The White House is withholding another $1.2 billion in federal Medicaid payments to California, citing growth in the state’s personal care services spending.
CMS Administrator Mehmet Oz, MD, made the announcement Oct. 20 in the Oval Office on behalf of HHS Secretary Robert F. Kennedy Jr.
He pointed to concerns over California’s In-Home Supportive Services program, which is run through the state’s counties.
“California has been growing that program 24% in the last three years,” Dr. Oz said. “That is twice the rate of every other state average in the country. Impossible for us to understand how that could be so.”
Dr. Oz said California was notified Oct. 20 and that the deferral applies to Medicaid payments directed to personal care services. A payment deferral does not mean the funds have been permanently canceled; instead, they are delayed until proper documentation can be shown that claims meet federal Medicaid requirements, according to a July 21 news release from HHS.
In May, the White House withheld $1.3 billion in federal Medicaid reimbursements to California, and alleged the state did not take Medicaid fraud “seriously.” Dr. Oz said the state’s Medicaid record produced “major red flags,” and that California needed to clarify $630 million in billing, $500 million in home health services and $200 million in “questionable expenditures” allegedly linked to undocumented immigrant coverage.
A Sept. 8 HHS Office of Inspector General report also found that the California Department of Health Care Services did not report and return $113.3 million in Medicaid overpayments identified by the state’s Medicaid Fraud Control Unit in fiscal 2023. This included a $47.8 million federal share. DHCS agreed with three of the OIG’s recommendations but did not agree with its call to return the federal share.
“California condemns the Trump administration’s decision to defer another $1.1 billion in in-home care funding, bringing the total to $2.8 billion,” a spokesperson for California Gov. Gavin Newsom said in a statement shared with Becker’s. “This is a cruel, reckless attempt to use vulnerable Californians as political pawns, putting seniors, children, and people with disabilities at risk.”
The spokesperson said that the total deferral letter is more than $1.2 billion, but only $1.1 billion is related to in-home care.
The statement also said taxpayers will “pay the price for the Trump administration’s stupidity.” It added that in-home care lets Californians age and live at home and saves Medi-Cal roughly $100,000 a year for each person who can safely avoid a nursing facility.
“California takes program integrity seriously and aggressively investigates credible allegations of wrongdoing, recovers improper payments, and works with state and federal partners to hold bad actors accountable,” the statement said. “California has led the nation in preventing and addressing fraud.”
