The Arc of California blasts $867.5 million Medicaid deferral

The Arc of California is urging federal officials to release about $867.5 million in deferred Medicaid payments to California, saying HHS has not shown the claims are fraudulent. The group argues the move could disrupt in-home and community services for people with disabilities and older adults.

Why it matters: - The federal deferral could delay funding for services that help Californians with disabilities and older adults remain in their homes and communities. - The Arc of California says broad fraud allegations risk cutting off support for daily needs such as bathing, eating, getting dressed, working and staying out of institutions. - California officials say the payments support a more cost-effective alternative to nursing homes.

What happened: - The U.S. Department of Health and Human Services announced on July 21 that it was deferring about $867.5 million in Medicaid payments to California. - HHS described the claims as “high-risk” and said the money would stay deferred while California provides more documentation. - The Arc of California condemned the move on July 24 and said the federal government has not shown the deferred claims are fraudulent. - The new deferral may overlap with, or be separate from, $1.3 billion in California Medicaid payments deferred in May.

The details: - The latest action mostly targets claims tied to California’s In-Home Supportive Services program. - HHS cited California’s higher spending on home care as a reason to question the claims. - California has expanded Home and Community-Based Services so more people can avoid nursing homes and other institutions. - CMS guidance says the improper payment rate is not a fraud rate, but a measurement of payments that did not meet statutory, regulatory or administrative requirements. - The Arc of California said actual fraud should be investigated, prosecuted and recovered. - The Arc of California said documentation errors and improper payments are not the same as fraud. - Anthony Cava, spokesperson for the California Department of Health Care Services, said in-home care growth reflects intentional expansion, not improper spending. - Governor Gavin Newsom said California is being targeted for political reasons, not because of evidence of fraud. - Newsom said California saves taxpayers money by keeping seniors and people with disabilities out of more expensive nursing homes.

Between the lines: - The dispute is also about how the federal government is defining risk and using payment data. - California and disability advocates are pushing back on any effort to treat administrative problems as proof of fraud. - The Arc of California is trying to frame the issue as a false choice between oversight and access to care. - The organization argues both can happen at the same time without imposing broad financial penalties on providers and families.

What's next: - The Arc of California is calling on HHS and CMS to release full details about the claims under review. - The group wants federal officials to separate documentation and administrative issues from actual fraud. - The Arc of California is also asking the federal government to release funding for claims that have not been shown to be improper. - The group says it will continue to support fraud investigations that target intentional abuse while defending access to essential services.