On October 20, 2026, federal health officials announced they were holding back another $1.2 billion in Medicaid money from California. The reason centers on one program that helps older people and those with disabilities stay at home. The program grew 24 percent in three years—twice as fast as the rest of the country. Officials say the numbers do not add up. State leaders call the move political. Both sides have points worth examining closely.
What Happened in the Oval Office
Dr. Mehmet Oz, who runs the Centers for Medicare and Medicaid Services, made the announcement with President Donald Trump and Vice President JD Vance present. The hold affects payments for personal care services. These are the tasks many families already do for free—helping someone get dressed, prepare meals, or carry groceries upstairs. In California, the state pays caregivers, often family members, through its In-Home Supportive Services program. Counties run much of the day-to-day work.
Oz put the growth figure front and center. “California has been growing that program 24 percent in the last three years. That is twice the rate of every other state average in the country. Impossible for us to understand how that could be so.” He added that the state had just received notice of the hold. This brings the total amount of Medicaid money temporarily held from California this year above $3.3 billion, according to reports from The Epoch Times and other outlets covering the event.
The same day, officials also launched a $25 million Fraud Whistleblower Incentive Program. People who tip off authorities about real fraud can receive 1 percent of the money recovered. Tips go through fraud.gov. Independent journalist Nick Shirley, who earlier highlighted problems in Minnesota daycare billing, joined the event and spoke about the lack of reward for people who point out waste.
Why the Growth Rate Stands Out
Federal officials treat rapid spending growth in high-risk categories as a signal that needs explanation before more matching funds go out. Personal care services are one such category because the work happens in private homes, often without direct observation, and many caregivers are family members. HHS has said it is shifting from chasing money after it leaves to holding funds until documentation arrives. In a July 21 statement, CMS noted it was “done trying to chase down stolen and misused funds after they’ve already left the building.”
California’s own numbers show real increases. State officials have pointed to a larger caseload (roughly 17.5 percent growth in recent years for federally eligible people), higher hourly wages (from about $19 to $21), and more hours per person as needs rise. An aging population is part of the picture nationwide. Keeping people at home costs far less than a nursing home—state figures put home care near $30,000 a year versus well over $100,000 for institutional care. Advocates argue the growth is a success story, not a problem.
Critics of the federal approach note that Oz and others have not, in the latest announcement, released specific examples of fraudulent claims tied to the new $1.2 billion hold. The Los Angeles Times reported that “Dr. Mehmet Oz did not provide any evidence of fraud.” Federal statements emphasize outlier growth and the need for supporting documents rather than a finished audit of individual cases. Previous holds this year included a May action of about $1.3 billion (announced by Vance) and a July action of roughly $867.5 million from California plus money from Minnesota.
California’s Side of the Story
State leaders reject the fraud framing. A spokesperson for Governor Gavin Newsom told The Epoch Times the latest move is “a cruel, reckless attempt to use vulnerable Californians as political pawns, putting seniors, children, and people with disabilities at risk.” The office has called earlier actions “recycled political stunt[s]” and said California leads in preventing fraud. Officials argue the program follows federal policy goals of keeping people out of institutions and that growth reflects demand, wage increases needed to attract workers, and approved expansions.
In May, after an earlier hold, California’s Department of Health Care Services issued a detailed response. It listed the three drivers of cost growth and noted that federal policy has long encouraged home and community-based services. The state has processes for assessments, electronic timesheets, and county-state reviews. County data from one recent period showed thousands of fraud complaints and hundreds of investigations, with provider fraud the most common type. Prosecutions and recoveries have occurred, though critics say the scale of enforcement remains small relative to total spending.
Health advocates and some state officials worry that repeated holds create budget pressure even if the money is not permanently lost. The holds are temporary. States can recover the funds by supplying the requested documentation showing claims meet federal rules. Benefits and eligibility for individuals are not supposed to stop during the review. Still, large temporary gaps force states to manage cash flow and can delay other planning.
What the Numbers Leave Open
The core disagreement is whether double the national growth rate is automatic proof of widespread problems or a predictable result of policy choices and demographics. California has expanded access more aggressively than many states. It pays family caregivers. It has raised wages through minimum-wage laws and county agreements. Population aging is real. At the same time, home care programs have a documented history of abuse in multiple states because verification is harder than in clinics or hospitals. Older state audits and grand jury reports in California have flagged weak oversight in past years. Independent estimates of fraud rates in the program vary widely; some outside analysts have put potential losses in the billions annually, while state figures show lower confirmed recoveries.
Federal matching funds come with conditions. CMS has clear authority to review claims and withhold payment when documentation is incomplete. Whether this particular hold is the most efficient way to protect taxpayers, or whether it functions more as leverage in a political fight between a Republican administration and a Democratic state, is a judgment readers can make from the public statements. Oz has repeatedly said that if something “smells like fraud,” the agency will not pay first and chase later. California counters that the smell test is being applied without the evidence being shared in advance.
Related federal actions this year have also touched hospice billing, claims involving people with uncertain immigration status, and high-outlier providers. Those are separate from the personal-care growth figure that drove the October announcement, but they form part of the broader context in which officials view California’s Medicaid spending. For background on other federal-state tensions over public programs, see Planet Today’s coverage of Justice Department guidance on reporting and welfare funds and Democratic questions about vaccine policy changes.
What Happens Next
California can supply the documentation CMS wants. If the records support the claims, the held funds should be released. If gaps remain, further holds or recoveries are possible. The new whistleblower program may surface additional tips from inside the system. County-level data already show ongoing fraud complaints; whether those scale to the size of the federal holds is one question the review process is meant to answer.
Taxpayers in every state fund the federal share of Medicaid. People who rely on home care want the program to stay reliable and available. Officials on both sides say they oppose fraud. The practical difference is how much proof should be required before money moves, and how much weight to give anomalous growth rates when the state offers demographic and policy explanations. Those questions are now being tested with real dollars and real documentation requests.
Readers who want the original reporting can review the Epoch Times account of the October 20 announcement, the ZeroHedge version of the same material, the Los Angeles Times coverage, and the earlier HHS press release from July 21. Primary statements from Dr. Oz’s account and the Department of Health and Human Services provide the federal side in their own words. California’s responses appear in statements from the governor’s office and the Department of Health Care Services.
Original sources: The Epoch Times, October 20–21, 2026; ZeroHedge (based on Epoch Times reporting); Los Angeles Times, October 20, 2026; HHS.gov, July 21, 2026.
Disclaimer for fact-checkers: This article summarizes public statements by federal officials (HHS, CMS, Dr. Oz) and California state responses as reported by multiple outlets. The funding actions are temporary deferrals pending documentation, not final findings of fraud or permanent cuts. Claims about the causes of program growth and the presence or absence of specific fraudulent claims remain subject to the ongoing federal review and any additional evidence either side provides. Readers should consult primary government documents and state replies for full context.