Vance cuts $1.3 billion in California Medicaid, pauses hospice care

By Andrew Rice
The Center Square

The Trump administration will defer $1.3 billion in Medicaid funds to California, due to concerns over fraud, Vice President JD Vance said Wednesday.

Vance, alongside Mehmet Oz, administrator for Medicare and Medicaid Services, said the administration is launching more fraud enforcement efforts for Medicare and Medicaid in states across the country. The government sent letters to all 50 states calling for states to revalidate their providers of Medicare and Medicaid services.

“There are California taxpayers and American taxpayers who are being defrauded because California isn’t taking its program seriously,” Vance said.

The vice president said many states that have Medicaid fraud deterrence programs have not properly utilized them to stop fraudulent activity. He said Hawaii has secured zero indictments or convictions while receiving funds to pursue fraudulent activities.

“They don’t think the fraud is a big enough problem,” Vance said. “They don’t care about protecting that Medicaid program.”

Vance also pointed to the Medicaid programs in New York, Minnesota, Ohio and Maryland as examples where fraud needs to be more aggressively pursued.

The administration is also launching a six-month nationwide moratorium on Medicaid enrollments for new hospice and at home care services. Oz said a third of all hospice programs receiving federal assistance in the United States are in Los Angeles.

“There will be no new hospices,” Oz said. “We’re not taking any services, but there will be no new ones.”

Oz said the administration suspended 800 hospices in the Los Angeles area alone. He said those entities charged $1.4 billion to taxpayers.

“We’re talking about turning off the resources that the state government should be using to police fraud and then instead reuse those resources ourselves, because we’re actually taking the fraud very seriously,” Vance said.

Vance called on states across the country to cooperate with the federal government as it enforces fraud efforts. He said all 50 states responded to letters he sent calling for them to revalidate their providers.

Vance said he hopes California and other states run by Democrat leaders will cooperate with the administration as it roots through fraud. The administration has also introduced heightened oversight of hospice providers in Arizona, Georgia, Ohio, Nevada and Texas, due to “elevated fraud risk.”

The administration also launched a pilot program to identify potential fraud that will start in North Carolina, Ohio, Oklahoma and Texas.

“We’ve had some good cooperation with both red states and blue states,” Vance said.

The administration’s announcement follows months of ramping up enforcement actions for fraud in federally funded programs. In February, the administration halted $259 million in Medicaid funds sent to Minnesota.

“We want to save the American people money, but we’re also trying to preserve programs that exist for the benefit of the American people,” Vance said. “We’re also trying to make sure that we do this in a way that’s defensible.”

Tax advocates praised the administration’s decision. OJ Oleka, CEO of the State Financial Officers Foundation, said the federal government needs to call on states for help combatting fraud.

“Real accountability with real teeth is indispensable for winning the war on fraud, protecting its victims, and getting reluctant states off the fence and into this fight,” Oleka said. “It is encouraging and empowering to know that Vice President Vance and his task force are looking to the states to be proactive partners.”