Key facts
- The Trump administration is deferring over $1 billion in Medicaid payments to California and Minnesota.
- The deferrals are due to suspected fraud and noncompliance with program rules.
- California faces a deferral of $867.5 million, while Minnesota faces $199 million.
- Health Secretary Robert F. Kennedy Jr. stated the administration's goal is to prevent fraud proactively.
- Officials in both states have expressed concerns about the lack of specific data provided by CMS to justify the deferrals and have disputed the reasons given.
The Trump administration has announced the deferral of over $1 billion in Medicaid payments to California and Minnesota, citing suspected fraud and noncompliance. Health Secretary Robert F. Kennedy Jr. stated that this action is part of a strategy to proactively stop fraud before it occurs, a departure from previous methods of recovering funds after prosecution.
The specific amounts deferred are $867.5 million for California and $199 million for Minnesota. Kennedy indicated that the administration has a duty to halt payments, demand explanations, and follow evidence. This move is framed as part of a broader campaign to combat fraud and save taxpayer money, particularly relevant amid rising healthcare costs and upcoming midterm elections.
However, state officials have raised concerns about the lack of specific data and explanations from the federal government regarding how the deferral amounts were calculated. John Connolly, Minnesota's Medicaid director, noted that the federal government has not provided sufficient information. Minnesota's Governor Tim Walz suggested the deferrals might be politically motivated to fund tax cuts, while California's Governor Gavin Newsom also accused the administration of targeting the state for political reasons.
Past instances have shown challenges with the administration's fraud probes. In April, CMS admitted to errors in figures used for a New York fraud probe. California's Medicaid director previously stated that CMS had not provided instances of fraud to justify a separate $1.3 billion deferral announced in May. Minnesota has been working on a corrective action plan to address concerns that led to the deferral of approximately $260 million in federal funds.
CMS Administrator Dr. Mehmet Oz pointed to questionable billing patterns, such as providers billing for multiple patients simultaneously or after a beneficiary's death, and a rapid growth in California's home care program. California officials, however, explained that the growth in their home care program is a deliberate strategy to keep individuals out of more expensive nursing homes, asserting it reflects intentional, federally encouraged expansion rather than improper spending.