Trump Administration Defers Another $1.2 Billion in California Medicaid Payments

The Trump administration will defer another $1.2 billion in federal Medicaid payments to California, the largest single deferral yet in a year of funding fights between Washington and the state over its in-home care program.

Centers for Medicare and Medicaid Services Administrator Mehmet Oz announced the move on Tuesday at the White House, speaking on behalf of Health and Human Services Secretary Robert F. Kennedy Jr. "We are going to defer $1.2 billion more dollars from California," Oz told reporters. "They just got the note."

The program at the center of the fight

The money is tied to personal care services paid through Medicaid, the health program for low-income Americans that states run with federal money. In California, most of the deferred funds involve the In-Home Supportive Services program, which pays family members and other caregivers to help patients with daily tasks such as washing, dressing and feeding themselves.

Oz said California approvals for Medicaid-covered personal care services have grown 24 percent in the last three years. "That is twice the rate of every other state average in the country, impossible for us to understand how that could be so," he said. He repeated a point he has made before about the program: "Many of you would carry groceries upstairs for your mom for free, I would think, but in California they will pay you a lot of money for it."

Not the first deferral this year

The Centers for Medicare and Medicaid Services has already withheld around $2.2 billion from California over the course of this year, most of it tied to the same in-home care program. The administration says the program is riddled with fraud and points to its rapid growth. California has protested the earlier deferrals, saying the federal government has not given the state enough evidence of fraud and that the growth comes from rising demand for care.

A deferral is a hold, not a final cut. The deferred money stays under review at the Centers for Medicare and Medicaid Services, which can later pay it or cancel it. If the money is cancelled, the state has to make up the payments itself. The deferred funds total around 4 percent of the annual federal Medicaid payments California receives. Neither the Centers for Medicare and Medicaid Services nor California officials immediately answered requests for comment on the new deferral.

Part of a wider fraud campaign

Oz made the announcement during an Oval Office event for the new Fraud Whistleblower Incentive Program, where President Donald Trump promised rewards for tips about fraud, waste and abuse. Fighting fraud has become a central administration message ahead of the November midterm elections. Vice President JD Vance and his anti-fraud task force have pointed to actions in Medicaid, the health insurance marketplaces and the food stamp program, saying they are protecting federal safety net programs for the Americans who qualify for them.

California is not the only state facing a hold. The Centers for Medicare and Medicaid Services has also deferred Medicaid payments to Minnesota over fraud allegations.