The Trump administration says it's deferring over $1 billion in Medicaid payments to Minnesota and California because of suspected fraud and noncompliance.
Centers for Medicare & Medicaid Services administrator Dr. Mehmet Oz speaks before Vice President JD Vance at the Wisconsin Air National Guard facility at Milwaukee Mitchell International Airport, Wednesday, July 8, 2026, in Milwaukee.
Centers for Medicare & Medicaid Services administrator Dr. Mehmet Oz speaks before Vice President JD Vance at the Wisconsin Air National Guard facility at Milwaukee Mitchell International Airport, Wednesday, July 8, 2026, in Milwaukee. Centers for Medicare & Medicaid Services administrator Dr. Mehmet Oz speaks before Vice President JD Vance at the Wisconsin Air National Guard facility at Milwaukee Mitchell International Airport, Wednesday, July 8, 2026, in Milwaukee.
The Trump administration on Tuesday said it was deferring more than $1 billion in Medicaid payments to Minnesota and California because of “suspected fraud and noncompliance,” the latest in Health Secretary Robert F. Kennedy Jr. said the new actions — which come after previously announced Medicaid funding deferrals in those states — are part of the administration's strategy to “stop the fraud before it happens” rather than claw back problematic spending after bad actors are prosecuted, as previous administrations had done.
“We have a duty to stop the payments, demand answers and then follow the evidence wherever it leads,” Kennedy told a news conference. The tactic is part of the administration’s sweeping campaign to show it’s cracking down on fraud and saving taxpayers money when rising healthcare costs and other economic stressors have made affordability a top voter concern in November’s midterm elections.
In March, Vice President JD Vance launched a new anti-fraud task force at the request of President Donald Trump, bringing together officials from various departments to use data and technology to identify and investigate suspected wrongful use of federal dollars. But the federal government hasn't provided “data or explanation on how the deferral amount was calculated or what it was based on” to Minnesota, said John Connolly, the temporary commissioner and state Medicaid director for Minnesota's Department of Human Services.
“Today's actions show that the federal government is acting again in unprecedented and punitive ways as part of their war on Medicaid and its recipients,” he said in a statement. “Partnership — not politics — is required to stop criminals and protect services for the people who need them. ” Minnesota’s Democratic Gov. Tim Walz suggested the Republican administration was deferring the funds to pay for Trump’s tax cuts to wealthy Americans.
California’s Democratic Gov. Gavin Newsom accused the administration of targeting it for political reasons. The Trump administration intensified anti-immigration efforts in Minnesota earlier this year, sending in a robust force of Immigration and Customs Enforcement officers whose actions there caused weeks of counterprotests and included the shooting deaths of two civilians. Trump himself has frequently denounced California as a badly governed state.
The strategy has led to some false starts and headaches for states.in figures it used to help justify a fraud probe in New York. Last month, California's Medicaid director told a congressional committee that CMS had not yet provided “any instances of fraud, waste or abuse” to the state in its justification of a $1.3 billion Medicaid funding deferral announced in May.
And in Minnesota, state officials have been executing a thorough corrective action plan to defray CMS concerns that have led the agency to defer some $260 million in federal money and to threaten future cuts.
“We have cooperated in good faith and proactively engaged the Centers for Medicare and Medicaid Services to first raise the alarm on fraud in Minnesota’s Medicaid program, to effectively investigate fraud and to institute further safeguards against future misuse of funds,” Connolly said. Kennedy didn't specify in Tuesday's announcement whether the new deferrals — $867.5 million in federal Medicaid payments to California and $199 million to Minnesota — are in addition to, or overlap with, CMS Administrator Dr. Mehmet Oz didn't provide concrete examples of fraud in the two states in justifying the deferrals.
He did mention some patterns the agency noticed that it found questionable, including that some providers were billing for four or more patients at the same time, or billing after the date of a Medicaid beneficiary's death. Oz also highlighted a fast rate of growth in California's home care program as a reason for concern.
California officials have disputed that idea, explaining that the state's home care program has grown because of an intentional strategy to keep people out of more expensive nursing homes. Kennedy and Oz said states could restart the flow of federal funding by providing documentation proving the payments in question were legitimate. A representative for California's Medicaid program didn't immediately respond to a request for comment.
Officials in the state have previously acknowledged they are working with the federal government to provide the requested information. Oz said Minnesota had already returned documents to the federal government and they were being “reevaluated very carefully. ” Kennedy also suggested Tuesday that he would extend the power to exclude providers from Medicaid, Medicare and other federal health programs to CMS. In the past, that authority has rested solely with his department’s Office of the Inspector General.
“This is going to be a full force multiplier,” HHS Inspector General Thomas March Bell told a news conference. “It's going to create additional momentum, and it's going to exclude additional bad actors. ” Copyright 2026 The Associated Press. All rights reserved.
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Trump Administration Pauses Over $1 Billion in Medicaid Payments to California and MinnesotaThe Trump administration has paused more than $1 billion in federal Medicaid payments to California and Minnesota over concerns about suspected fraud and noncompliance. Health and Human Services Secretary Robert F. Kennedy Jr. announced that the Centers for Medicare & Medicaid Services (CMS) has halted the payments pending further review. The pause affects two of the nation's largest Medicaid programs, with over $867 million for California and over $200 million for Minnesota. CMS Administrator Dr. Mehmet Oz stated the deferral is part of a proactive approach to program integrity, stopping waste and fraud before funds are released. The states must provide documentation to demonstrate compliance with federal Medicaid requirements. California Governor Gavin Newsom's office criticized the move as a political stunt, while both states' Medicaid programs serve millions of low-income residents, including children, seniors, people with disabilities, and eligible adults. The decision aligns with the administration's broader effort to combat fraud, waste, and abuse in federal health care programs.
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Trump administration pausing $1 billion in Medicaid payments to California, Minnesota after fraud audit“We have a duty to stop the payments, demand answers, and then follow the evidence wherever it leads,” HHS Secretary Robert F. Kennedy Jr. said in a briefing.
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Trump administration says it's deferring $1B in Medicaid payments to California and MinnesotaThe Trump administration says it's deferring over $1 billion in Medicaid payments to Minnesota and California because of suspected fraud and noncompliance.
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