Trump admin defers more than $1 billion in Medicaid payments to California and Minnesota

WASHINGTON (TNND) — On Tuesday, the Trump administration announced its latest deferment of healthcare funding to two Democratic-led states until they can prove certain Medicaid claims were not fraudulent.

On Tuesday, the Trump administration announced its latest deferment of healthcare funding to two Democratic-led states until they can prove certain Medicaid claims were not fraudulent. (TNND)

In a press conference, Health and Human Services Secretary Robert F. Kennedy, Jr. and Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz said the administration will defer more than $867 million in federal Medicaid payments to California and $199 million to Minnesota until the states can provide additional documentation for claims considered at high-risk for fraud, like home-based services and expenditures linked to flagged providers.

“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,” Kennedy said.

Oz said it’s part of the administration’s new “proactive approach” to tackling fraud. He said if a claim “smells like fraud, we’re not paying for it anymore.”

“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,” Oz said.

Including Tuesday’s announcement, the total amount of Medicaid funding deferred or withheld from California and Minnesota this year exceeds $3 billion.

California Gov. Gavin Newsom called the administration’s latest move “the same recycled political stunt we’ve seen before.”

“California isn’t being targeted because Trump has evidence of fraud. We are being targeted for political reasons — and because Dr. Oz doesn’t understand that we are *SAVING* taxpayers money by keeping seniors and people with disabilities out of far more expensive nursing homes! We hate fraud. That’s not what this is. And we stand ready to collaborate with CMS in good faith efforts to combat fraud,” Newsom said.

Minnesota Gov. Tim Walz issued a similar statement Tuesday.

“This isn’t about fraud – it’s about cutting your healthcare so that Trump can afford the tax cuts he gave to billionaires. They’re cutting more money in healthcare than they’ve prosecuted for fraud. The math doesn’t add up,” Walz said.

Both Minnesota and California have accused the Trump administration of refusing to work with them on state-level efforts to combat fraud. During a roundtable with other state attorneys general in May, California Attorney General Rob Bonta said Vice President JD Vance gave them less than one business day’s notice to participate in a meeting in Washington, D.C. about Medicaid fraud while Republican attorneys general were given more than one week’s notice.

“The truth is, Democratic AGs have recovered billions of taxpayer dollars, secured criminal convictions and implemented reforms to strengthen the security of our programs,” Bonta said.

CMS has also launched inquiries into potential fraud in New York, Maine and Florida, but has not deferred their funding.