Hawaii stands to lose around $3 million in federal funding to fight Medicaid fraud after failing to consistently bring criminal cases, the Trump administration said Thursday, in an escalation of Vice President JD Vance’s campaign against healthcare fraud.

Read more Resolute Zverev reels in Mensik, books French Open final with Cobolli

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. The state can ask for reconsideration, according to the letter.

After the administration’s announcement Thursday, the state’s Department of the Attorney General said in a statement that it will ask the HHS to reconsider its decision to defund the Hawaii unit.

Officials said in a news release that the attorney general’s office “remains committed to protecting Medicaid beneficiaries, safeguarding public funds, and holding accountable those who commit fraud, abuse, or neglect.”

“We recognize the seriousness of the HHS’s concerns and are treating this matter with the urgency it deserves,” they said in the news release. “The department has mobilized additional personnel and resources from across multiple divisions to conduct a comprehensive review of the findings, prepare a formal response, and pursue all available avenues to preserve and strengthen Hawaii’s Medicaid fraud enforcement efforts. We intend to seek reconsideration of HHS’s decision and will continue working closely with our federal partners to address concerns and demonstrate the full scope of the Medicaid Fraud Control Unit’s work.”

Gov. Josh Green’s office said in a separate that after discussions with the U.S. Centers for Medicare and Medicaid Services, the state’s Department of Human Services “has been informed that Hawaii’s Medicaid program remains in good standing and that this action does not affect eligibility, benefits, provider payments, or federal Medicaid funding.”

DHS Director Joseph Campos II said in a statement, “The Medicaid program provides essential healthcare coverage to hundreds of thousands of Hawaii residents and we want our members, providers and community partners to know that their benefits and services will continue without interruption.”

Read more Saddle Road improvements set to begin after state declares traffic emergency

Green has also authorized the the creation of an independent Medicaid Fraud Strike Force within DHS “to strengthen oversight, accountability and coordination in the fight against Medicaid fraud, waste and abuse. The strike force will support and build upon the work of Hawaii’s existing Medicaid Fraud Control Unit,” according to the news release.

“Hawaii takes Medicaid fraud seriously,” Green said. “Even before receiving this letter, we were taking steps to strengthen oversight and accountability through the creation of an independent Medicaid Fraud Strike Force within DHS. Our goal is straightforward: protect vulnerable residents, safeguard taxpayer dollars and ensure every available tool is being used to identify and address fraud, waste and abuse.”

The Trump administration’s move Thursday is part of a broader push on Medicaid fraud enforcement.

On May 13, Vance accused Hawaii 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.

Lopez has pushed back against the Trump administration’s characterization.

She has 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.

Read more In stacked National League, can Shohei Ohtani win Cy Young with fewer innings?