WASHINGTON—The Trump administration has deferred more than $1 billion in federal Medicaid payments to California and Minnesota pending additional documentation to support what officials described as high-risk claims, saying the move is part of a broader effort to combat fraud, waste and abuse in the healthcare program.
U.S. Health and Human Services Secretary Robert F. Kennedy Jr. announced the action alongside Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz, saying approximately $867.5 million in payments to California and about $199 million to Minnesota would be withheld while the federal government reviews the claims. Federal officials said the payments have been deferred rather than permanently canceled and could be released if the states provide sufficient documentation.
Kennedy said the administration was shifting toward preventing questionable payments before federal funds are disbursed instead of attempting to recover money after fraud investigations. Oz said CMS had identified claims requiring further review, including rapid growth in certain in-home care services in California and what the agency described as 14 high-risk service areas in Minnesota. Administration officials did not publicly present specific evidence of fraud during the announcement.
The action is the latest in a series of Medicaid payment suspensions affecting the two Democratic-led states as the White House intensifies oversight of federal healthcare spending. Administration officials said the reviews are intended to strengthen program integrity and protect taxpayer funds.
California Governor Gavin Newsom criticized the decision, calling it politically motivated and arguing the state has worked with federal officials to expand access to home-based care while pursuing fraud prevention. Minnesota Governor Tim Walz also objected to the payment deferral, saying state officials had not been provided with evidence supporting the federal action and that Minnesota was cooperating with the review process.
Minnesota officials said they had already submitted documentation requested by CMS, while California said it was preparing additional information to support the claims under review. Federal officials said payment deferrals could be lifted once the documentation is validated.
Kennedy also announced plans to expand the authority of CMS and the HHS Office of Inspector General to exclude providers found to have engaged in fraud from participating in federal healthcare programs, describing the measure as part of the administration's broader anti-fraud initiative.
