$1.2 Billion in Medicaid Funds Withheld from California Over Fraud Concerns

Federal Officials Hold Back $1.2 Billion in California Medicaid Funding

Pointing to suspected fraud within a state initiative that helps seniors and disabled residents with daily chores, the Trump administration is withholding an additional $1.2 billion in Medicaid reimbursements to California. Federal officials took action after they grew concerned about the rapid expansion of California’s personal care services program in recent years, according to Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services. State officials were notified of the decision Tuesday, he said.

Growth Rate Sparks Federal Intervention

Federal scrutiny intensified as the administration tracked the trajectory of California’s personal care services program over recent years. According to Oz, California has grown its personal care program by 24 percent over the last three years. That figure represents twice the rate of every other state average in the country.

“Impossible for us to understand how that could be so we are taking major action in California,” Oz said, pointing to services that could allegedly be offered without taxpayer expense.

While federal officials did not provide direct evidence of fraud in this latest deferral, Oz suggested the state was compensating individuals generously for routine chores. “Many of you would carry groceries upstairs for your mom for free, but in California, they will pay you a lot of money for it,” he stated.

Earlier Actions Target Healthcare and Hospice Programs

This $1.2 billion holdback follows a similar action in May, when the administration withheld $1.3 billion in Medicaid reimbursements from California over concerns regarding fraudsters operating within the state’s hospice and in-home care programs. These moves form part of a broader federal effort by the administration to rein in costs and target perceived waste within healthcare benefit programs, particularly in Democrat-led states.

California’s hospice industry has faced scrutiny in the past. Amid a booming market, a 2020 Los Angeles Times inquiry revealed that providers were billing Medicare for medical equipment and hospice care given to individuals who were not actually terminally ill.

Senator Alex Padilla Criticizes Funding Decision

Democratic Sen. Alex Padilla sharply criticized the administration’s decision on Tuesday, arguing that the move will harm vulnerable populations.

“This Administration’s track record speaks for itself: Fewer people have health insurance, premiums are up, and drug costs are higher,” Padilla said in a statement. “This decision will hurt older Californians, people with disabilities, and those recovering from illness or injury. The American people deserve better, and I’ll keep fighting against their attacks.”

Gavin Newsom’s office did not immediately respond to a request for comment. However, the governor’s office has previously defended the targeted programs as vital lifelines that keep vulnerable residents out of costlier institutional facilities. In past statements regarding similar fund withholdings, Newsom’s office labeled the actions a politically motivated attack on services designed to keep seniors and people with disabilities out of nursing homes.

State data indicates that In-Home Supportive Services care costs roughly $30,000 annually, compared to $137,000 a year for traditional nursing home care. An evaluation released in 2020 by the California state auditor revealed that family members serve as caregivers for nearly three-fourths of In-home Supportive Services participants.

Whistleblower Incentive Program Launched

The White House referred all inquiries regarding the Medicaid reimbursement decision to the Centers for Medicare & Medicaid Services. The federal agency did not immediately respond to a request for comment.

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