The Trump administration recently announced the withdrawal of $3 million in federal funding from Hawaii’s Medicaid fraud control program. This move follows threats to withhold Medicaid funds from states that fail to address fraud effectively. Vice President J.D. Vance indicated New York might be the next target.
Why Funding Was Cut in Hawaii
Medicaid, a joint federal and state healthcare program, requires every state to maintain a fraud control unit. In Hawaii, the U.S. Department of Health and Human Services (HHS) Inspector General, Thomas March Bell, informed the state’s Attorney General, Anne Lopez, of the funding cuts. Bell cited the lack of indictments or convictions by the Medicaid Fraud Control Unit (MFCU) over the past four years as the reason for the decision.
During this period, Hawaii’s Medicaid enrollment surged by 40%, and funding increased by 27%, with the unit receiving approximately $3 million each year from federal taxes. Currently, more than 360,000 residents are covered by Medicaid, as per state figures.
Efforts Against Fraud Under Scrutiny
The MFCU has been denied federal certification, leading to the withdrawal of funding. Bell stated in a letter, quoted by The Hill, that the unit has consistently underperformed in fulfilling its statutory responsibilities in fighting fraud.
Federal Trade Commission Chair Andrew Ferguson also criticized the Hawaii unit’s performance, highlighting its low rankings among fraud units nationally.
State Responds to Criticism
“We recognize the seriousness of the HHS’s concerns and are treating this matter with the urgency it deserves.”
In response, Lopez emphasized Hawaii’s efforts, noting the recovery of $14 million in civil cases since 2021 and recent charges against two individuals for healthcare fraud.
Continued Focus on Fraud
The decertification is part of a broader anti-fraud campaign initiated by President Donald Trump, with Vance leading the task force. Vance called attention to Hawaii’s lack of serious efforts against fraud.
Beyond Hawaii, Vance pointed out New York’s involvement, noting its nine indictments despite a large Medicaid program. In contrast, Indiana, with a smaller population, reported more indictments.
New York governor’s office, contacted for comment, is yet to respond.
Spotlight on New York
Nearly 6.5 million New Yorkers are Medicaid enrollees. Recent fraud convictions involved individuals admitting to conspiracies to defraud Medicaid. They used kickbacks to patients, falsely billing $68 million.
However, confusion arose when Dr. Mehmet Oz, the CMS administrator, inaccurately reported the number of people using personal care services in New York, prompting criticism.
“The initial claim by CMS was patently false, and we are glad they now admit it.”
Governor Hochul’s office stressed their commitment to combat Medicaid fraud, clarifying that misrepresentation of figures does not reflect their oversight efforts.