The Trump administration has paused over $1 billion in Medicaid disbursements to California and Minnesota, following audit findings that revealed potential fraudulent activities in the program. On Tuesday, HHS Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz confirmed a deferment of over $800 million for California and close to $200 million for Minnesota.
Both states have often been scrutinized by the Trump administration regarding Medicare and Medicaid fraud accusations. They can recover the withheld funds by submitting paperwork that verifies their high-risk service claims adhere to federal standards.
"We have reason to believe that taxpayer money is being misused, especially through fraud. We have a duty to stop the payments, demand answers, and then follow the evidence wherever it leads," Kennedy said in a press briefing.
This deferral stems from CMS audits that detected irregular payment patterns in California and Minnesota. Examinations in California revealed that some in-home care services had spending levels above national averages. For Minnesota, CMS pinpointed 14 service categories considered high-risk due to possible eligibility or billing issues. Oz noted that personal care and home-based care are among these areas.
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The current administration has been intensively reviewing states to reduce federal health program costs and address inefficiencies, fraud, and misuse. HHS had earlier committed to auditing every state and warned it would suspend Medicaid payments for noncompliance with anti-fraud regulations. In May, the administration said it was postponing more than $1 billion in Medicaid repayments to California, citing suspected fraud.
This latest action continues a pattern of aggressive oversight by the Trump administration. In addition to the May deferral, the HHS has launched broader audits of state Medicaid programs to ensure compliance. The agency has emphasized that states must maintain proper documentation and eligibility verification to avoid payment holds.
The Trump administration's focus on Medicaid fraud is part of a broader initiative to reduce waste in federal health programs. This aggressive oversight reflects a concerted effort to ensure taxpayer dollars are spent appropriately, with both California and Minnesota now required to provide detailed documentation to unlock funds.
Both California and Minnesota can still get their money back. If they provide documentation showing that the services are legitimate and not fraudulent, the funding will be restored. Kennedy made the offer plain: "If Governor Gavin Newsom or Governor Tim Waltz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent."
Representatives from California and Minnesota did not respond to inquiries for comment at the time of publication.
These payment pauses are part of a broader crackdown on state Medicaid programs. CMS has indicated that audits of additional states are ongoing, and further funding holds may be announced if irregularities are found. The administration views these actions as necessary to protect taxpayer dollars and ensure program integrity.
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