WASHINGTON - Vice President JD Vance announced Wednesday that the Trump administration is withholding $1.3 billion in Medicaid payments to California and is threatening to suspend federal funding to all states if they don’t aggressively prosecute fraud in their Medicaid programs.

As part of his role as the fraud czar, Vance said that the administration is targeting California because the state isn’t taking fraud seriously.

The move is similar to the one the administration took in February suspending Medicaid payments to Minnesota.

Vance said that the administration is also notifying all 50 states that it could freeze funding to their Medicaid Fraud Control Units “if they do not aggressively prosecute Medicaid fraud.” The units, which exist in each state, investigate and prosecute Medicaid provider fraud. “We are going to turn off the money that goes to these anti-fraud units,” he said, if they fail to do their job.

Addressing the deferral of reimbursements to California, Dr. Mehmet Oz, the Centers for Medicare and Medicaid Services administrator, said that the state’s Medicaid records “have generated major red flags for us.” Oz said that the administration needs California to clarify $630 million in billing, $500 million in home health services and $200 million in “questionable expenditures” linked to coverage for undocumented immigrants, he claimed. They are not eligible for Medicaid, however.

Oz also announced as part of these anti-fraud actions that the CMS is imposing a six-month moratoria on new Medicare enrollment for hospices and home health agencies (HHAs). CMS said that during that period, it will “intensify targeted investigations, deploy advanced data analytics, and accelerate the removal of hospice and HHA providers from the Medicare program that are suspected of committing fraud.” (Source: NBC News)

Story Date: May 14, 2026