Vice President J.D. Vance delivered a loud warning to states on Wednesday to get a handle on fraud in their Medicaid programs, saying they’ll lose federal money if they don’t take the issue more seriously.
He announced a first step, saying the Department of Health and Human Services is withholding $1.3 billion in reimbursement payments to California for its failures.
The government also announced it had suspended some 800 hospice programs in the Los Angeles area, believing that they were part of a massive fraud to claim payments for Americans who are dying.
“We’re trying to save the Medicaid program from dysfunctional state bureaucrats,” Mr. Vance said.
The moves are part of a major anti-fraud push from the administration, which argues hundreds of billions of dollars flow each year to fraudsters who range from small-time opportunists to criminal syndicates to foreign governments.
Officials said they’re starting to make a dent in the eye-popping totals.
Kim Brandt, deputy administrator at the Center for Medicare and Medicaid Services, said for decades the government has operated on a pay-and-chase model.
This practice has been for the feds to shovel money out the door and only later try to make sure it was spent correctly. In cases where it wasn’t, the government then has to try to “chase” it down and get it back.
She said the Trump administration last year set up a war room to try to head off some of the payments up front, and over that time, it’s blocked $2 billion in money before it could be paid out.
Mr. Vance said fraud is a problem in both GOP-led and Democrat-led states, and said he’s gotten promises of cooperation from both sides of the aisle. But he said the states most resistant have been blue states.
California repeatedly surfaced as one of those.
Dr. Mehmet Oz, head of CMS, said California officials were about to release a new regulation at the start of this year that would have limited doctors to only one hospice. He said doctors who have multiple hospices are “taking bribes” and selling their licenses to fraudsters.
Dr. Oz said “someone very senior” in California scuttled that rule.
Mr. Vance also said that the Los Angeles area accounts for a staggering portion of the country’s Medicaid-funded hospice care, even though there just aren’t that many people dying there.
After the government suspended 800 of those hospices, Dr. Oz said only 20 called to complain — suggesting that the others were, indeed, fraud mills.
Gov. Gavin Newsom’s office said CMS has refused to share the data on those hospices, preventing the state from going after “bad actors.”
“Are they refusing to coordinate and share info with the state because they don’t actually believe in partnering? Or because they can’t back up the numbers that they are using?” the office said.
The Democratic governor’s office did praise CMS for a nationwide moratorium on certifying new hospices for Medicare — but said Mr. Newsom had that idea in 2022, and earlier this year had called on the Trump administration to adopt it nationwide.
Hawaii, another Democrat-led state, also came under fire.
Mr. Vance said that state has gone years without bringing a single Medicaid fraud case. It’s not that the state is immune from fraud, but rather it’s not looking for it, the vice president said.
He said Hawaii and other states like it could lose federal money that funds fraud detection programs.
President Trump has put Mr. Vance in charge of his anti-fraud crusade.
Last week, the vice president said 168,000 people the government has listed as deceased are still receiving food stamps. That, he said Wednesday, means someone is illegally collecting those benefits on their behalf.
Earlier this year, Mr. Vance had announced the withholding of funds from Minnesota over Medicaid fraud.
Minnesota Attorney General Keith Ellison sued, seeking to keep the money flowing. A federal judge rejected that, allowing the withholding to stand.
