OAN Staff Jenna Lee
4:12 PM – Thursday, May 14, 2026
Vice President JD Vance has warned that the government may withhold federal Medicaid funds from states that fail to crack down on Medicaid fraud. This comes as the Trump administration launches a crackdown on suspected fraud in state programs and defers $1.3 billion in Medicaid reimbursements from California.
The initiative came as people across the U.S. have expressed concern about increasing health costs and barriers to access, some of which come from the federal government’s own acts.
“We’re announcing that the federal government is deferring $1.3 billion in Medicaid reimbursements from the state of California. 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,” said Vance at news conference.
The vice president was joined by Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz and other officials, who all outlined new requirements for Medicaid programs in all 50 states, including showing aggressive prosecution of fraud or risk losing government funding for their anti-fraud units.
Dr. Oz referenced data from the White House Fraud Task Force on rapid growth in California’s hospice and home health sectors and described a “stunning level of suspected Medicaid and hospice fraud” uncovered in California, such as a 1,500% increase in hospice claims.
“In February, we had the largest anti-fraud announcement from CMS. Today’s effort is larger. It’s much larger, and there’s a reason for that. Half of the fraud, we believe, in the federal government, could be coming out of health care services,” said Oz.
Vance also singled out Hawaii and New York as potential targets for Medicaid fraud as they have not taken the fraud issue seriously.
“This does not have to be a red state or a blue state issue. This is just basic good government. However, states like California, states like Hawaii, states like New York have completely not taken the fraud issue seriously in the Medicaid program. And, so, for those states that refuse to get serious about fraud, we are going to turn off that anti-fraud money,” said the vice president.
While Dr. Oz gave governors and state Medicaid leaders 10 business days on April 23rd to tell the Centers for Medicare & Medicaid Services (CMS) about their commitment to conducting fraud investigations, it was next to a separate 30-day deadline for a broader strategy for provider-revalidation, which escalated government pressure on states to tighten anti-fraud reinforcement.
“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. That’s fundamentally what we’re trying to fix, rebuilding America’s trust,” emphasized Vance.
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