U.S. Vice President J.D. Vance announced a sweeping federal initiative targeting alleged fraud within Medicaid and Medicare programmes, accusing several Democratic-led states of failing to aggressively enforce anti-fraud measures.

Speaking at the White House on Wednesday, Vance said the federal government would defer approximately $1.34 billion in Medicaid reimbursements to California while demanding stronger oversight and enforcement from state authorities.

“The state of California has not taken fraud very seriously,” Vance said, adding that all 50 state Medicaid programmes would receive formal notices requiring proof that they are “effectively and aggressively prosecuting Medicaid fraud.”

According to Vance, states that fail to comply could lose federal anti-fraud funding. He argued that fraud within public healthcare systems harms both taxpayers and vulnerable Americans who rely on government-supported healthcare services.

Mehmet Oz, widely known as Dr. Oz, said investigators uncovered “major red flags” in California’s Medicaid billing records. Federal officials identified nearly $630 million in suspicious claims linked to providers classified among the top five percent of billing outliers.

Oz also announced what officials described as the largest hospice fraud action in federal history. Authorities suspended 800 hospice providers operating in the Los Angeles region after identifying widespread irregularities in billing practices.

According to federal officials, those providers billed the government nearly $1.4 billion last year. The administration additionally imposed a nationwide moratorium on approving new hospice and home healthcare providers while oversight systems undergo review.

Andrew Ferguson criticized some states for treating anti-fraud units as “a jobs programme for Blue State lawyers,” while senior official Kim Brant said authorities had already blocked more than $2 billion in suspicious payments over the past year.

The Trump administration has made healthcare fraud enforcement a key domestic policy priority during its second term, focusing on waste, identity theft schemes, and improper payments across federal welfare programmes.