The Trump administration, led by Health and Human Services Secretary Robert F. Kennedy Jr. and CMS Administrator Mehmet Oz, announced it is deferring more than $1 billion in federal Medicaid payments to California and Minnesota. This action, part of a wider crackdown on fraud in federal programs, includes $867.5 million for California and $199 million for Minnesota.
For California, the Centers for Medicare and Medicaid Services (CMS) reviewed claims for in-home care programs, noting spending growth that surpassed national trends and other claims requiring further documentation. In Minnesota, the CMS reviewed claims in 14 high-risk service areas. Officials for both states indicated that they can restart the flow of federal funding by providing documentation to prove the payments in question are legitimate.
This move follows earlier deferrals announced this year, including a $1.3 billion deferral for California in May and $260 million for Minnesota. Kennedy and Oz emphasized that this is a deferral, not a permanent cut, and is part of a proactive approach to program integrity, aiming to prevent fraudulent spending before it occurs rather than recovering funds later.
State officials from California and Minnesota have criticized the action. California's Democratic Governor Gavin Newsom accused the administration of political targeting, while Minnesota's Democratic Governor Tim Walz suggested the deferral was to fund Trump’s tax cuts. Minnesota officials are cooperating with a federal inquiry and have characterized the move as unexplained and punitive. CMS, however, stated it has not yet provided specific instances of fraud to California, according to the state's Medicaid director.
Kennedy also announced that HHS plans to expand its authority to remove questionable entities from federal health programs and potentially bar them from rejoining. This initiative reflects the administration's broader campaign to address rising healthcare costs and perceived misuse of taxpayer funds.
