Federal officials have informed Hawaii that its Medicaid Fraud Control Unit will lose federal certification and corresponding funding after a review found no criminal indictments or convictions for Medicaid fraud or patient abuse and neglect by the unit over a four-year span.
In a letter from U.S. Department of Health and Human Services Inspector General March Bell to Hawaii Attorney General Anne Lopez, HHS announced the state unit has been denied federal certification and that HHS will stop providing funding that had amounted to roughly $3 million per year.
The letter noted that Hawaii’s Medicaid Fraud Control Unit obtained no criminal indictments or convictions for Medicaid fraud or patient abuse and neglect between 2022 and 2025, even as enrollment in the Medicaid program increased during that period. The correspondence also said the state may request reconsideration of the decision.
Context and federal stance
The move is part of a broader effort by the Trump administration to intensify enforcement against Medicaid fraud. Vice President JD Vance has publicly criticized Hawaii’s handling of fraud cases and last month accused the state of giving fraudsters "free rein." He warned that additional federal resources tied to state Medicaid programs could be withheld if shortcomings persist, saying: "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."
HHS has indicated that, without a federally certified Medicaid fraud unit, a state’s broader Medicaid funding could be at risk.
Hawaii’s response and enforcement record
Attorney General Anne Lopez has contested the federal characterization of the state’s work on Medicaid fraud. She has pointed to $14 million recovered through civil cases since 2021 as evidence that the state has pursued fraud recovery through civil litigation. The state also brought criminal charges against two individuals earlier this year in connection with healthcare fraud.
Scale of the program and national comparison
More than 360,000 residents in Hawaii are enrolled in Medicaid. In 2024, the state received $2.2 billion in federal Medicaid funds, according to the agency that advises Congress on healthcare spending. By comparison, the same advisory agency reports that Medicaid fraud units nationwide secured more than 4,800 criminal convictions of people and businesses between 2022 and 2025.
Next steps and implications
The state has the option to seek reconsideration of the certification denial. Beyond that, the decision draws attention to how federal oversight interacts with state-level enforcement priorities and resource allocation for Medicaid fraud investigations.
The fiscal and programmatic consequences for Hawaii will depend on whether the state succeeds in reversing the decision or adjusts its enforcement approach to meet federal expectations.