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The Trump administration has paused more than $1 billion in federal Medicaid payments to California and Minnesota over claims of suspected fraud and noncompliance with federal requirements, prompting a sharp rebuke from California Gov. Gavin Newsom, who dismissed the move as a politically motivated “recycled political stunt.”
The decision — announced on Tuesday, July 21, by Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz — affects two of the nation’s largest Medicaid programs while officials review selected claims.
Trump administration halts Medicaid payments for California, Minnesota
RFK Jr. announced that CMS had paused more than $867 million in payments to California and more than $200 million to Minnesota pending further review. “CMS is PAUSING over $1 billion in federal Medicaid payments to California and to Minnesota because of suspected fraud and non-compliance,” he wrote on X, explaining that the funding would remain on hold until both states provide documentation showing the claims comply with federal Medicaid rules.
“Medicaid exists to serve vulnerable Americans — not to bankroll unsupported claims,” Kennedy said in a statement. “Under President [Donald] 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.”
Dr. Oz described the action as part of a more proactive enforcement strategy. “CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” he said, adding that the agency is deferring payments for certain high-risk Medicaid services to prevent fraud before federal funds are distributed.
Gavin Newsom rejects fraud allegations
California officials quickly challenged the Trump administration’s explanation. In a post on X, Newsom’s office said, “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.”
The governor’s office further argued that the state supports efforts to combat fraud but maintained the payment pause is politically motivated rather than evidence-based.
Medicaid review targets specific claims
Federal officials emphasized the action does not affect all state Medicaid programs. In California, the payment deferrals involve certain in-home care programs and claims requiring additional documentation rather than the broader Medi-Cal system, which provides health coverage to millions of low-income residents, including children, seniors, people with disabilities and eligible adults.
Minnesota’s Medical Assistance program, which covers low-income adults, children, pregnant women, seniors and people with disabilities, is also under review. According to HHS, CMS examined claims across 14 “high-risk” service areas and identified expenditures requiring additional scrutiny before federal matching funds are released.
Questions remain over potential impact
Federal officials have characterized the move as a temporary payment deferral while states submit supporting documentation. However, it remains unclear whether beneficiaries will experience disruptions in care or whether California and Minnesota will continue funding affected services using other revenue sources during the federal review. Because Medicaid is jointly financed by states and the federal government, states often have multiple funding streams available, although federal reimbursements make up a significant portion of the funding.
HHS said the payment deferrals are part of the Trump admin’s broader campaign to combat fraud, waste and abuse across federal health care programs. The administration has increased scrutiny of government spending in recent months — while carrying out a multi-billion dollar war with Iran — with Medicaid, a program covering more than 70 million Americans, becoming a central focus of those oversight efforts.
