Vance announces $1.3B Medicaid deferral, Medicare hospice enrollment freeze

In a White House event Wednesday, Vice President JD Vance and Dr. Mehmet Oz, who leads the Centers for Medicare and Medicaid Services, unveiled new steps in the administration’s anti-fraud task force, including a $1.3 billion hold on California’s Medicaid payments and a nationwide six-month freeze on new Medicare enrollments for hospice and home care agencies. The Department of Health and Human Services’ internal watchdog simultaneously sent letters to state attorneys general warning them to investigate possible Medicaid fraud or risk federal funding.

Vance framed the actions as protecting taxpayers and beneficiaries. “How long are people going to pay into programs if they know that that money doesn’t go to a low-income kid who needs healthcare, but that money goes into a fraudster getting rich?” he said, arguing that fraud victimizes both program recipients and the public.

Oz, the CMS administrator, characterized the California deferral as “the largest deferral we’ve ever made” and justified it by pointing to what he described as questionable expenditures and anomalies, including a higher rate of growth in California’s home care program compared with other states. He did not offer concrete examples of documented fraud. “We’d like the state to at least come to the table and explain to us how these outlier payments have been generated,” he said.

The press office of Gov. Gavin Newsom, D-Calif., disputed Oz’s claims, saying the state’s home care program grew because California is “keeping more people OUT of far more expensive nursing homes.” “We hate fraud,” the office wrote on X. “But that’s NOT what this is.” The total cost of California’s Medicaid program, including state and federal funding, is expected to reach about $222 billion for the budget year starting July 1.

Separately, CMS announced a six-month nationwide moratorium on all new Medicare enrollments by providers of hospice and home care. Existing providers will continue to operate, but the agency said it would “intensify targeted investigations, deploy advanced data analytics, and accelerate the removal” of suspected fraudulent entities.

Tricia Neumann, a senior vice president at the healthcare research nonprofit KFF, noted that such a freeze is not unprecedented: President Bill Clinton’s Democratic administration imposed a temporary moratorium on home health agencies. “A brief moratorium gives the administration time to crack down on true fraud and prevent new fraudulent entities from popping up,” she said.

However, the National Alliance for Care at Home, the country’s largest organization advocating for home healthcare providers, said that while it supports efforts to root out fraud, it prefers targeted strategies to a sweeping moratorium. The group raised concerns that the freeze could limit patient access to care, reduce competition, and slow innovation. Several states have acknowledged that fraud in the hospice and home care categories is a legitimate concern but have pushed back against the administration’s aggressive tactics, warning that they could needlessly punish law-abiding providers.

The moves are the latest in a months-long federal push. In recent months, CMS suspended payments to hundreds of hospice and home care agencies in Los Angeles over alleged fraud and issued a separate six-month moratorium on durable medical equipment suppliers. The administration has also approached at least five states with healthcare fraud investigations and halted some $243 million in Medicaid payments to Minnesota over fraud concerns.

In at least one case, the administration has erred. In April, CMS acknowledged to The Associated Press that it made a significant error in figures it used to help justify a fraud probe in New York, deepening doubts about the administration’s methods and fueling the criticism that President Trump’s administration tends to “attack first and confirm the facts later.”

Vance, a potential 2028 White House contender, has used the high-profile anti-fraud assignment to remind voters that he is trying to claw back taxpayer dollars. He has promoted the task force’s work at campaign stops for Republican candidates and was expected to focus on the effort Thursday in Maine, where closely watched primary races are scheduled for June 9. The anti-fraud push comes amid broader concerns about rising health costs and access barriers, including new Medicaid work requirements that are expected to strain hospitals and result in millions of enrollees losing health coverage.