President Donald Trump’s administration is withholding an additional $1.2 billion in federal Medicaid reimbursements to California as federal officials intensify their investigation into potentially improper healthcare spending.
The decision, announced October 20, places renewed scrutiny on programs administered under Democratic Gov. Gavin Newsom and adds to a series of actions targeting questionable Medicaid expenditures.
Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, announced the latest payment deferral during a White House event focused on fraud prevention and government accountability.
Federal officials say the action was prompted by significant increases in spending associated with California’s personal care services program.
The program provides assistance to eligible older adults and individuals with disabilities who require help performing everyday activities.
Those services can include bathing, dressing, meal preparation, mobility assistance, and other forms of support intended to allow patients to remain in their homes.
CMS officials have raised questions about the program’s rapid expansion and whether all expenditures submitted for federal reimbursement meet applicable requirements.
Oz said California’s spending patterns had grown substantially faster than those observed nationally.
He stated, “California has been growing that program 24% in the last three years. That is twice the rate of every other state average in the country.”
The administrator said the unusual growth had prompted federal officials to take action while examining the state’s reimbursement claims.
He explained, “Impossible for us to understand how that could be so we are taking major action in California.”
The latest announcement follows previous decisions by the Trump administration to defer substantial Medicaid payments involving California healthcare programs.
In May, federal officials announced the temporary withholding of approximately $1.3 billion in reimbursements amid concerns about potentially improper spending.
Additional federal payment deferrals were announced in July, including approximately $867.5 million involving California and $199 million involving Minnesota.
The July action focused on claims associated with certain high-risk service categories that federal reviewers determined required additional documentation.
Those earlier reviews included spending in California’s in-home care programs.
The new $1.2 billion action continues the administration’s broader effort to verify claims before releasing federal taxpayer money.
CMS officials maintain that states seeking federal reimbursement must provide documentation establishing that expenditures meet Medicaid requirements.
The funding actions are payment deferrals rather than permanent cancellations.
California may submit additional supporting documentation, and federal officials can release withheld payments if the claims satisfy applicable requirements.
The Department of Health and Human Services has emphasized the importance of reviewing questionable expenditures before taxpayer money is distributed.
HHS Secretary Robert F. Kennedy Jr. previously addressed the administration’s approach to Medicaid oversight.
He said, “Medicaid exists to serve vulnerable Americans, not to bankroll unsupported claims.”
Kennedy’s remarks reflected the administration’s stated objective of increasing scrutiny of federal healthcare expenditures.
Oz has likewise argued that financial safeguards should identify potentially improper claims before money leaves the Treasury.
The federal government shares responsibility for financing Medicaid, while individual states administer their programs under federal requirements.
That arrangement makes accurate documentation essential to determining whether federal matching payments are justified.
California operates one of the nation’s largest Medicaid programs through Medi-Cal, serving millions of residents.
The state’s in-home support programs have grown considerably as demand for personal care services has increased.
Federal officials are examining whether that growth can be adequately supported through eligibility records, service documentation, and financial reporting.
