The Trump administration announced Wednesday it is withholding $1.3 billion in Medicaid payments to California, alleging the state has not done enough to tackle fraud.

Vice President JD Vance claimed during an event at the White House that the “simple reason” for deferring Medicaid payments to the Golden State is “because the state of California has not taken fraud very seriously.” The news comes as the administration has recently been moving to crack down on healthcare ‌fraud nationwide.

“There are California taxpayers and American taxpayers who are being defrauded because California isn’t taking its program seriously, but also you have people who have been prescribed medications that they don’t even need,” Vance said. “They’ve had drugs put into their bodies that they don’t need because fraudsters have actually encouraged false prescriptions and false administration of medications.”

The Vice President also said the administration is informing all 50 U.S. states that it could halt funding to their Medicaid Fraud Control Units if they fail to “aggressively prosecute Medicaid fraud.”

Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz stated in a statement posted to X on Wednesday that “when states like California refuse to work with the federal government on saving American taxpayer dollars,” the administration “will hold those states accountable.”

“We hate fraud,” Democratic California Gov. Gavin Newsom’s press office said in a Wednesday X post responding to the Trump administration’s announcement. “But that’s NOT what this is. Vance and Oz are attacking programs that keep seniors and people with disabilities OUT of nursing homes. Pretty sick.”

When reached for comment, Newsom’s press office referred the Daily Caller News Foundation to some of its recent X posts criticizing the Trump administration.

“CMS has used what once was a routine payment reconciliation process with states to undermine exactly what federal HCBS policy has long sought to achieve: helping more people remain safely at home, rather than enter institutions for long-term care,” California State Medicaid Director Tyler Sadwith said in a Thursday statement.

“Americans across the country have seen the rampant level of fraud going on in California,” an anonymous senior administration official told The New York Post on Wednesday. “The Trump administration will not tolerate it.”

In fiscal year 2024, Medicaid spending in California was about $150.4 billion, making it the state with the highest total Medicaid expenditure, according to data compiled by Statista. CMS notably reimbursed California over $92 billion in fiscal year 2024, Politico reported, citing MACPAC data.

The Trump administration announced on April 30 it was withholding an additional $91 million in Medicaid funding for the state of Minnesota, citing concerns over fraud vulnerabilities, MinnPost reported.

Additionally, the administration announced Wednesday that it is temporarily halting new home health and hospice providers from enrolling in Medicare, Reuters first reported.