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The U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services announced Tuesday that they are withholding more than $1 billion in federal Medicaid funding from California and Minnesota while federal officials review high-risk spending claims.
The temporary freeze includes about $867.5 million designated for California and roughly $199 million for Minnesota. Federal officials stated that the money is being deferred, rather than permanently cut, to give both states time to provide additional documentation proving the claims meet federal funding guidelines.
In California, CMS targeted federal matching funds for in-home care programs, citing expenditure growth that significantly outpaced the national average.
In Minnesota, federal regulators examined 14 service areas classified as high-risk. That audit flagged expenditures tied to providers previously flagged in program integrity checks, as well as claims with potential billing or eligibility discrepancies.
“Medicaid exists to serve vulnerable Americans — not to bankroll unsupported claims,” HHS Secretary Robert F. Kennedy, Jr. said in a statement accompanying the announcement. “States that receive federal Medicaid funding must demonstrate that every dollar meets federal requirements. When they cannot, we will not release federal funds until they do.”
CMS Administrator Dr. Mehmet Oz framed the deferrals as part of a shifted enforcement strategy aimed at withholding funds prior to disbursement rather than attempting to recover improper payments later.
“CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” Oz said. “That’s why we’re deferring payments with respect to certain high-risk services within the Medicaid programs in California and Minnesota as part of our proactive new approach to program integrity.”
Federal officials noted that HHS and its Office of Inspector General are also continuing to use administrative exclusion authorities to bar problematic providers from participating in Medicare and Medicaid programs. Both states will be allowed to submit the required records to clear the flagged claims and release the withheld funds.
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$1B Medicaid Freeze: Feds Block Funds To California, Minnesota In Massive Fraud Sweep
