White House Withholds $1.3 Billion in California Medicaid Funds

The White House said on May 13, 2026 it is withholding $1.3 billion in federal Medicaid reimbursements to California, citing what officials described as the state’s failure to adequately combat fraud, particularly in hospice care. Vice President JD Vance and Centers for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz announced the move at a press conference in Washington.

Officials said the deferral is CMS’ largest to date, though it represents a small share of the more than $92 billion in federal Medicaid reimbursements California received in fiscal year 2024. Medicaid is a joint federal-state program, and California has already paid providers that serve low-income patients, officials said.

CMS will not disburse the federal share of those payments unless California meets the agency’s requirements for demonstrating that eligible patients received services. The state did not immediately respond to a request for comment, according to the report provided.

Oz said CMS believes roughly half of the hospices in the Los Angeles area are fraudulent. He said the agency wants the state to explain how it believes certain payments were generated and what steps are being taken to address outlier billing.

Federal actions aimed at hospice and home health fraud

CMS said it has taken additional steps as it focuses on hospice and home health fraud. The agency announced a six-month moratorium on adding new hospice and home health providers to Medicare nationwide.

Officials also said CMS has asked state Medicaid fraud control units to submit detailed reports on their anti-fraud measures. Vance said some units are not doing enough to combat fraud despite receiving federal funding.

Wider dispute over oversight and reimbursements

The move escalates an ongoing dispute between the administration and California over fraud oversight, officials said. In recent months, CMS has also withheld more than $300 million in Medicaid reimbursements from Minnesota for suspect claims.

California’s response and any next steps from CMS will be closely watched as states and providers assess how the agency applies its payment and documentation requirements in other jurisdictions.