Trump administration suspends funding for New York's Medicaid fraud unit over low performance

By — Ali Swenson, Associated Press Ali Swenson, Associated Press By — Geoff Mulvihill, Associated Press Geoff Mulvihill, Associated Press Leave your feedback Share Copy URL https://www.pbs.org/newshour/politics/trump-administration-suspends-funding-for-new-yorks-medicaid-fraud-unit-over-low-performance Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Trump administration suspends funding for New York's Medicaid fraud unit over low performance Politics Jun 30, 2026 4:52 PM EDT NEW YORK (AP) — The Trump administration on Tuesday said it would freeze federal funding for New York's Medicaid Fraud Control Unit, a state agency responsible for investigating and prosecuting fraud in the safety-net government healthcare program. READ MORE: As states face stricter Medicaid work requirements, Nebraska is an early test In a letter sent to New York officials, U.S. Department of Health and Human Services Inspector General Thomas March Bell accused the state of not securing enough criminal indictments and convictions and said millions of dollars in funding would be suspended through at least Sept. 30. The move is the second suspension of a state Medicaid fraud unit this year by the Republican Trump administration, and part of a barrage of anti-fraud actions it has aggressively promoted in the healthcare sector. They have included the creation of a new task force, targeted investigations, funding deferrals and demands for revalidation of healthcare providers that have touched all states but focused largely on Democratic ones. Educate your inbox Subscribe to Here’s the Deal, our politics newsletter for analysis you won’t find anywhere else. The pulled funding also comes after the administration admitted a glaring error in figures meant to help justify a fraud probe into New York's Medicaid program earlier this year, a mistake critics said revealed a Trumpian tendency to attack first and verify the facts later. New York Attorney General Letitia James, a Democrat, immediately vowed to fight Tuesday's funding freeze. "During my time as Attorney General, my office has recovered over $627 million for Medicaid and was recognized by this very administration for leading the nation in anti-fraud efforts," she wrote. "We are considering all legal options to stop this outrageous action." Letter accuses New York of low performance Bell's letter to James and New York MFCU Director Amy Held argues that the unit is moving too slowly on cases and amassing too few indictments and convictions for wrongdoing in the Medicaid system. It notes that compared to four similarly-sized units in other states, it secured the lowest number of criminal fraud convictions between 2023 and 2025. The letter acknowledges that one reason the state has fewer criminal convictions than other states is that it made a deliberate choice to focus on "high impact, complex fraud cases" rather than smaller-scale individual cases, but says that tradeoff didn't produce suffici