CMS Withholds $1.3B in Medicaid Funds from California in Record Fraud Enforcement Action

The Trump administration announced it will withhold $1.3 billion in Medicaid funding from California—the largest single deferral ever made by CMS—citing the state’s failure to address program integrity and fraud concerns. Vice President JD Vance and CMS Administrator Mehmet Oz made the announcement, pointing to fraudulent prescriptions and mishandled taxpayer funds. New York and Hawaii were also named as states under scrutiny, and the administration threatened to freeze Medicaid Fraud Control Unit funding across all 50 states unless they aggressively pursue fraud. This follows similar action against Minnesota earlier in 2026. CMS also imposed a six-month moratorium on new Medicare enrollment for hospice providers and home health agencies, continuing a pattern of heightened enforcement across high-fraud service categories including DME and home health.