The Trump Administration is turning up the heat on California, freezing a staggering $1.3 billion in Medicaid funding as federal officials intensify a sweeping fraud crackdown targeting the state’s hospice and home health industry.
The move, first reported by The California Post, marks one of the largest financial actions yet in President Donald Trump’s broader campaign against alleged Medicaid abuse.
Vice President JD Vance is spearheading the administration’s anti-fraud task force, which announced Wednesday that federal officials are taking aggressive action after suspending the licenses of 447 hospice facilities and 23 home health agencies accused of suspicious billing practices.
“As Americans across the country have seen the rampant level of fraud going on in California, the Trump Administration will not tolerate it,” a senior administration official told The Post.
The official credited both Vance and CMS Administrator Mehmet Oz — better known nationally as Dr. Oz — for driving the investigation forward.
The administration says the crackdown is only beginning.
“The Vice President’s task force is taking all steps necessary to ensure that American taxpayer dollars don’t make it into the hands of fraudsters,” a spokesperson for Vance told the outlet.
The federal government is now conducting what officials described as a full accounting of hospice and home health agencies nationwide, suggesting more states could soon face scrutiny.
California has increasingly become ground zero for concerns surrounding alleged Medicare and Medicaid fraud.
Multiple investigations uncovered clusters of suspicious hospice and home health businesses operating across the state, along with networks of doctors allegedly linked to tens of millions of dollars in questionable billing activity.
Federal officials said one doctor already lost billing privileges with Medicare, while dozens of agencies saw licenses suspended amid the probe.
The California action follows a similar federal confrontation with Minnesota earlier this year.
Back in February, Vance announced the administration would withhold more than $250 million in Medicaid funds from the state over fraud concerns and ordered Democratic Gov. Tim Walz to submit a “corrective action plan” within 60 days.
Months later, Dr. Oz announced another $91 million in Medicaid funding for Minnesota would be deferred, warning the state’s system faced “serious vulnerabilities to fraud.”
Now, California is facing an even larger financial reckoning.
The latest move is likely to intensify already-growing tensions between the Trump Administration and Democratic leaders in Sacramento as Washington ramps up oversight of federally funded healthcare programs.
According to The Wall Street Journal, Vance is set to give all 50 states an ultimatum on Medicaid funding: comply with anti-fraud statutes, or risk losing federal dollars.
More over at The Wall Street Journal:
Exclusive: Vice President JD Vance is planning to deliver an ultimatum to all 50 states: fully comply with antifraud statutes or run the risk of losing federal Medicaid funding https://t.co/wK8traZyxE
— The Wall Street Journal (@WSJ) May 13, 2026
