The federal government is holding back another $1.2 billion in Medicaid payments to California, the latest move in a growing fight over the state’s in-home care program.
Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz announced the decision at the White House on Tuesday, October 20, pointing to fast-rising spending on personal care services. California says the growth reflects real demand, not fraud.
The money isn’t gone yet, but the stakes are high for older and disabled Californians who rely on home care. Here’s what’s happening and what it could mean.
What CMS announced
Speaking in the Oval Office on behalf of Health and Human Services Secretary Robert F. Kennedy Jr., Oz said CMS is “deferring an additional $1.2 billion in California Medicaid payments.”
The hold targets federal Medicaid money for personal care services, mainly California’s In-Home Supportive Services (IHSS) program. Run by the counties, IHSS pays caregivers, often family members, to help older and disabled people with everyday tasks like bathing, dressing and cooking so they can stay at home.
What a “deferral” means
A deferral isn’t a permanent cut. It means the federal government is holding back its share of the money until California shows that the claims meet federal Medicaid rules.
After reviewing the state’s documents, CMS can either release the funds or refuse to pay them. If it refuses, California would have to cover the gap itself. The $1.2 billion is roughly 4% of the federal Medicaid money California receives in a year.
Why the federal government says it’s acting
Oz’s main argument is growth. He said California’s personal care services have grown 24% in three years, which he called “twice the rate of every other state average.” He also suggested the state is paying caregivers for help that family members might otherwise give for free, though he didn’t offer evidence for that claim.
He pointed to other “red flags” in California’s Medicaid records, saying the state needs to explain:
- $630 million in billing
- $500 million in home health services
- $200 million in what he called “questionable expenditures” linked to coverage for undocumented immigrants
A separate HHS Office of Inspector General report in September found California’s Medicaid agency didn’t report and return $113.3 million in fiscal year 2023 overpayments that had been identified by the state’s own fraud unit. The state agreed with three of the report’s recommendations but rejected the call to return the federal share of about $47.8 million.
The administration’s broader message is that it wants to stop money going out the door rather than chase it afterward. “CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” Oz said when earlier deferrals were announced in July.
California’s side
California has pushed back on the deferrals throughout the year. The state says the federal government hasn’t shown enough evidence of fraud, and argues that the growth in home care spending reflects rising demand, not wrongdoing. Neither Gov. Gavin Newsom’s office nor the state’s Department of Health Care Services had publicly responded to the latest $1.2 billion hold at the time of writing.
U.S. Sen. Alex Padilla of California criticized the move, saying: “This decision will hurt older Californians, people with disabilities and those recovering from illness or injury.”
Some health policy experts have also questioned the approach. Georgetown University’s Center for Children and Families, which studies Medicaid, argued in May that CMS was using fraud claims as a weapon against California’s Medicaid program.
It’s worth keeping both things in mind. Rapid growth in a program can be a warning sign worth investigating. But growth on its own isn’t proof of fraud. The review process is where those questions should get answered.
This year’s holds at a glance
The latest move is part of a series. Here are the Medicaid holds announced against California and Minnesota in 2026, as reported:
| When | State | Amount held | Focus |
|---|---|---|---|
| May | California | $1.3 billion | State accused of not taking fraud seriously |
| July 21 | California | About $867.5 million | In-home care claims and other undocumented claims |
| July 21 | Minnesota | About $199 million | Claims in 14 high-risk service areas |
| October 20 | California | $1.2 billion | Personal care services, mainly IHSS |
Added up, that’s roughly $3.4 billion held back from California this year, by our count of the announced amounts.
The crackdown goes beyond Medicaid too. In May, CMS also put a nationwide pause on new Medicare home health and hospice providers enrolling, as part of the same anti-fraud push.
What it means for people who use IHSS
The money is being held back from the state, not taken directly from individual caregivers or the people they care for. Whether services are affected depends on how the review ends and how California responds. If CMS ultimately refuses to pay, the state would have to find the money elsewhere or make changes.
If you or a family member rely on IHSS, the best source of updates is your county IHSS office. Be wary of anyone who calls claiming your benefits are frozen and asks for personal or bank details.
Sources: Becker’s Hospital Review (October 21, 2026), Home Health Care News, NOTUS via The Washington Sun, HHS (July 21, 2026) and CBS6 Albany.
Jackson is a dedicated USA news writer, who covers important topics such as Social Security payment schedules, COLA increases, IRS tax refunds, stimulus payment announcements, Medicare eligibility, retirement benefits, and changes to state driving laws. His goal is to provide clear, informative, and easy-to-follow articles that help retirees, seniors, taxpayers, and American families stay informed.