Trump Admin Freezes $1.3B in Medicaid Funds to California Over Hospice Fraud

In the latest escalation of the Trump administration’s crackdown on waste, fraud, and abuse in federal health programs, Vice President JD Vance announced Wednesday that the federal government is deferring $1.3 billion in Medicaid funds slated for California due to the state’s ongoing failure to tackle fraud in its Medi-Cal program. 

Joined by Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz, Vance detailed a nationwide six-month moratorium on new Medicaid enrollments for hospice and at-home care services. The move comes as the administration has suspended payments to roughly 800 hospice providers in the Los Angeles area alone, entities that have billed taxpayers an estimated $1.4 billion. Oz noted that one-third of all hospice programs receiving federal assistance in the United States are concentrated in Los Angeles County. 

When states like California refuse to work with the federal government on saving American taxpayer dollars, @CMSGov and the @WHFraudTF will hold those states accountable.

Today, CMS notified the California Dept. of Health Care Services that we are deferring $1.3 billion in… https://t.co/6vfMo1iqfa pic.twitter.com/E7H6Necg42

— DrOzCMS (@DrOzCMS) May 13, 2026

“There are California taxpayers and American taxpayers who are being defrauded because California isn’t taking its program seriously,” Vance stated. “They don’t think the fraud is a big enough problem. They don’t care about protecting that Medicaid program.” 

The vice president, who leads the White House’s anti-fraud task force targeting welfare abuse in high-risk states like California, emphasized that many states, including Democrat-led ones such as New York, Minnesota, and Maryland, have failed to utilize fraud deterrence programs effectively. He cited Hawaii’s zero indictments or convictions despite receiving federal funds to combat fraud as a prime example of negligence. 

This latest action builds directly on efforts the California Globe has tracked since early this year. In February, the Globe reported on the White House’s announcement that Vance would lead a new anti-fraud task force aimed squarely at Governor Gavin Newsom’s failures to address rampant fraud in multiple government entities. Recently, Dr. Oz highlighted the state as an “epicenter” for hospice and home-health fraud in Los Angeles. The response from California Democrats? Dr. Oz was a racist. 

Yet, as the Globe detailed in March and April, independent investigations and federal probes have exposed explosive growth in LA’s hospice sector—a 1,500 percent surge in providers since 2010 while the senior population grew by only 40 percent—alongside “phantom care,” ghost offices, and over-billing estimated in the hundreds of millions. 

My own April reporting on “Operation Never Say Die” documented federal arrests in a $50 million Medicare scam, coordinated with Vance’s task force, which had already suspended 221 hospice and healthcare providers in LA at that time (a figure that has since more than tripled). “Operation Never Say Die” was coined by the feds because the reported hospice patients never died, because they never existed or were fraudulently enrolled as hospice patients. 

Additional Globe coverage has continually underscored how state audits dating back years had flagged these vulnerabilities, yet Sacramento’s response remained inadequate even as billions flowed out the door. 

Oz made clear the moratorium is targeted: “There will be no new hospices. We’re not taking any services, but there will be no new ones.” The administration is also imposing heightened oversight on hospice providers in Arizona, Georgia, Ohio, Nevada, and Texas, and launching a fraud-identification pilot in North Carolina, Ohio, Oklahoma, and Texas. All 50 states have now responded to federal letters demanding revalidation of Medicare and Medicaid providers. 

Vance called on states, including California, to cooperate. “We’ve had some good cooperation with both red states and blue states,” he said. “We want to save the American people money, but we’re also trying to preserve programs that exist for the benefit of the American people. We’re also trying to make sure that we do this in a way that’s defensible.” 

Newsom’s press office responded that “Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.”

We hate fraud. But that’s NOT what this is.

Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.

Why has IHSS grown in California? It’s simple: Because California is keeping more people OUT of far more expensive… https://t.co/bzmHwR8IMi

— Governor Newsom Press Office (@GovPressOffice) May 13, 2026

Despite Newsom’s Press Office protest, “a 2022 California State Auditor report documented a 1,500 percent surge in hospice agencies in Los Angeles County since 2010, a density more than six times the national average relative to the county’s elderly population. By 2019, those agencies had likely overbilled Medicare by $105 million in a single year. That report was filed away and left to collect dust,” we reported.

As Vance’s task force continues its work, the message from Washington is unmistakable: taxpayer dollars are no longer an open checkbook for states that refuse to root out fraud. California taxpayers, long burdened by one-party rule and unchecked spending, may finally see relief, provided Sacramento Democrats chooses cooperation over denial.