The Trump administration will withhold $1.3 billion in federal Medicaid payments from California, Vice President JD Vance announced Wednesday, saying the state had failed to fight fraud in the public health insurance program.
“The state of California has not taken fraud very seriously,” said Mr. Vance at a press conference in the White House.
The vice president also announced an audit of state-level watchdog agencies called Medicaid fraud control units, which are meant to root out inappropriate spending. The administration sent letters to the agencies on Wednesday asking them to prove they were “effectively and aggressively” fighting Medicaid fraud, Mr. Vance. 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 Trump established a task force to crack down on misuse of public funds in federal programs and appointed Mr. Vance to head 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 often 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.
“Something is clearly wrong,” said Dr. Oz 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.
