By Jody Godoy
June 4 (Reuters) – Hawaii’s attorney general stands to lose around $3 million in federal funding to fight Medicaid fraud after failing to consistently bring criminal cases, the Trump administration said on Thursday, in an escalation of Vice President JD Vance’s campaign against healthcare fraud.
The U.S. Department of Health and Human Services Inspector General March Bell sent a letter to Hawaii Attorney General Anne Lopez informing her that her state’s Medicaid Fraud Control Unit, a body that investigates and prosecutes fraud by healthcare providers, has been denied federal certification. HHS will no longer fund the unit, which has been receiving around $3 million annually, Bell wrote.
Without a federally certified Medicaid fraud unit, the state’s broader Medicaid funding could be in jeopardy.
Hawaii’s unit obtained no criminal indictments or convictions for Medicaid fraud or patient abuse and neglect between 2022 and 2025, despite increased enrollment in the program, Bell wrote.
Hawaii will seek reconsideration of the decision, the state attorney general’s office said.
“We recognize the seriousness of the HHS’s concerns and are treating this matter with the urgency it deserves,” Lopez’s office said in a statement.
The move is part of a broader Trump administration push on Medicaid fraud enforcement. Vance accused Hawaii last month of giving fraudsters “free rein,” and warned of consequences for states failing to effectively police the program. “If we continue to find problems, we can turn off other resources within their state Medicaid programs as well. Our goal here is not to do that,” he said at the time.
More than 360,000 Hawaii residents are enrolled in Medicaid, the health program for low-income Americans. Hawaii received $2.2 billion in federal Medicaid funds in 2024, according to the agency that advises Congress on healthcare spending. Nationwide, Medicaid fraud units were responsible for more than 4,800 criminal convictions of people and businesses between 2022 and 2025, according to the same agency.
Attorney General Lopez has pushed back against the Trump administration’s characterization. She has previously said the state has not ignored Medicaid fraud, pointing to $14 million recovered in civil cases since 2021. The state also charged two people with criminal healthcare fraud earlier this year.
(Reporting by Jody Godoy; Editing by Sanjeev Miglani and Stephen Coates)
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