Vance Makes 50-State Medicaid Fraud Crackdown Mandatory
Vice President JD Vance announced Wednesday that the Trump administration is escalating its crackdown on Medicaid fraud, warning states that failure to aggressively prosecute abuse within the program could result in the loss of federal funding. The announcement came as the administration blocked $1.3 billion in Medicaid reimbursements tied to roughly 800 California hospice providers suspected of fraudulent activity.
Speaking at a wide-ranging press conference as chairman of President Trump’s anti-fraud task force, Vance accused California officials of failing to take the issue seriously.
“We’re announcing that the federal government is deferring $1.3 billion in Medicaid reimbursements from the state of California,” Vance said. “And the simple reason is because the state of California has not taken fraud very seriously.”
“We want California to get serious about this fraud.”
Vance said letters are being sent to all 50 states warning that federal support for Medicaid fraud control units could be cut off if states fail to aggressively investigate and prosecute abuse within the system. He also warned that broader Medicaid funding could eventually be withheld from states that continue ignoring the problem.
“For those states that refuse to get serious about fraud, we’re going to turn off that anti-fraud money,” Vance said. “And if we continue to find problems, we can turn off other resources within their state Medicaid programs as well.”
The vice president singled out New York and Hawaii as states drawing increased scrutiny. He sharply criticized New York’s low number of Medicaid fraud indictments despite operating one of the largest Medicaid programs in the country.
“New York has had nine indictments over the last year — nine indictments,” Vance said. “That’s a $100 billion Medicaid program just in New York.”
He contrasted that with Indiana, which he noted has a significantly smaller population but more than four times the number of fraud indictments over the same period.
“Does anybody seriously think the good people of Indiana are 12 times more likely to commit fraud than the people of New York?” Vance asked. “No, of course not.”
“What is happening is that the people in leadership in New York are just not taking the fraud issue seriously.”
Neither New York Gov. Kathy Hochul nor California Gov. Gavin Newsom immediately responded publicly to the administration’s criticism.
While much of the administration’s focus has landed on Democrat-led states, Vance framed the effort as nonpartisan and acknowledged that his home state of Ohio has also struggled with Medicaid fraud enforcement.
Dr. Mehmet Oz, now overseeing Medicare and Medicaid operations within the administration, provided additional details on the California investigation. Oz said federal officials believe at least half of the hospice providers operating around Los Angeles may be fraudulent.
“A third of all hospices in the entire country are in Los Angeles,” Oz said. “Ask yourself, how is that possible? It’s not.”
According to Oz, only a small number of the suspended facilities have challenged the federal action so far.
“We believe that at least half of the hospices in the entire area around Los Angeles are fraudulent,” he said. “Today we announced 800 of those hospices have been suspended.”
Oz also announced a nationwide moratorium on approving new hospice and home healthcare providers eligible for federal reimbursement, arguing that fraud rings simply relocate when enforcement intensifies in one state.
“When we squeeze the balloon in California, we know what those fraudsters do,” Oz said. “They move to nearby Nevada.”
The administration has already pursued similar actions elsewhere. Earlier this year, federal officials withheld hundreds of millions in Medicaid reimbursements tied to programs in Minnesota deemed vulnerable to fraud, including transportation services, autism care, and at-home rehabilitation programs. In February, the administration also imposed restrictions targeting suspected Medicare fraud involving durable medical equipment providers in South Florida.
Vance argued the broader issue goes beyond wasted taxpayer dollars and touches directly on public trust in government programs.
“We are not going to have a generous country if Americans think that they’re paying their taxes not to needy people, but to fraudsters,” he said. “That’s fundamentally what we’re trying to fix.”