The Trump administration escalated its anti-fraud campaign Wednesday, warning it will withhold Medicaid funds from any state that fails to show it is aggressively prosecuting fraud in the program. Vice President Vance told reporters that the Department of Health and Human Services inspector general has sent letters to all 50 states demanding proof of compliance with federal anti-fraud statutes.
“If they do not aggressively prosecute Medicaid fraud, we are going to turn off the money that goes to these anti-fraud units,” Vance said, framing the crackdown as a bipartisan issue. “This does not have to be a red state or a blue state issue. This is just basic good government.”
The move comes as the administration also defers over $1 billion in Medicaid reimbursements from California, citing fraud concerns in the state. Vance did not detail the specific allegations against California but said the federal government is taking a hard line on states that fail to police the program.
Vance named Hawaii and New York as two states that have been uncooperative with the administration’s anti-fraud efforts, while praising Ohio and Maryland for working closely with federal officials. He said the administration has both red and blue states cooperating, but declined to provide a full list.
The threat to withhold Medicaid funding is a significant escalation in the administration’s broader push to crack down on waste and abuse in federal healthcare programs. Vance is expected to detail the anti-fraud push targeting Democratic states in the coming days, signaling a potentially partisan edge to the enforcement.
In a related move, HHS announced Wednesday it is placing a moratorium on new Medicare enrollments from home health care and hospice providers. The halt on new Medicare sign-ups for home health and hospice providers aims to curb fraud in those sectors, which have been a focus of federal scrutiny.
The administration’s actions are likely to reignite debates over federal versus state control of Medicaid, a joint federal-state program that covers millions of low-income Americans. Critics argue the threat to withhold funds could harm vulnerable beneficiaries, while supporters say it is necessary to protect taxpayer dollars.
Vance emphasized that the goal is not to punish states but to ensure accountability. “We want states to be partners in rooting out fraud, not obstacles,” he said. The administration has not set a deadline for states to respond to the inspector general’s letter, but Vance warned that noncompliance will have consequences.
As the administration continues its anti-fraud push, the DOJ has also threatened to sue states that deny undercover license plates to DHS, indicating a broader federal crackdown on state resistance to Trump-era policies.
