The Trump administration announced Tuesday it is freezing more than $867 million in federal Medicaid payments to California, citing suspected fraud and unsupported claims within the state's In-Home Supportive Services (IHSS) program. An additional $199 million in payments were also halted for Minnesota.
Health and Human Services Secretary Robert F. Kennedy Jr. stated during a press conference that the administration will not disburse Medicaid funds until confidence is restored in their lawful and appropriate expenditure. Centers for Medicare & Medicaid Services (CMS) Administrator Mehmet Oz indicated that California's spending on in-home services had doubled the national average over the past two years, prompting scrutiny.
"If it smells like fraud, we’re not paying for it anymore," Oz said, adding that CMS requires California to substantiate its claims from a recent audit before payments are restored. Suspicious billing patterns flagged by CMS include providers submitting claims more than a year after services were rendered, billing multiple patients simultaneously, or ranking among the top billers nationwide.
The IHSS program, funded by Medicaid, pays caregivers – often family members – to assist elderly and disabled residents in their homes, serving over 500,000 Californians. Fraud expert Haywood Talcove, CEO of LexisNexis Risk Solutions for Government, described the program as susceptible to exploitation, estimating that fraud accounts for approximately 20% of the IHSS program's costs. Talcove explained that fraudsters can create fictitious recipients of care, secure false certifications of need from healthcare professionals, and then receive payments, suggesting that California lacks the necessary technology, personnel, and systems for adequate validation.
California Governor Gavin Newsom rejected the administration's allegations, labeling the decision to halt payments as "pure politics." Newsom asserted that his office has been cooperating with federal authorities and that California's IHSS approach, previously approved by CMS, saves taxpayer money compared to nursing facility care. A 2020 state audit found no program integrity concerns and recommended increasing reimbursement rates to bolster the in-home care provider workforce and reduce reliance on institutional care.
In May, the Trump administration previously withheld $1.3 billion in Medicaid funding from California due to concerns related to the state's hospice and home-health agencies. The current freeze will remain in effect until California and Minnesota can provide documentation proving the legitimacy of the payments and federal officials complete their review of high-risk Medicaid claims.