Trump Administration Suspends Funding For New York's Medicaid Fraud Unit

The Trump management connected Tuesday said it would frost national backing for New York's Medicaid Fraud Control Unit, a authorities agency responsible for investigating and prosecuting fraud successful nan safety-net authorities healthcare program.

In a missive sent to New York officials, U.S. Department of Health and Human Services Inspector General Thomas March Bell accused nan authorities of not securing capable criminal indictments and said millions of dollars successful backing would beryllium suspended done astatine slightest Sept. 30.

The move is nan 2nd suspension of a authorities Medicaid fraud portion this twelvemonth by nan Republican Trump administration, and portion of a barrage of anti-fraud actions it has aggressively promoted successful nan healthcare sector. They person included nan creation of a caller task force, targeted investigations, backing deferrals and demands for revalidation of healthcare providers that person touched each states but focused mostly connected Democratic ones.

The pulled backing besides comes aft nan management admitted a glaring correction successful figures meant to thief warrant a fraud probe into New York’s Medicaid programme earlier this year, a correction critics said revealed a Trumpian inclination to onslaught first and verify nan facts later.

New York Attorney General Letitia James, a Democrat, instantly vowed to conflict Tuesday's backing freeze.

“During my clip arsenic Attorney General, my agency has recovered complete $627 cardinal for Medicaid and was recognized by this very management for starring nan federation successful anti-fraud efforts,” she wrote. “We are considering each ineligible options to extremity this outrageous action.”

Letter accuses New York of debased capacity compared to different states

Bell's missive to James and New York MFCU Director Amy Held argues that nan portion is moving excessively slow connected cases and amassing excessively fewer indictments and convictions for wrongdoing successful nan Medicaid system. It notes that compared to 4 similarly-sized units successful different states, it secured nan lowest number of criminal fraud convictions betwixt 2023 and 2025.

The missive acknowledges that 1 logic nan authorities has less criminal convictions than different states is that it made a deliberate prime to attraction connected “high impact, analyzable fraud cases” alternatively than smaller-scale individual cases, but says that tradeoff didn't nutrient capable results.

“Enough is enough,” Bell wrote. “The New York MFCU has grounded to comply pinch nan position and conditions of its MFCU assistance award.”

Bell said successful nan missive that nan backing suspension could beryllium lifted earlier Sept. 30 if New York takes corrective action, “showing it has remediated concerns that formed nan ground for this suspension.” He said if nan authorities doesn’t hole nan problems, nan frost will continue.

New York officials conflict nan Trump administration's claims

New York's lawyer general's agency said successful a connection that it has “long been recognized arsenic a nationalist leader successful efficaciously investigating and prosecuting Medicaid fraud schemes,” including by nan HHS inspector general's office. A 2025 study from nan agency notes that New York is 1 of 4 states that made up half nan full civilian recoveries successful that year.

A spokesperson for nan lawyer general’s agency said astir of nan unit’s criminal convictions attraction connected institution owners, executives and corporations that would return ample amounts to Medicaid.

“This administration’s unprecedented onslaught connected New York is different governmental distraction,” James said successful a statement.

The backing cutoff follows a akin move successful Hawaii. In early June, Bell told Hawaii officials that Medicaid fraud backing would beryllium trim disconnected there, saying that it had a three-year agelong without a Medicaid fraud indictment aliases conviction.

Joan Alker, executive head and co-founder of Georgetown University’s Center for Children and Families, said there's an irony successful nan national authorities cutting disconnected money intended for prosecuting fraud erstwhile its stated extremity is to do conscionable that.

“If you want to conflict fraud, don't return distant money from states' fraud power units,” she said. “I chalk this up to much governmental theatre to distract voters from historical Medicaid cuts earlier nan midterms.”

Move follows months of national warnings and deferrals

For months, nan Trump management has contended that states – particularly immoderate Democratic-led ones – person been lax astir fraud successful societal safety-net programs, including Medicaid.

It has demanded astatine slightest 5 states, 4 of them governed by Democrats, stock accusation astir really they identify, forestall and reside Medicaid fraud.

The national authorities has besides withheld immoderate Medicaid backing from Minnesota and California complete fraud concerns. Minnesota Gov. Tim Walz, a Democrat who was Kamala Harris’ 2024 moving mate, accused Trump of making cuts because of retribution.

The fraud-busting efforts person besides targeted Medicare programs. Dr. Mehmet Oz, who leads nan national Centers for Medicare and Medicaid Services, announced a six-month moratorium connected caller enrollments for providers of hospice and location attraction nationally.

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Associated Press writer Anthony Izaguirre contributed to this report. Mulvihill reported from Haddonfield, New Jersey.