Finding waste, fraud and corruption in Medicaid is a lot like diagnosing illness in a human body. You do an initial check-up and if something seems off, you order more tests.
That’s exactly what the US Centers for Medicare & Medicaid Services (CMS) did with California’s Medicaid program, known as Medi-Cal.
During a review of state-by-state Medicaid spending, CMS saw major warning signs that could not be ignored. As a result, we deferred payment of $867 million to California for the second quarter of 2026 to take a closer look.
Finding waste, fraud and corruption in Medicaid is a lot like diagnosing illness in a human body. You do an initial check-up and if something seems off, you order more tests. REUTERS
During a review of state-by-state Medicaid spending, CMS saw major warning signs that could not be ignored. As a result, we deferred payment of $867 million to California for the second quarter of 2026 to take a closer look. Getty Images
Our biggest area of concern was California’s In-Home Supportive Services (IHSS) program, which reimburses individual caregivers — who are often unlicensed and unmonitored — for helping disabled Medicaid beneficiaries with everyday tasks like changing clothes or picking up groceries. Over the past two years, the cost of this program grew by almost 24%, nearly twice as fast as personal care expenditures in the rest of the country, making California a significant outlier.
It’s true that many states are ramping up initiatives to help keep beneficiaries in their homes, but such rapid spending growth on one set of services in one state is often a sign of a deeper problem.
That’s why we directed our program integrity experts to go through California’s expenditure reports line by line, the same way a good doctor would look at medical charts.
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Then, we took action.
In response to the state’s spike in IHSS spending, we deferred over $390 million, to account for the amount of California’s expenditure growth that is above the national average, until the state can explain why its rate of increase in spending is so much higher.
We also deferred nearly $255 million in suspicious claims from caregivers who billed Medicaid for services to dead people, who claimed they treated more patients than they could handle at one time; who showed up as statistical outliers among top IHSS billers; or who exhibited other irregularities.
We also deferred nearly $255 million in suspicious claims from caregivers who billed Medicaid for services to dead people, who claimed they treated more patients than they could handle at one time; who showed up as statistical outliers among top IHSS billers; or who exhibited other irregularities. REUTERS
We did not just look at one set of services, however. We know California has a long history of siphoning federal funds out of its Medicaid program to pay for healthcare for noncitizens.
After taking a hard look at this issue, we deferred around $220 million in payments that California wanted to make for individuals with unsatisfactory immigration status, as well as a few other anomalous expenditures. Under the Trump administration, we will not tolerate federal taxpayer dollars funding free healthcare for illegal immigrants and ineligible enrollees.
What makes these anomalies particularly troubling is that we didn’t need any forensic accounting wizardry to find them. They practically jumped off the page.
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California officials could have identified and addressed these issues at any time by applying the same basic scrutiny, which raises an unavoidable question: Why didn’t they?
The best way to answer that is to ask cui bono — who benefits? In this case, some of the biggest beneficiaries seem to be the powerful unions that dominate California’s IHSS — and the politicians whose campaigns they fund with tens of millions of dollars.
These incentives create a vicious cycle: Lax program integrity standards mean more demand for caregivers, more caregivers mean more union dues and more union dues mean more donations for the elected officials who are supposed to be guarding the cash register.
U.S. Secretary of Health and Human Services Robert F. Kennedy Jr. and Center for Medicare & Medicaid Services Administrator Dr. Mehmet Oz shake hands during a press conference at the U.S. Department of Health and Human Services in Washington, D.C., on Tuesday, July 21, 2026. The press conference was held to discuss new actions HHS and the White House Anti-Fraud Task Force are taking to combat healthcare fraud. (Kylie Cooper) REUTERS
The Supreme Court has been unambiguous about the limits of that arrangement. Under the 2018 decision in Janus v. AFSCME, California must ensure that caregivers clearly, freely and affirmatively consent before dues can be deducted from their Medicaid payments.
We believe California has not been doing that. In a recent labor complaint, one caregiver claimed that a union representative locked the doors at her orientation and told attendees “no one is leaving” until they’d all signed a union membership card.
Other complaints are similarly shocking. One caregiver was charged dues for over a year despite writing “Do not wish to participate” on her opt-in form. Another spent five years trying unsuccessfully to leave the union. Some said they were never told union membership was optional. And multiple caregivers found forged signatures on their supposed membership cards.
These First Amendment violations are not the reason for our deferrals, but they do help explain the emergence of an ecosystem in which state leadership has every incentive to keep the money flowing and no incentive to ask hard questions. That’s how you end up with ballooning programs, like the 1,500% spike in the number of California hospice providers between 2010 and 2022; or the 24% two-year increase in IHSS spending we mentioned previously.
As stewards of federal taxpayer dollars, we cannot let these abuses continue. We want California to have a healthy Medicaid program, but you can’t treat a patient who insists there’s nothing wrong.
We’ve run the tests, analyzed the results and recommended some lifestyle changes. California can either accept sound medical advice now, or end up back in the doctor’s office after its condition has worsened.
Dr. Mehmet Oz is the 17th administrator for the Centers for Medicare & Medicaid Services (CMS). Dan Brillman is the director of Medicaid and deputy administrator at CMS.
