Officials say $1.3 billion in Medicaid money to California will be
deferred over suspicions of fraud
[May 14, 2026]
By ALI SWENSON and MICHELLE L. PRICE
WASHINGTON (AP) — Vice President JD Vance on Wednesday announced new
steps in the Trump administration's initiative to root out fraud in
federal health programs, including a $1.3 billion deferral in Medicaid
funding to California.
“How long are people going to pay into programs if they know that that
money doesn’t go to a low-income kid who needs healthcare, but that
money goes into a fraudster getting rich?” Vance said during an event at
the White House, adding that taxpayers and program beneficiaries are
victimized by such fraud.
The Republican administration also is imposing a six-month freeze on
some new Medicare enrollments and warning states to investigate Medicaid
fraud or risk losing funding, officials said.
The moves are part of Vance’s anti-fraud task force, which has been
taking more aggressive steps to investigate states before the November
elections. The panel set up by President Donald Trump seeks to crack
down on potential misuse of public money.
Vance, a potential 2028 White House hopeful, has used the high-profile
assignment from Trump to remind Americans struggling with high costs
that he is trying to claw back taxpayer dollars. Vance has promoted the
task force’s work during campaign stops for Republican candidates and is
expected to focus on the effort Thursday in Maine, which has closely
watched primary races scheduled for June 9.
The steps come as people across the United States have raised concerns
about rising health costs and barriers to access, sometimes from the
federal government’s own actions. New work requirements in Medicaid, for
example, are expected to strain hospitals around the country and result
in millions of enrollees losing their health coverage.
The administration contends its vigorous fraud-busting efforts will help
prevent wrongdoing in Medicaid and Medicare while preserving funding and
resources for those most in need.
Deferring $1.3 billion in California payments
Dr. Mehmet Oz, who leads the Centers for Medicare and Medicaid Services,
said the administration was making the “largest deferral we've ever
made” in Medicaid funds and that it was justified.
He claimed the administration had identified questionable expenditures
and anomalies, such as a higher rate of growth in California's home care
program compared with other states. He did not provide concrete examples
of documented fraud.
“We'd like the state to at least come to the table and explain to us how
these outlier payments have been generated,” he said.
The press office of Gov. Gavin Newsom, D-Calif., disputed Oz's claims
and said the state's home care program grew because the state is
“keeping more people OUT of far more expensive nursing homes.”
“We hate fraud,” the office wrote on X. “But that's NOT what this is.”
The total cost of California’s Medicaid program, including state and
federal funding, is expected to be about $222 billion for the budget
year that starts July 1.
Nationwide freeze on some new Medicare provider enrollments
Oz's agency also announced a nationwide six-month moratorium on all new
Medicare enrollments by providers of hospice and home care.
“Today we’re shutting the door on fraud — preventing new bad actors from
entering Medicare while we aggressively identify, investigate, and
remove those already exploiting them,” he said in a statement.
[to top of second column]
|
Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz
listens as Vice President JD Vance speaks to the media from the
Eisenhower Executive Office Building on the White House campus,
Wednesday, May 13, 2026, in Washington. (AP Photo/Jacquelyn Martin)
 Existing hospice and home healthcare
providers will continue to operate as usual. But CMS said it will
“intensify targeted investigations, deploy advanced data analytics,
and accelerate the removal” of providers in the category that are
suspected of fraudulent activity.
Such a freeze is not unprecedented, said Tricia Neumann, a senior
vice president and executive director for the program on Medicare
policy at the healthcare research nonprofit KFF. She said President
Bill Clinton’s Democratic administration also imposed a temporary
moratorium on home health agencies.
“A brief moratorium gives the administration time
to crack down on true fraud and prevent new fraudulent entities from
popping up,” she said.
Several alleged fraud schemes have been prosecuted in the hospice
and home healthcare categories, and states have acknowledged that it
is a legitimate concern. But some have pushed back on the
administration’s aggressive tactics and raised concerns that the
catchall efforts could needlessly punish law-abiding providers that
are trying to serve patients.
The country's largest organization advocating for home healthcare
providers, the National Alliance for Care at Home, said in a
statement that it supports efforts to root out fraud. But it said it
prefers targeted strategies to a sweeping moratorium, which it said
raises concerns about access to care as well as reduces competition
and slows innovation.
Also Wednesday, the Department of Health and Human Services'
internal watchdog sent letters to state attorneys general warning
them to vigorously investigate possible fraud or risk losing federal
money.
Moves are part of monthslong federal push
In recent months, CMS has suspended payments to hundreds of hospice
and home care agencies in Los Angeles over alleged fraud and issued
another six-month moratorium on suppliers of durable medical
equipment, prosthetics, orthotics and certain other supplies in
Medicare.
The administration also has approached at least five states with
investigations into potential healthcare fraud and halted some $243
million in Medicaid payments to Minnesota over fraud concerns. Last
month, Oz announced CMS would add to that oversight by requiring all
50 states to share how they planned to revalidate some of their
Medicaid providers.
In at least one case, the administration has erred in its
accusations against states. In April, CMS acknowledged to The
Associated Press that it made a significant error in figures it used
to help justify a fraud probe in New York. The acknowledgment
deepened doubts about the administration’s methods and raised a
common criticism of the second Trump administration — that it tends
to attack first and confirm the facts later.
___
Swenson reported from New York. Associated Press writers Tran Nguyen
in Sacramento, Geoff Mulvihill in Haddonfield, New Jersey, Patrick
Whittle in Portland, Maine, and Joey Cappelletti contributed to this
report.
All contents © copyright 2026 Associated Press. All rights reserved |
