The Trump administration will withhold more than $1 billion in Medicaid payments to California and Minnesota after an audit indicated instances of fraud in the federal health program.
Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare & Medicaid Services Administrator Mehmet Oz announced Tuesday they will defer more than $800 million in funding to California and nearly $200 million in Minnesota.
The two states, frequent targets of the Trump administration over allegations of Medicare and Medicaid fraud, will be able to have their funding restored if they provide documentation ensuring payments they made for claims tied to high-risk services meet federal Medicaid requirements.
“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 the press briefing.
The pause comes as a result of Centers for Medicare & Medicaid Services audits showing payment anomalies in both states, with reviews in California finding certain in-home care programs exceeding national trends in spending.
In Minnesota, the agency identified 14 high-risk service areas with potential eligibility or billing concerns. These include personal care and home-based care services, according to Oz.
The Trump administration has closely scrutinized states in its effort to curb spending on federal health programs, as well as target waste, fraud, and abuse. The HHS previously promised to audit all fifty states and threatened to withhold Medicaid funds if they failed to comply with federal anti-fraud statutes. The administration in May announced it was deferring more than $1 billion in Medicaid reimbursements from California over fraud.
“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,” Kennedy said.
Minnesota Department of Human Services Temporary Commissioner John Connolly said in a statement that the CMS “has not provided data or explanation on how the deferral amount was calculated or what it was based on.”
The state asks the federal government to share any information about their calculation methods to identify potentially fraudulent providers in Minnesota.
A spokeperson for California said that the Trump administration is seeking to punish the state for home-care expansions approved by CMS in the past. The state said that any growth in eligibility, increased wages for caregivers, and support for higher-acuity members were all in line with longstanding federal policy.