The Trump administration just froze more than $1 billion in federal Medicaid payments to California and Minnesota over suspected fraud — and HHS Secretary Robert F. Kennedy Jr. made it crystal clear Tuesday: not another taxpayer dollar moves until the states prove the spending was legitimate.
“If Governor Gavin Newsom or Governor Tim Walz wants this 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.”
The Centers for Medicare & Medicaid Services is withholding roughly $867 million from California and more than $200 million from Minnesota while federal officials review what they describe as high-risk claims and documentation deficiencies that don’t pass the smell test.
Kennedy said the administration is deploying artificial intelligence, advanced analytics, and traditional financial audits to hunt down suspicious spending. States seeking federal Medicaid dollars must now demonstrate the payments comply with federal law — no more honor system.
“We are not sending Medicaid and Medicare dollars out the door until we have confidence that they are being spent lawfully and appropriately,” Kennedy said.
CMS Administrator Dr. Mehmet Oz said the review uncovered repeated irregularities in both states, including claims submitted for deceased beneficiaries, providers previously flagged through fraud detection systems, and spending patterns federal officials called significant outliers.
“If it smells like fraud, we’re not paying for it anymore.”
California accounted for the largest share of the freeze. Roughly $646 million is tied to in-home supportive services, and another $221 million is linked to claims involving individuals Oz described as having “unsatisfactory immigration status.”
Oz said California’s spending on in-home supportive services surged 24% over the past two federal fiscal years — roughly double the national average — and the state has yet to adequately document hundreds of millions of dollars in claims.
In Minnesota, officials said the state was ordered to review providers in 14 high-risk Medicaid service categories, including personal care and home-based services. Oz said Minnesota recently disenrolled roughly 3,000 providers after failed background checks, failed site visits, and other compliance failures — prompting CMS to review nearly $200 million in claims tied to those providers.
Federal officials also flagged millions of dollars in claims billed for services allegedly provided to beneficiaries after their deaths. Kennedy called such payments a major red flag and a textbook fraud indicator.
Kennedy also announced HHS is expanding exclusion authority, allowing both CMS and the HHS Office of Inspector General to remove individuals and entities found guilty of fraud from federal healthcare programs. Some offenders will face permanent bans.
Kennedy sharply criticized the Biden administration’s oversight of Medicaid, arguing former HHS Secretary Xavier Becerra weakened anti-fraud efforts by reducing program integrity staffing and allowing questionable payments to continue while attempting to recover the money later — a pay-now-ask-questions-later approach.
“The scammers got paid. The taxpayers got stuck with these enormous bills.”
The administration said California and Minnesota can receive the withheld funding if they provide documentation showing the payments were legitimate. No documentation, no money.
“We have a duty to stop the payments, demand answers, and then follow the evidence wherever it leads,” Kennedy said.
