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The Trump administration has announced a freeze on more than $1 billion in Medicaid payments to California and Minnesota, citing concerns over questionable claims. On Tuesday (July 21), federal officials from the Centers for Medicare and Medicaid Services (CMS) stated that they are deferring approximately $867.5 million to California and $199 million to Minnesota until further documentation is provided.
The focus of the review is on California's In-home Supportive Services (IHSS) program, which assists around 900,000 seniors and people with disabilities, and certain flagged claims in Minnesota. According to CalMatters, CMS Administrator Dr. Mehmet Oz described this as the "largest deferral we've ever made" and emphasized the need for California to justify its home health spending, which is reportedly growing at twice the rate of other states.
The Department of Health and Human Services plans to expand its authority to remove fraudulent providers from federal health programs as part of a broader effort to prevent Medicaid fraud and protect taxpayer dollars. Vice President JD Vance, who oversees the administration's fraud task force, stated that the freeze is aimed at ensuring states take Medicaid fraud seriously. He warned that similar actions could be taken against other states if they fail to prosecute Medicaid fraud aggressively.
California Governor Gavin Newsom and state health officials have criticized the decision, arguing that the program's growth is intentional and necessary. They maintain that the state's oversight system is robust, with measures like electronic timesheets and verification tools in place. Newsom noted that in-home care costs significantly less than institutional care, and the expansion should be celebrated rather than penalized.
The freeze follows a similar action taken in February against Minnesota, which resulted in a lawsuit from the state. California Attorney General Rob Bonta has also suggested that the freeze may be politically motivated, a claim echoed by other state officials.
Despite the freeze, state health officials assure that services for home health patients will continue without interruption. However, there are concerns about the impact of a prolonged freeze on clients and caregivers.