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California Governor Gavin Newsom’s office has criticized the Trump administration after Dr. Mehmet Oz and Health Secretary Robert F. Kennedy Jr. announced plans to pause more than $1 billion in federal Medicaid payments.
Centers for Medicare & Medicaid Services (CMS) has halted the payments pending further review over concerns about suspected fraud and noncompliance, Kennedy and CMS administrator Oz announced Tuesday.
“CMS is PAUSING over $1 billion in federal Medicaid payments to California and to Minnesota because of suspected fraud and non-compliance,” the health secretary added on X. “That includes over $867M for CA and over $200M for Minnesota.”
In a post on X, Newsom’s office dismissed the announcement, calling it “the same recycled political stunt we’ve seen before.”
“California isn’t being targeted because Trump has evidence of fraud. We are being targeted for political reasons — and because Dr. Oz doesn’t understand that we are *SAVING* taxpayers money by keeping seniors and people with disabilities out of far more expensive nursing homes! We hate fraud. That’s not what this is. And we stand ready to collaborate with CMS in good faith efforts to combat fraud.”
Minnesota Department of Human Services Temporary Commissioner John Connolly told Newsweek, that the administration had failed to provide any “data or explanation on how the deferral amount was calculated or what it was based on.
“I respectfully ask the federal government to partner with us and share any information about their methods to identify potentially fraudulent providers in Minnesota,” he added.
“Today’s actions show that the federal government is acting again in unprecedented and punitive ways as part of their war on Medicaid and its recipients. Partnership – not politics – is required to stop criminals and protect services for the people who need them,” he continued.
Kennedy said the funding would remain on hold until the two states provide documentation demonstrating that the payments comply with federal Medicaid requirements.
“Medicaid exists to serve vulnerable Americans — not to bankroll unsupported claims,” Kennedy added in a statement. “Under President Trump’s leadership, we are restoring accountability across our public programs and protecting taxpayer dollars. 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.”
Newsweek reached out to the California Department of Health Care Services for comment via email.
The pause affects two of the nation’s largest Medicaid programs. California’s Medi-Cal program provides health coverage to millions of low-income residents, while Minnesota administers Medicaid through its Medical Assistance program, which serves children, seniors, people with disabilities and low-income adults.
The decision comes as the Trump administration has stepped up scrutiny of federal spending and sought to identify what officials describe as waste, fraud and abuse across government programs. Medicaid, a joint federal-state program that provides health coverage to more than 70 million Americans, has increasingly become a focus of those efforts.
“CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” said CMS Administrator Dr. Mehmet Oz. “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. By stopping waste and fraud before the check clears, CMS is delivering record-high savings for taxpayers and ensuring that their hard-earned dollars reach the vulnerable Americans Medicaid is meant to serve.”
Who Could Be Impacted in California?
California’s Medicaid program, known as Medi-Cal, provides health coverage to millions of low-income residents, including children, seniors, people with disabilities and eligible adults. HHS said the deferred payments are tied to certain in-home care programs and claims that require additional documentation, rather than the state’s entire Medicaid program.
It is not yet clear whether beneficiaries will experience any disruption in services or whether the state would continue making payments while the federal review is underway. States often have multiple funding streams available to administer Medicaid programs, though federal reimbursements account for a substantial share of program financing.
The federal government has characterized the action as a temporary payment deferral while California provides documentation supporting the claims under review.
California Democratic Governor Gavin Newsom’s office responded to the announcement on X, calling the move “the same recycled political stunt we’ve seen before.”
“California isn’t being targeted because Trump has evidence of fraud. We are being targeted for political reasons — and because Dr. Oz doesn’t understand that we are SAVING taxpayers money by keeping seniors and people with disabilities out of far more expensive nursing homes!
“We hate fraud. That’s not what this is. And we stand ready to collaborate with CMS in good faith efforts to combat fraud.”
Who Could Be Impacted in Minnesota?
Minnesota administers Medicaid through its Medical Assistance program, which covers low-income adults, children, pregnant women, seniors and people with disabilities. According to HHS, CMS reviewed claims across 14 “high-risk” service areas and identified expenditures requiring additional review before federal matching funds are released.
The agency has not identified the specific providers or services involved, and it remains unclear whether the payment deferral will affect beneficiaries or whether the state will continue funding the affected programs while the federal review proceeds.
Why Are Medicaid Payments Being Paused?
HHS said the payment deferrals are part of the Trump administration’s broader effort to combat fraud, waste and abuse in federal health care programs. Federal officials said California and Minnesota must provide additional documentation demonstrating that certain Medicaid claims comply with federal requirements before the matching funds will be released.
Officials emphasized that the action is a payment deferral—not a permanent funding cut—and that both states will have an opportunity to submit the requested information.
What Is the Suspected Fraud and Noncompliance Related To?
Federal officials have not alleged a specific fraud scheme or accused either state of intentionally misusing Medicaid funds. Instead, HHS said financial reviews identified claims that require further documentation and verification before federal payments can be made.
According to the agency, California’s review focused on certain in-home care programs after CMS identified spending growth that exceeded national trends. In Minnesota, the review covered 14 high-risk service areas and identified claims linked to providers previously flagged through program integrity reviews, as well as expenditures with potential eligibility or billing concerns. HHS has not released additional details about the specific claims or providers involved.
Contact Newsweek editors on this story: Gabe Whisnant and Sam Wilson.
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