California, Minnesota face delayed Medicaid funds as CMS defers over $1B pending records

BAKERSFIELD, Calif. (KBAK/KBFX) — The U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services announced on Tuesday deferred more than $1 billion in federal Medicaid payments to California and Minnesota.

According to a release, it comes as the states need to submit additional documentation supporting certain “high-risk” Medicaid claims. In a release, it said, “The action advances the Trump administration’s effort to combat fraud, waste, and abuse in Medicaid and safeguard federal taxpayer dollars.”

“Medicaid exists to serve vulnerable Americans — not to bankroll unsupported claims,” said HHS Secretary Robert F. Kennedy, Jr. “Under President Trump’s leadership, we are restoring accountability across our public programs and protecting taxpayer dollars. I appreciate CMS Administrator Dr. Oz’s leadership in strengthening Medicaid program integrity and ensuring federal funds are spent as Congress intended. States that receive federal Medicaid funding must demonstrate that every dollar meets federal requirements. When they cannot, we will not release federal funds until they do.”

According to a release, CMS is deferring about $867.5 million in federal Medicaid payments to California and $199 million to Minnesota after focused financial reviews identified claims that require additional review before federal matching funds are released.

“These are payment deferrals (not permanent funding cuts) and both states will have the opportunity to provide documentation showing the claims meet federal Medicaid requirements,” said in the release.

“CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” said CMS Administrator Dr. Mehmet Oz. “That’s why we’re deferring payments with respect to certain high-risk services within the Medicaid programs in California and Minnesota as part of our proactive new approach to program integrity. By stopping waste and fraud before the check clears, CMS is delivering record-high savings for taxpayers and ensuring that their hard-earned dollars reach the vulnerable Americans Medicaid is meant to serve.”

For California, CMS reviewed the state’s claims for certain in-home care programs after identifying spending growth that “far exceeded national trends and other claims that require additional documentation.” As a result, CMS is deferring about $867.5 million in federal Medicaid payments until the state provides the information needed to support those claims.

For Minnesota, CMS also reviewed Medicaid claims in 14 high-risk service areas in Minnesota. The review identified claims that require additional documentation, including expenditures linked to providers flagged through program integrity reviews and other claims with potential eligibility or billing concerns.

CMS is deferring approximately $199 million in federal Medicaid payments while that review continues.