Trump imposes historic Medicaid funding freeze in CA – CalMatters

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The Trump administration is suspending $1.1 billion in Medicaid funding intended for California’s home health care program over fraud concerns, a move that state health officials and health advocates say could harm hundreds of thousands of seniors and people with disabilities.

At the center of the dispute is California’s In-Home Supportive Services, or IHSS, program, which helps about 900,000 older Californians and people with disabilities with their daily activities so they can remain in their homes rather than in institutional settings.

Dr. Mehmet Oz, administrator of the US Centers for Medicare and Medicaid Services, called it “the biggest delay we’ve ever done.” at a press conference on Wednesday . He said California is an emergency — its home health care costs are rising twice as fast as other states — and that the federal government will freeze Medicaid funding until the state can convincingly explain why.

The suspension is part of the administration’s stated campaign against Medicaid and Medicare fraud. Although Oz’s agency has raised concerns about the “integrity” of California’s home health care program, it has not presented evidence to support it, California health officials said.

State Medicaid Director Tyler Sadwit said in a news release that the expansion of the program is intentional. He attributes this to three factors: higher caseloads, higher hourly wages for home health workers and longer work hours as workers care for more people with greater needs.

Between 2023 and 2025, caseloads increased 17.5 percent, and the average hourly wage for home health workers rose from $19 to $21, according to the Department of Health Services, which runs the state’s Medicaid program, better known here as Medi-Cal.

Gov. Gavin Newsom, during his budget presentation Thursday, argued that expansion should be celebrated, not punished. Home health care costs about $30,000 per person per year, Newsom said. Qualified nursing homes can cost four to five times as much.

State health officials said they have a robust oversight system in place to root out fraud in the home health care system, including “annual assessments, electronic schedules, screening tools and coordinated state and county review processes.”

In addition to setting aside $1.1 billion for home health services, the federal government is withholding another $200 million related to administrative claims that the state said it expects and is working to resolve.

The federal funding freeze for California follows a similar move in Minnesota in February, when the federal administration halted $259 million in Medicaid payments. Minnesota filed a lawsuit to block the decision.

During Wednesday’s press conference, Vice President JD Vance, who leads the administration’s anti-fraud task force, accused California, New York and Hawaii of not doing enough to combat Medicaid fraud. “That’s why we’re taking this action,” Vance said. “We want California to take this fraud more seriously.”

California has been at the center of the Trump administration’s anti-fraud efforts, with palliative care at the center of investigations. Vance and Oz also announced Wednesday a six-month national moratorium barring new hospice providers from enrolling in Medicare. California imposed a similar freeze on new hospice licenses.

State health officials say patients receiving home health care will continue to receive services without interruption. However, advocates and unions representing caregivers are concerned about the uncertainty over the timing of federal funds being disbursed and the potential impact of an extended freeze on patients.

As part of the program, Medicaid pays caregivers to help people with everyday tasks such as bathing, cooking, shopping and attending medical appointments.

“It’s clear that California’s most vulnerable citizens need this program,” said Doug Moore, executive director of the United Domestic Workers, an organization that represents caregivers. “There are elderly people, children and people with disabilities. Don’t put innocent people in the middle of this situation.”

This program is supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the health care they need, when they need it, and at an affordable cost. Visit www.chcf.org for more information.