Administration threatens to withhold Medicaid funding over fraud prosecutions
Health Care Newsletter
Administration threatens to withhold Medicaid funding over fraud prosecutions
by Nathaniel Weixel and Joseph Choi - 05/13/26 6:54 PM ET
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by Nathaniel Weixel and Joseph Choi - 05/13/26 6:54 PM ET
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Administration threatens to withhold Medicaid funding over fraud prosecutions
The Trump administration is escalating its fight against alleged fraud by withholding $1.3 billion in Medicaid reimbursements to California over hospice care.
© AP
Vice President JD Vance threatened to suspend federal funding to all states if they don’t aggressively prosecute fraud in their Medicaid programs.
Vance told reporters Wednesday that a letter sent to states by the Department of Health and Human Services inspector general requires them to show that they are “effectively and aggressively prosecuting Medicaid fraud in their states.”
The move is similar to one the administration took in February when it suspended Medicaid payments to Minnesota. It also comes on the heels of an announcement from HHS that it is putting a moratorium on new Medicare enrollments from home health care and hospice providers.
Vance said California isn’t taking fraud seriously, and while the administration has frequently attacked California’s fraud control efforts, this is the first time the Centers for Medicare and Medicaid Services has targeted federal funding to the state.
CMS Administrator Mehmet Oz said $1.3 billion is the agency’s largest deferral ever.
Vance said the issue of fraud goes beyond politics, though targeting California is likely to renew allegations that the Trump administration is targeting Democratic rivals.
“Now, we have red states and blue states that go after fraud aggressively. But we also unfortunately have some states — mostly blue states, unfortunately — that do not take Medicaid fraud very seriously,” Vance said.
 
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