The Trump administration has temporarily halted nearly $1 billion in federal Medicaid payments to California and Minnesota, citing suspected fraud and noncompliance. U.S. Health Secretary Robert F. Kennedy Jr. announced the move alongside Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz, stating that the funds will remain on hold until both states provide documentation proving the claims are legitimate. The deferred payments include approximately $867.5 million for California and $199 million for Minnesota.
The payment pause is part of a broader White House initiative to combat fraud in federal healthcare programs. Kennedy said the administration suspects questionable spending in California’s in-home care services, while Minnesota’s deferred funds relate to 14 high-risk areas previously identified by the state’s legislative auditor. Although Kennedy and Oz pointed to unusual billing patterns and data anomalies, they did not present direct evidence of fraud. They stressed that the suspended funds could be released once the states demonstrate compliance with federal requirements.
Governors Gavin Newsom of California and Tim Walz of Minnesota strongly criticized the decision, calling it politically motivated. Newsom said California supports efforts to combat fraud and would cooperate with CMS, emphasizing that its in-home care program reduces healthcare costs by helping seniors and people with disabilities remain out of nursing homes. Walz argued the administration was harming vulnerable residents rather than addressing fraud. Federal officials clarified that the action is a temporary deferral and does not affect Medicaid eligibility or benefits for recipients.
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