THREE REASONS TRUMP SHOULD END AMBULANCE LOOPHOLE IN CALIFORNIA

This mechanism allows public entities to move money among agencies, classify it as Medicaid spending, and then claim extra reimbursement from Washington. In some cases, the total funds drawn down can exceed the actual cost of delivering care.

Supporters say the system helps keep emergency services funded. Critics say it amounts to financial engineering designed to maximize federal payouts rather than reflect the real cost of treatment. Some would go further and call it exactly what it is: a scandal.

I’ve seen similar dynamics trigger Department of Justice investigations and litigation by whistleblowers under the False Claims Act (FCA). In other cases I’ve worked on, private providers generated revenue based on reimbursement from medical services under Medicaid. Those schemes were challenged because they crossed a legal line between private profit and public interests.

Here, California blurs that line by diverting public funds into public profit.

California’s system does not cross the legal threshold for fraud under the FCA for the sole reason that the FCA does not apply to the states. But functionally, the outcome is not so different.

When reimbursements exceed costs, providers become motivated to maximize claims rather than improve care delivery. Oversight becomes more difficult because the activity operates within approved frameworks. And taxpayers are left funding a system where spending is driven by financial engineering rather than medical necessity.

That is a serious problem. It also creates a dangerous precedent for other states. If a mechanism like this can be used to increase federal funding without corresponding increases in costs or the quality of care, there is every reason to expect that it will spread. 

Medicaid is already one of the largest and fastest-growing areas of federal spending. Expanding structures that inflate reimbursements without improving outcomes will only accelerate that trend.

The longer this goes unaddressed, the harder it becomes to distinguish between what is truly needed and what is abusive.  

A system rife with bad incentives, where payments are disconnected from services, will eventually become unsustainable. That is bad news not only for taxpayers, but also for Californians who genuinely need emergency medical transport.

Federal policymakers should take this seriously. Dr. Mehmet Oz and the Centers for Medicare & Medicaid Services have both the authority and the responsibility to ensure that Medicaid payments are tied to actual costs and legitimate services. That means tightening the rules around IGT financing, improving transparency, and enforcing stronger auditing standards. Congress should also be paying attention and consider expanding the definition of whom the FCA applies to, including expanding that definition to include state actors.

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This case is ultimately about whether Medicaid is being used as intended or whether well-meaning financial structures are being exploited to drain federal funds raised from American taxpayers.

The Department of Justice’s functions require that it tackle fraud. Now it’s time to end ambulance IGT fraud in California, with the same focus on protecting taxpayers and patients.

Daniel Trujillo Esmeral is a Washington, D.C.–based labor and employment attorney. He represents employers and employees in complex federal litigation, including experience representing litigants, both employees and employers in actions in federal court, including under the False Claims Act and regularly works to defend and enforce whistleblower claims.