The Centers for Medicare and Medicaid Services is pausing more than $1 billion in federal Medicaid payments to California and Minnesota because of suspected fraud and noncompliance, Health Secretary Robert F. Kennedy Jr. announced Tuesday.
More than $867 million for California and $200 million for Minnesota will be withheld.
“If those states want that money, they need to provide documentation that these payments are legitimate,” Mr. Kennedy said.
If California Gov. Gavin Newsom or Minnesota Gov. Tim Walz want the funding released, “all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent, and that’s common sense,” he said.
The Department of Health and Human Services is also expanding its exclusion authority, which allows HHS’s internal watchdog to exclude individuals and entities from federally funded health care programs.
This authority can remove bad actors from federal health care programs, Mr. Kennedy said, and in many cases, permanently ban them from returning.
CMS Administrator Mehmet Oz said that withholding $1 billion is a “very conservative approach.”
“When there are signature and significant outliers, patterns that we have identified, anomalies that seem to happen again and again and again, federal law mandates us to pause that funding so that the states fix the problems,” he said.
In Minnesota and California, audits have unearthed “claims that smell like fraud,” Dr. Oz said. “And if it smells like fraud, we’re not paying for it anymore.”
He cited California claims with “unsatisfactory immigration status” and a surge of in-home supportive services, of which the Golden State increased spending at twice the average rate of other states.
In Minnesota, personal care and home-based services were high-risk categories susceptible to fraud, Dr. Oz said.
Billing for deceased patients was an identifiable problem in both California and Minnesota, he added.
In February, the Trump administration took several steps to crack down on Medicare and Medicaid fraud, including deferring almost $260 million of quarterly federal Medicaid funding in Minnesota while the feds completed a fraud investigation.
In response, Mr. Newsom’s office said Tuesday’s announcement is “the same recycled political stunt we’ve seen before.
“California isn’t being targeted because Trump has evidence of fraud,” his office said in a statement. “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!”
Mr. Walz agreed.
“This isn’t about fraud — it’s about cutting your healthcare so that Trump can afford the tax cuts he gave to billionaires,” he said in a statement. “They’re cutting more money in healthcare than they’ve prosecuted for fraud. The math doesn’t add up.”
A massive Medicaid fraud scheme by Somali-run daycare centers in Minnesota was exposed late last year. Federal investigators and state officials uncovered systemic fraud in Minnesota child care and food programs, and these investigations have led to the convictions of dozens of individuals.
Medicare dolled out $57 billion in improper payments — of which fraud is included, but not the whole number — for the 2025 fiscal year, while Medicaid’s improper payments totaled $37 billion, according to an April congressional watchdog report.
Mr. Kennedy said that $42 billion in Medicare fraud has been identified thus far.
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