Federal Medicaid officials are withholding another $1.2 billion from California, CMS Administrator Mehmet Oz said at the White House on Oct. 20, 2026, pointing to fast growth in the state's personal care services. The Los Angeles Times and the Washington Examiner reported the announcement; Oz said state officials had been notified that day.
Oz told reporters California had grown "that program 24% in the last three years," about twice the average of other states, the Times reported. He did not present evidence of fraud.
The third hold this year
A deferral is not a cut. CMS holds back the federal share of claims it questions until the state documents that they are allowable, removes them, or fixes how it claims them. This is the third round in 2026:
| Date | Amount deferred | What CMS flagged |
|---|---|---|
| May 13 | $1.34 billion total, including $1.13 billion in Community First Choice and personal care claims | Growth in claiming and claims CMS called program-integrity risks |
| July 21 | $867.5 million (about $646 million tied to in-home services) | Spending growth and high-risk claims, per HHS |
| Oct. 20 | $1.2 billion | Growth in personal care services, per Oz |
In the May 13 letter, CMS said California's Community First Choice and personal care claiming outgrew the average of all other states by 11.23% between federal fiscal years 2023 and 2025, and that it flagged about $699 million in statistical outliers. It gave the state 60 days to send documentation and said it keeps deferring similar claims in later quarters until the issue is resolved. Home Health Care News reported the July amounts.
Sen. Alex Padilla said the decision would hurt older Californians and people with disabilities. Gov. Gavin Newsom's office has called earlier holds politically motivated and says In-Home Supportive Services costs far less than nursing home care.
Why this matters for providers and DSPs
Deferrals hit the state's cash flow first, not paychecks, but repeated holds put pressure on the program that pays California's personal care aides and other home and community-based services. Agencies and direct care workers should expect closer documentation checks on visits and timesheets. In Minnesota, the state has warned that deferred funds CMS rejects for good could mean clawbacks from providers.