Vance Warns States of Federal Funding Cuts Over Medicaid Fraud Enforcement

Vice President JD Vance warned Wednesday that states could lose federal funding if they fail to aggressively pursue Medicaid fraud, escalating the Trump administration’s pressure on governors and state Medicaid officials.

"We are sending letters that will require them to show that they are effectively and aggressively prosecuting Medicaid fraud in their states. And if they do not, if they do not aggressively prosecute Medicaid fraud, we are going to turn off the money that goes to these anti-fraud units," Vance said during a fraud press conference on Wednesday.

Vance said the federal government has provided states with billions of dollars for Medicaid Fraud Control Units and warned that funding could be cut off if states fail to comply with the crackdown. He pointed to states that have received billions of dollars in federal funding to protect against fraud but have yet to produce a conviction or indictment.

The warning came as the administration announced it is deferring $1.3 billion in Medicaid reimbursements from California, with Vance accusing the state of failing to take fraud seriously. California officials have disputed the administration’s claims.

"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," Vance added.

Vance said that Ohio, a red state, and Maryland, a blue state, have been good examples of states taking the fraud seriously.

Ohio Governor Mike DeWine issued a press release on the same day announcing new measures to crack down on suspected fraud, including proposing a six-month moratorium on new home healthcare and hospice providers enrolling in Medicaid.

Vance pointed to Democrat-led jurisdictions for not tackling fraud scandals more aggressively.

"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," Vance said.

He continued that if states do not take the fraud crackdown seriously, other resources within their Medicaid programs could be turned off too.

"We don't want to turn off any money. What we want to do is ensure that people are taking fraud seriously. We want to protect Medicaid," Vance said. "We want to protect Medicare, but we can't do that if the states that are administering those programs are allowing those programs to be fleeced by fraudsters."

Dr. Oz previously gave governors and state Medicaid leaders 10 business days on April 23 to tell CMS whether they will commit to conducting a swift revalidation of high-risk Medicaid providers and provide a proposed timetable. He set a separate 30-day deadline for a broader provider-revalidation strategy.

"While the factors contributing to fraud are multifaceted and require a comprehensive approach to address, a revalidation process for high-risk providers will immediately deter criminal actors from continuing their fraud schemes, as the federal and state governments closely review and scrutinize the qualifications of providers to suspend or terminate clearly abusive actors from the program," Oz wrote in a letter.

The letters targeted providers at high risk of waste, fraud, abuse, and corruption, particularly those with less rigorous enrollment and billing requirements. CMS directed states to include any provider operating without a National Provider Identifier.

A second letter went to each state Medicaid director reiterating the call for a revalidation strategy tailored to each state.

"Our analysis of national trends strongly suggests a persistent and growing Medicaid threat posed by sophisticated actors knowingly exploiting these complex systems for financial gain," Oz wrote.