The Trump administration has announced a freeze on over $1 billion in federal Medicaid funding to California and Minnesota due to suspected fraud.
HHS Secretary Robert F. Kennedy Jr. warned that states will not receive another taxpayer dollar until they can provide documentation proving the payments were legitimate.
The Centers for Medicare & Medicaid Services (CMS) is withholding around $867 million from California and over $200 million from Minnesota while federal officials review what they describe as high-risk Medicaid claims and documentation deficiencies.
Kennedy stated that the Trump administration is using advanced tools, including artificial intelligence and analytics, to identify suspicious spending, and that states must demonstrate compliance with federal law.
CMS Administrator Dr. Mehmet Oz said the review uncovered repeated irregularities in both states, including claims submitted for deceased beneficiaries, providers previously flagged for fraud, and spending patterns that were significant outliers.
Oz stated that if there are signs of fraud, the administration will not pay for it, and highlighted California's spending on in-home supportive services as a particular area of concern.
California accounted for the largest share of the funding freeze, with around $646 million tied to in-home supportive services and another $221 million associated with claims involving individuals with unsatisfactory immigration status.
Oz noted that California's spending on in-home supportive services increased 24% over the past two federal fiscal years, double the national average, and that the state has yet to adequately document hundreds of millions of dollars in claims.
