Trump cuts funding to Hawaii's Medicaid fraud unit

The Trump administration is cutting off $3 million in federal funding to Hawaii’s Medicaid fraud control program after it failed to bring a single indictment or conviction over the past four years. 

In a letter sent to Hawaii Attorney General Anne Lopez, Department of Health and Human Services Inspector General March Bell said his agency would not recertify the state’s Medicaid Fraud Control Unit (MFCU), a body that investigates and prosecutes fraud by healthcare providers. 

Without a certified fraud control unit, the state’s Medicaid funding could be at risk. 

Between 2022 and 2025, the unit did not obtain a single indictment or conviction for Medicaid fraud, despite receiving about $12 million in federal taxes during that period.  

“Enough is enough,” Bell wrote in the letter. “The Hawaii MFCU for many years has not effectively carried out, and is not currently effectively carrying out, its statutory fraud-fighting functions and requirements.”  

At the same time, Hawaii’s Medicaid funding rose 27 percent and its Medicaid enrollment rose 40 percent, but it saw no increase in investigative outcomes. There are nearly 400,000 Hawaiians enrolled in Medicaid, according to state figures. 

During a press conference in Ohio to highlight antifraud initiatives, Federal Trade Commission Chair Andrew Ferguson said Hawaii’s fraud control unit was being decertified because of an “abject failure” to follow state and federal law.

“For more than a decade, Hawaii’s Medicaid fraud control unit has received millions and millions of dollars to fight fraud and has consistently been one of the lowest performing fraud units in the country,” Ferguson said.

The move in Hawaii is part of the Trump administration’s recent ramped-up efforts to attack alleged Medicaid fraud across the country, but primarily in blue states.  

President Trump launched an anti-fraud task force in April and put Vice President Vance in charge. During a press conference last month, Vance singled out Hawaii and said the state wasn’t taking fraud seriously. 

“The administrators of the Hawaii program just don’t take it seriously. They don’t think that fraud is a big enough problem,” Vance said.  

Lopez pushed back against the characterization.   

“Political attacks do not change the facts,” Lopez said in a May 14 statement. 

Lopez said the fraud control unit has recovered more than $14 million in judgments, settlements and recoveries since 2021. It also filed criminal charges earlier this year against two people, one of whom has already pleaded no contest. 

“We welcome accountability, but we will not allow the work of this unit to be mischaracterized as doing nothing.”