hospice industry in the state exploding in size.

California’s Medicaid program, known as Medi-Cal, is expected to cost about $222 billion for the budget year beginning July 1, including state and federal funding. About 15 million Californians, or more than a third of the state’s land area, receive Medi-Cal.

Vance, a potential 2028 presidential candidate, has returned to his job as “fraud czar” with vigor, traveling across the country to make it clear that the Trump administration is working diligently to reduce health care costs by tackling the waste, fraud and abuse plaguing the system.

He said waste and abuse are particularly prevalent in Democratic-led states like California, New York and Minnesota.

“We have red states and blue states that are aggressively going after fraud, but we also have, unfortunately, some states, mostly blue states, that unfortunately are not taking Medicaid fraud very seriously,” he said Wednesday.

Vance specifically threatened to cut what he says are billions in federal funding for state-run fraud control units that are supposed to go after people who abuse the system but who he says aren’t doing the job. “This is a tool that we want states to use, but unfortunately many states are not using these tools at all,” he said.

The focus on fraud comes amid criticism that other policy measures pushed by the administration have driven up health care costs or made it harder for people to access health care — including Obamacare subsidy cuts and new work requirements in Medicaid, which are expected to strain hospitals across the country and lead to millions losing health coverage.

Democrats and Republicans have argued over who is responsible for rising health care costs, and Vance and Oz have already clashed with California leaders.

In January, Newsom filed a civil rights lawsuit against Oz after he posted a video accusing Armenian crime groups of committing widespread health care fraud in Los Angeles. In the video, Oz was shown driving around Van Nuys, claiming that approximately $3.5 billion in Medicare fraud was perpetrated by hospice and home health care companies — and “managed, in large part, by the Russian Armenian Mafia.”

Newsom called Oz’s claims “baseless and racist.”

The administration previously launched investigations into potential health care fraud in at least five states — California, Florida, Maine, Minnesota and New York — and halted some $243 million in Medicaid payments in Minnesota due to fraud concerns.

The Centers for Medicare & Medicaid Services also admitted to using erroneous numbers to justify a fraud investigation in New York, deepening concerns about the administration’s methods of identifying problematic activity.

Vance said the delay of funds to California and the letters warning other states to take it seriously are not a matter of political retaliation, but a wake-up call. He said the Trump administration wanted to help states eliminate fraud and abuse, including through new technology — but couldn’t do that if they weren’t first “willing to help themselves.”

“We don’t want to take away the money. What we want to do is make sure people take fraud seriously. We want to protect Medicaid, we want to protect Medicare,” Vance said. “But we can’t do that if the states that administer these programs allow these programs to be ripped off by fraudsters.”

The Associated Press contributed to this article.