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Health and Human Services Secretary Robert F. Kennedy Jr. said Tuesday he’s stopping more than $1 billion in federal Medicaid payments to California and Minnesota over suspected fraud.
“We are not sending Medicaid dollars out the door until we have confidence that they are being spent lawfully and appropriately,” Kennedy said at an announcement on Tuesday.
Kennedy said if California Gov. Gavin Newsom (D) and Minnesota Gov. Tim Walz (D) want the money to fund low-income healthcare, “they need to provide documentation that these payments are legitimate.”
Kennedy blamed the Biden administration and the Democratic leadership in both blue states for alleged misuse of taxpayer dollars.
“Instead of protecting your money, they open the floodgates to theft,” Kennedy said. “They dismantle basic program integrity and oversight.”
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The health secretary criticized the Biden administration’s oversight of Medicaid, arguing that former HHS Secretary Xavier Becerra “looked the other way while fraud, waste, and abuse exploded.”
“The scammers got paid,” Kennedy said. “The taxpayers got stuck with these enormous bills.”
The Centers for Medicare and Medicaid Services is deferring over $200 million and over $867 million in federal Medicaid payments for Minnesota and California, respectively. The hold will be in place while federal officers review “high-risk Medicaid claims” and document deficiencies.
In Minnesota, the funding involves 14 high-risk areas that were identified as suspect because of vulnerabilities or evidence of fraudulent activity.
CMS officials suspect the questionable spending in California is rooted in in-home services. Over the past two federal fiscal years, California’s spending in these programs went up 24%, while the rest of the country’s average was 12%, according to CMS administrator Mehmet Oz.
“So California increased spending at twice the rate of the average of the rest of the entire nation,” Oz said. “That doesn’t make sense.”
According to CMS, California’s frozen funds include $221 million in associated claims involving individuals, which Oz describes as “unsatisfactory immigration status.”
This is a developing story. Please check back for updates.
Federal officials also cited millions of dollars in claims tied to services allegedly provided to beneficiaries after they die.
Oz said they’re working with the administrations of both states, and Minnesota has already returned the documents to ensure the money is being well spent.
The Post reached out to Newsom and Walz’s office, and did not receive immediate comment.
The clampdown is part of a broader Trump administration effort to go after waste, fraud and abuse.
Kennedy said the Trump Administration has expanded from using just traditional financial verification to go after fraud. To identify suspicious spending, CMS used AI, advanced analytics and “other cutting-edge tools.”
Just a month ago, acting Attorney General Todd Blanche announced 455 people were charged for $6.5 billion in healthcare fraud schemes.
The feds say this was the “greatest combined federal and state effort in combating health care fraud in history,” charging individuals who used taxpayer-funded programs to pay for lux lifestyles.
The funds will be deferred until California and Minnesota can substantiate their claims from the previous quarter of audits.
Walz’s office responded to the Medicaid cuts in a statement to the Post saying that the “Trump Administration is cutting more money in healthcare than they’ve prosecuted for fraud.”
Newsom also said in an X post that the announcement is a “recycled political stunt,” and California is being targeted for political reasons — not due to fraud.
