Just hours after the Trump administration announced action against fraud in the hospice and home health spaces, Vice President JD Vance put state regulators on notice that the feds are poised for further action.
At a White House event on Wednesday, Vance said the Centers for Medicare & Medicaid Services would withhold $1.3 billion in Medicaid funding from the state of California, as officials have “not taken fraud very seriously.”
CMS Administrator Mehmet Oz, M.D., said during the event that this is the largest deferral ever made by the agency, with the goal of bringing state officials to the table.
Earlier this year, the agency took similar steps in holding back millions in Medicaid funds originally earmarked for the state of Minnesota. At the time, CMS leaders said the state had not done enough to address program integrity concerns raised by the feds.
In his comments, Vance said there are “two victims” of fraud in California. First, the fraud activity impacts both state and federal taxpayers whose money is being mishandled. And second, he said that there are “people who have been prescribed medications that they don’t even need.”
“They’ve had drugs put into their bodies that they don’t need because fraudsters have actually encouraged false prescriptions and false administration of medications,” Vance said at the event.
Vance also cited New York and Hawaii as states that the feds are honing in on.
Alongside the specific sanctions against the Golden State, Vance said that the agency is poised to freeze funding for Medicaid Fraud Control Units across all 50 states if they do not act aggressively to root out fraudulent behavior. The vice president said that the feds will be sending letters to all 50 states to push them to do more around fraud.
He continued that the Trump administration “can turn off other resources within their state Medicaid programs as well” if the feds continue to see issues.
Rooting out fraud, waste and abuse across multiple government programs has been a focus area for the White House of late, with Vance at the helm of the broader effort. He said during the event that White House wants to support states that embrace this work, through technology and other means.
“These letters are the first step, the first effort to try to force these states to get serious about prosecuting fraud,” Vance said.
On Wednesday morning, CMS announced a six-month moratorium on new Medicare enrollment for hospice providers and home health agencies, which the feds cited as a major source of fraudulent behavior. Putting the moratorium in place will allow CMS to do a data-driven deep dive to identify potential fraudsters and remove them from Medicare reimbursement.
The agency made a similar move for durable medical equipment, prosthetics, orthotics and supplies companies earlier this year.