The U.S. government has announced it will withhold an additional $1.2 billion in Medicaid reimbursements to California, citing concerns over possible fraud within the state’s personal care services program that supports older adults and individuals with disabilities. The decision was communicated to California officials on Tuesday by Dr. Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services (CMS).
Oz highlighted the rapid growth of California’s personal care services program, which has expanded by 24% over the past three years—more than double the national average. He described such growth as “impossible” to justify, suggesting the program may be paying for services that could be provided without compensation, such as carrying groceries upstairs.
While Oz did not present direct evidence of fraud, his comments reflect the Trump administration’s broader efforts to tighten oversight of federal healthcare benefit programs, especially in states led by Democratic governments. This recent action follows a similar move in May, when the administration withheld $1.3 billion over alleged fraud within California’s hospice and in-home care programs.
Democratic Senator Alex Padilla criticized the decision, emphasizing that it would adversely affect vulnerable populations in California. “This decision will hurt older Californians, people with disabilities, and those recovering from illness or injury,” Padilla said, noting increased insurance premiums and drug costs as ongoing challenges under the current administration.
California Governor Gavin Newsom’s office has not responded to the latest funding cut but has previously condemned similar measures as politically motivated attacks on essential services. In May, Newsom’s administration described the withholding of funds as targeting programs designed to prevent seniors and disabled individuals from entering nursing homes. Such services typically assist with daily living activities including bathing, meal preparation, and medication administration under medical supervision.
A 2020 report by the California state auditor indicated that nearly 75% of caregivers in the In-Home Supportive Services (IHSS) program assist family members. Newsom’s representatives contend that IHSS care significantly reduces costs compared to nursing home placements, estimating annual expenses of $30,000 for in-home care versus $137,000 for nursing facility care.
California’s hospice sector has a documented history of billing irregularities. A 2020 investigation found hospice providers submitting Medicare claims for services and equipment for patients not actively facing terminal illnesses during a period of industry expansion.
The administration, with Vice President JD Vance playing a prominent role, has made combating fraud and waste in healthcare programs a priority. On Tuesday, former President Trump and Vance announced a $25 million whistleblower initiative offering a 1% commission for tips that result in successful fraud convictions. Trump stated he would personally determine the distribution of rewards and pledged fairness and expediency in the process.
Requests for comment from CMS were not immediately answered, and the White House deferred inquiries to the agency.