Trump Administration Cuts Hawaii’s Medicaid Fraud Funding

The Trump administration is withholding $3 million in federal funding from Hawaii’s Medicaid fraud control program. This move is part of a broader effort to combat healthcare fraud. Vice President J.D. Vance hinted that New York might be next.

Reason for Funding Cut

Each state running Medicaid must have a fraud control unit. These units ensure proper use of funds and are managed by each state’s attorney general. In Hawaii’s case, the U.S. Department of Health and Human Services (HHS) Inspector General, Thomas March Bell, notified Attorney General Anne Lopez of the decision. Bell cited the failure of Hawaii’s Medicaid Fraud Control Unit (MFCU) to secure any indictments or convictions in the past four years.

During this period, Medicaid enrollments in Hawaii grew by 40%, with funding increasing by 27%. MFCU received $12 million in federal taxes or about $3 million annually. Over 360,000 people are currently enrolled in Medicaid in Hawaii.

Fraud Efforts Under Scrutiny

The MFCU, tasked with investigating and prosecuting provider fraud, has lost federal certification. Bell stated that the unit has consistently underperformed, remaining one of the least effective in the country.

Federal Trade Commission Chair Andrew Ferguson noted that despite millions in funding over the years, Hawaii’s unit failed to deliver results.

Response from Hawaii

Attorney General Lopez contested the portrayal of Hawaii’s actions, stating that they recognize the seriousness of HHS’s concerns and are prioritizing the issue. Her office mentioned recovering $14 million through civil cases since 2021 and charging two individuals with healthcare fraud earlier this year.

Ongoing Crackdown

The Trump administration’s decision to decertify Hawaii’s fraud control unit follows a broader crackdown initiated by President Trump. The anti-fraud task force, led by Vice President Vance, seeks to hold states accountable for Medicaid fraud.

Vance highlighted other states, including New York, urging them to show aggressive prosecution of fraud. He mentioned that despite New York’s large Medicaid program, indictments were low compared to states like Indiana, with less population but more indictments.

New York’s Current Situation

Recently, in New York, seven individuals pleaded guilty to defrauding Medicaid through kickbacks for non-existent services. This case involved billing Medicaid over $68 million fraudulently.

U.S. Attorney Joseph Nocella Jr. emphasized continued efforts to prosecute fraud that drains taxpayer resources from federal healthcare programs.

Controversy and Clarification

There was controversy over an exaggeration by Dr. Mehmet Oz, the CMS administrator, regarding the number of New Yorkers receiving personal care services from Medicaid. His statement was corrected from 5 million to 450,000 recipients.

Governor Kathy Hochul’s spokesperson affirmed the state’s commitment to fighting Medicaid fraud, calling the initial claim by CMS inaccurate.