Fraud task force says $1.3B withheld

Vice President JD Vance said on May 13 that the Trump administration is withholding $1.3 billion in Medicaid reimbursements from California, escalating a campaign by the White House task force he leads to tie federal health funding to state anti-fraud enforcement. The announcement came at a White House press conference and alongside a broader CMS action imposing a six-month nationwide moratorium on new Medicare enrollment for hospices and home health agencies. CMS Administrator Mehmet Oz said the California action was the agency’s largest Medicaid deferral ever. California had received more than $92 billion in federal Medicaid reimbursements in fiscal 2024, according to the most recent CMS data cited by Politico. ### Why is California losing $1.3 billion now? California was singled out because federal officials said the state had not done enough to police fraud in its Medicaid program, known as Medi-Cal. Vance said at the White House that “the state of California has not taken fraud very seriously,” and Oz said CMS wanted the state to explain “how these outlier payments have been generated.” (politico.com) The $1.3 billion is a deferral, not a permanent cancellation described in the available federal material. Politico reported that California has already paid providers serving low-income patients, and CMS is withholding the federal share unless the state satisfies agency requirements showing eligible patients actually received services. ### What is this task force, and who gave it this authority? (politico.com) President Donald Trump created the Task Force to Eliminate Fraud in a March 16 executive order. The order directed the group to coordinate a national anti-fraud strategy across federal benefit programs, including medical care administered with state and local partners, and said agencies should examine whether federal funds can be withheld from jurisdictions that lack adequate anti-fraud measures. (politico.com) The White House has also posted a public-facing account and video updates tied to the initiative. The White House live page lists “Vice President JD Vance’s Press Conference on Anti-Fraud Initiatives” on May 13, showing the administration is using official channels to publicize the task force’s actions. ### How does this fit into the administration’s earlier fraud cases? Minnesota was the first state publicly targeted with a Medicaid deferral under the new push. (whitehouse.gov) CMS said on Feb. 25 that it deferred $259.5 million in quarterly federal Medicaid funding to Minnesota after a review found $243.8 million in unsupported or potentially fraudulent claims and $15.4 million tied to claims involving people lacking satisfactory immigration status. (whitehouse.gov) The California move is much larger. Oz said on May 13 that the $1.3 billion deferral was the biggest of its kind for CMS, while Vance said the administration could freeze funding for Medicaid Fraud Control Units in all 50 states if they do not “aggressively prosecute Medicaid fraud.” ### What else did CMS announce on May 13? CMS said on May 13 that it is imposing a six-month, nationwide moratorium on new Medicare enrollment for hospices and home health agencies. (cms.gov) The agency said the freeze applies to initial enrollments and some majority-ownership changes, and that existing providers can continue serving Medicare beneficiaries. (politico.com) Los Angeles was cited as a focal point in the administration’s fraud claims. CMS said it had suspended payments to 773 hospices and 23 home health agencies suspected of fraud in Los Angeles alone, representing $70 million in suspended funds so far. Politico separately reported that CMS had recently suspended payments to about 800 hospice facilities in California. (cms.gov) ### What happens next for California and other states? California had not immediately responded to Politico’s request for comment on May 13. Vance said the administration was notifying every state that Medicaid fraud units could lose federal support if they fail to investigate and prosecute provider fraud, and he named California, New York, Maryland and Ohio as states he wanted to work with federal officials. (cms.gov) May 18 is the next dated public event on CMS’s calendar tied to health policy announcements: HHS and CMS said they will hold the first meeting of the Healthcare Advisory Committee that afternoon. In the meantime, the White House live page and CMS newsroom are carrying the administration’s anti-fraud updates and related enforcement actions. (cms.gov) (politico.com)