The Trump administration has cut off $3 million in federal funding to Hawaii’s Medicaid fraud control program following warnings of withholding federal Medicaid funds from states failing to address fraud. New York could be targeted next, according to Vice President J.D. Vance’s statements.
Reason for Funding Cuts
Medicaid is a joint federal and state healthcare program for low-income individuals. Each state must have a fraud control unit overseen by the state’s attorney general to ensure funds are used correctly. Thomas March Bell, Inspector General of the U.S. Department of Health and Human Services (HHS), informed Hawaii Attorney General Anne Lopez of the funding cuts due to the state’s Medicaid Fraud Control Unit (MFCU) failing to secure a single indictment or conviction over four years.
During this period, enrollments in Hawaii’s Medicaid increased by 40%, with funding growing by 27%. The MFCU received $12 million in federal taxes, approximately $3 million annually. More than 360,000 people in Hawaii are enrolled in Medicaid, according to state figures.
Issues with Fraud-Fighting Efforts
Bell noted that the MFCU’s failure led to its loss of federal certification, stopping HHS funding. “Enough is enough,” Bell wrote, highlighting past inefficiencies. Federal Trade Commission Chair Andrew Ferguson also criticized Hawaii’s fraud control unit during an Ohio press conference, emphasizing its underperformance.
Hawaii’s Response
Attorney General Lopez responded by acknowledging the seriousness of the situation and emphasizing that Hawaii has recovered $14 million in civil cases since 2021. She stated that the work of the MFCU was unfairly characterized and emphasized ongoing efforts to improve.
Continued Efforts to Combat Healthcare Fraud
The decertification is part of a broader campaign against healthcare fraud initiated by President Trump with Vance overseeing the anti-fraud task force. In public remarks, Vance criticized Hawaii’s fraud efforts and signaled potential actions against other states, including New York.
New York’s Medicaid program, serving over 6.5 million people, has had minimal indictments despite its $100 billion budget. Vance compared New York’s performance unfavorably to that of Indiana’s fraud control efforts.
Concerns and Clarifications in New York
While New York faces scrutiny, a misleading claim by Dr. Mehmet Oz, head of the Centers for Medicare & Medicaid Services (CMS), led to challenges for the task force. Oz overstated the number of New Yorkers using Medicaid personal care services. Correction from CMS followed, clarifying that about 450,000 individuals, or 6-7% of enrollees, used these services.
“Governor Hochul has zero tolerance for waste, fraud, and abuse in Medicaid,” spokesperson Nicolette Simmonds asserted. New York aims to protect taxpayer money and safeguard essential programs.
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