Key facts
- The Trump administration is pausing over $1 billion in Medicaid payments to California and Minnesota.
- The pause is due to suspected fraud and noncompliance with program integrity requirements.
- U.S. Health Secretary Robert F. Kennedy, Jr. announced the action.
- Minnesota faces a deferral of $259.5 million in federal matching funds for the fourth quarter of FY 2025.
- Deferred funds for Minnesota include expenditures related to unsupported or potentially fraudulent claims and claims involving individuals lacking satisfactory immigration status.
- A nationwide moratorium on Medicare enrollment for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers has been implemented.
The Trump administration, through U.S. Health Secretary Robert F. Kennedy, Jr., has announced a pause on over $1 billion in Medicaid payments to California and Minnesota, citing suspected fraud and noncompliance. Kennedy stated that these states must provide documentation to legitimize the payments to receive the funds.
According to the Centers for Medicare & Medicaid Services (CMS), Minnesota faces a deferral of $259.5 million in federal matching funds for the fourth quarter of fiscal year 2025. This deferral includes state expenditures of $243.8 million for unsupported or potentially fraudulent Medicaid claims and $15.4 million related to claims involving individuals lacking satisfactory immigration status. CMS utilized both traditional financial management and new program integrity oversight strategies to identify unusually high spending in service areas such as personal care services, home and community-based services, and other practitioner services.
In Minnesota, some of the deferred funding was linked to more than 3,000 providers who were disenrolled from Medicaid after a state audit. Dr. Mehmet Oz, CMS Administrator, noted that the majority of the $199 million in question was linked to these disenrolled providers, raising questions about the claims submitted before their removal. However, providers in Minnesota charge that some terminations were made in error, and the state is allowing them to continue billing for Medicaid services while they appeal.
This is the third time the administration has suspended funding in Minnesota, with previous actions totaling approximately $400 million. Vice President J.D. Vance has stated the state can use its rainy day fund to cover the difference while it proves the legitimacy of the claims. However, Governor Tim Walz, a Democrat, claims Minnesota is being politically targeted.
In addition to the state-specific actions, the administration is implementing a nationwide moratorium on Medicare enrollment for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers. Vice President J.D. Vance and CMS Administrator Dr. Mehmet Oz were also involved in announcing these broader efforts to crack down on fraud in Medicare and Medicaid, aiming to protect patients and taxpayers and improve affordability through a proactive, data-driven strategy.