Trump administration will defer $1.3B in Medicaid funds for CA

Vice President JD Vance announced on Wednesday, May 13 that the Trump administration will be deferring $1.3 billion in Medicaid reimbursements from the state of California, as part of a new initiative to root out fraud in federal health programs.

The topic of California’s hospice care fraud has been a major focus of scrutiny by state leadership, members of President Donald Trump’s administration, and Gov. Gavin Newsom’s critics. In his announcement, Vance claimed that the administration was set on deferring these funds “because the state of California has not taken fraud very seriously.”

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

Notably, this decision was part of Vance’s Anti-Fraud Task Force’s plan to implement a six-month nationwide, data-driven moratorium on new Medicare enrollment for hospices and home health agencies.

The Centers for Medicare and Medicaid Services, which is led by Dr. Mehmet Oz, is set to use this six-month moratorium to conduct investigations and review data on Medicare programs, with the hopes of removing hospice and home health agencies that are suspected of committing fraud.

“Today we’re shutting the door on fraud — preventing new bad actors from entering Medicare while we aggressively identify, investigate, and remove those already exploiting them,” Oz said. “This is about protecting patients, restoring integrity, and safeguarding taxpayer dollars.”

California Attorney General Rob Bonta called the administration’s action “unlawful” and noted that his office would be “carefully reviewing all available information” and may challenge the administration’s decision to threaten “Californians’ rights or access to critical services.”

“Once again, California appears to be targeted solely for political reasons,” Bonta said on X.

“The Trump Administration is planning to defer over $1 billion in Medicaid funding for vital programs that help seniors and people with disabilities remain safely in their homes.”

Bonta and his office have attempted to counteract criticism that the state does not take action against hospice fraud.

In April, Bonta announced that the California Department of Justice had arrested five people in connection with a major health care scheme in Southern California that defrauded taxpayers of nearly a quarter of a billion dollars.

“For years, California has led the charge to protect public programs from fraud and abuse,” Newsom said in the press release on April 10. “We hold accountable to the fullest extent of the law anyone who tries to rip off taxpayers and take advantage of public programs, particularly those as sensitive as hospice care.”

Newsom has yet to publicly respond to the administration’s decision to defer California’s Medicaid reimbursement.

However, shortly after Vance made the announcement, Newsom’s press office blasted the decision on X.

“We hate fraud. But that’s NOT what this is,” Newsom’s press office posted on X. “Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.”

Noe Padilla is a Northern California Reporter for USA Today. Contact him at npadilla@usatodayco.com, follow him on X @1NoePadilla or on Bluesky @noepadilla.bsky.social. Sign up for the TODAY Californian newsletter or follow us on Facebook at TODAY Californian.