On Wednesday, May 13, 2026, Vice President JD Vance announced at the White House that the Trump administration was withholding $1.3 billion in Medicaid payments to California and threatening to suspend federal funding to all states if they don't aggressively prosecute fraud in their Medicaid programs. Vance leads the administration's anti-fraud task force, a panel set up by President Trump. Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz called it the “largest deferral we've ever made.”
Oz said California's Medicaid records “have generated major red flags for us.” According to NBC News, he said the state needed to clarify $630 million in billing, $500 million in home health services and $200 million in “questionable expenditures” linked to coverage for undocumented immigrants, who are not eligible for Medicaid. CalMatters described the action as a $1.1 billion freeze on California's In-Home Supportive Services program, which helps about 900,000 older and disabled Californians, plus $200 million tied to administrative claims the state said it expected and was working to resolve. California health officials said CMS had provided no supporting evidence, and Gov. Gavin Newsom argued the program's growth keeps people out of costlier nursing facilities. “We'd like the state to at least come to the table and explain to us how these outlier payments have been generated,” Oz said.
Vance also said all 50 states were being told their Medicaid Fraud Control Units could lose funding “if they do not aggressively prosecute Medicaid 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. “And if we continue to find problems, we can turn off other resources within their state Medicaid programs as well.” He said that while both red and blue states fight fraud, “we also unfortunately have some states ... mostly blue states, unfortunately ... that do not take Medicaid fraud very seriously.” The HHS inspector general sent letters the same day warning state attorneys general to investigate fraud vigorously or risk losing federal money, AP reported.
The move followed a February suspension of Medicaid payments to Minnesota, which Minnesota sued to block. The same day, CMS announced a nationwide six-month moratorium on new Medicare enrollments by hospice and home care providers. AP noted that in April CMS acknowledged a significant error in figures it had used to help justify a fraud probe in New York. State officials said home health patients would keep receiving services, but caregiver unions worried about how long the freeze would last.
Correction (October 2, 2026): This entry previously called Vance a “self-designated” fraud czar; according to AP, the anti-fraud task force he leads was set up by President Trump. It also said California officials called the move politically motivated, that Medi-Cal covers about 14 million people, that the deferral bypassed a standard audit-and-recoupment process, and that FEMA grants to Democratic-led states had slowed from $91 million to $3 million a month. Those claims were not supported by this entry's sources and were removed. The entry now gives California's account of the deferral ($1.1 billion in home health funds plus $200 million in administrative claims) and its position that CMS offered no evidence.