The Trump administration announced a pause on more than $1 billion in Medicaid funding to California and Minnesota on Tuesday, alleging suspected fraud and noncompliance with federal requirements. The pause includes approximately $867 million designated for California and roughly $200 million for Minnesota. This action follows an earlier $243 million pause in Medicaid payments to Minnesota implemented earlier in the year.
Robert F Kennedy Jr, secretary of the Department of Health and Human Services, stated that states seeking the withheld funds must provide documentation demonstrating the legitimacy of the payments. Kennedy indicated that the department utilized artificial intelligence and advanced analytics to identify potentially fraudulent activity. In California, he noted that most of the suspected fraud involved in-home services. Kennedy has repeatedly highlighted concerns about in-home care provision, a focus that has generated concern among families and criticism from lawmakers given the program’s importance for disabled individuals.
Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, characterized the suspended payments as having been used to “pad the pockets of criminals” and stated that states have failed to adequately document claims or provide acceptable explanations for potentially fraudulent activity. Oz argued that in-home care services, while often necessary for individuals with illness and disability, are susceptible to abuse.
The administration is also expanding its exclusion authority to enable federal overrides of state decisions, allowing the government to remove entities deemed “bad actors” from federal healthcare programs and impose permanent bans on federal funding eligibility. Vice-President JD Vance had previously threatened in March to withhold funding from states that declined to cooperate with a new fraud taskforce established through a White House executive order and headed by Vance. Minnesota filed a lawsuit against the HHS in March challenging the earlier funding withholding.
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