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The Trump administration is freezing more than $1 billion in Medicaid funding to California and Minnesota.
The freeze is part of an effort to prevent Medicaid fraud, Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Administrator Mehmet Oz said Tuesday. The two states, both led by Democratic governors, can access the funds, the officials said, if they provide documentation for some claims the health department has flagged as suspicious.
“If Governor Gavin Newsom or Governor Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent,” Kennedy said.
HHS is deferring $867.5 million in Medicaid payments to California and $199 million to Minnesota. Officials didn’t discuss why the two states were selected for the freeze at an event Tuesday to announce the deferrals. The funds under pause represent just a slice of what each state receives for Medicaid. Washington sends roughly $100 billion in Medicaid funding to California and about $10 billion to Minnesota each year.
The funding deferral is the latest salvo in the Republican administration’s efforts to combat what it says is widespread fraud in federal spending programs. Oz and Vice President JD Vance are leading a task force focused on identifying misspent funds.
Oz said HHS would no longer pay for claims that “smell like fraud.” He described $3 million in claims in Minnesota that had “documentation gaps,” including, for example, for services provided to deceased people, and $42 million in payments to individuals flagged through “fraud detection analytics” who may have previously defrauded the government. The largest portion of the frozen funds to Minnesota, Oz said, were payments to providers in “high-risk areas,” although he did not specify where those were.
Oz said many of the frozen funds in California were for in-home services for seniors and people with disabilities. Spending on those services in the state had gone up 24% in the past two years, he said, compared with 12% on average in the rest of the states.
“This is a very conservative approach, by the way,” Oz said. “We could have taken a lot more money.”
Oz said Minnesota had provided some documentation already that federal health officials are evaluating, but said California had “different kinds of issues.”
Walz and representatives for Newsom said the administration was targeting the states for political reasons.
“They’re not punishing fraudsters, they’re punishing children, seniors, working families, and people with disabilities,” Walz said in a statement. “This is about cutting healthcare for people they don’t care about in their campaign of retribution against Minnesota.”
Newsom’s press office said on X: “Today’s announcement from Dr. Oz is the same recycled political stunt we’ve seen before.…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!”
This is the third deferral of Medicaid funds for Minnesota this year, which earlier saw $260 million and $91 million in funding frozen, according to the state. The Minnesota Department of Human Services said it already adopted several new practices to combat fraud, including a prepayment review and revalidating thousands of providers.
“We have cooperated in good faith,” Minnesota’s Medicaid director John Connolly said in a statement. The Centers for Medicare and Medicaid Services “touts their new fraud-detection capabilities, yet has not provided data or explanation on how the deferral amount was calculated or what it was based on,” he added.
The new freeze in funds is separate from a $1.3 billion pause in Medicaid funds announced by Vance in May, an HHS spokeswoman said.
Write to Liz Essley Whyte at [email protected]
