Trump Administration Defers $1.3 Billion Medicaid Payment to California

Vice President JD Vance announced that the federal government is deferring $1.3 billion in Medicaid payments to California. The deferral targets reimbursements already earned but not yet paid, according to officials cited across multiple reports. Vance, who leads an anti-fraud task force, said the action is intended to pressure the state to strengthen its fraud controls.

Officials emphasized that the measure does not cut off current beneficiaries.

The administration also suspended about 800 hospice programs in the Los Angeles area that had billed taxpayers $1.4 billion. Fewer than 20 of the suspended providers contacted officials to inquire about the action. ” Los Angeles-area hospices were flagged because the volume of claims is disproportionate to local mortality rates.

One official noted that the area accounts for roughly one-third of all hospice programs in the country despite having a typical number of deaths.

In response to suspected migration of fraudulent operators, the administration placed a six-month nationwide block on new enrollments for hospice and home health agencies. The measure is intended to give the Centers for Medicare and Medicaid Services time to strengthen oversight.

Officials said fraudsters appear to be shifting activity to Nevada, Arizona and Texas, where hospice openings have risen sharply.

The broader initiative requires states to demonstrate that their Medicaid Fraud Control Units are aggressively pursuing cases or risk losing dedicated federal funding for those units. Some states with large programs have recorded low numbers of indictments relative to program size.

Vance singled out California, New York and Hawaii as examples of states with high fraud volumes and low prosecution activity. He said Hawaii has recorded zero indictments or convictions for Medicaid fraud in recent years.