Trump Admin Freezing Over $1 Billion In Medicaid Payments To Two Blue States

WASHINGTON — The Trump administration is deferring over $1 billion in federal Medicaid payments to California and Minnesota as part of its ongoing healthcare fraud crackdown, Department of Health and Human Services Secretary Robert F. Kennedy Jr. announced Tuesday.

Kennedy said during a press conference that HHS is “not sending Medicaid or Medicare dollars out the door until we have confidence that they are being spent lawfully and appropriately.” The payment deferrals aim to advance the Trump administration’s ongoing “effort to combat fraud, waste, and abuse in Medicaid and safeguard federal taxpayer dollars,” HHS said in a news release.

Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz said during the news conference that fraudsters’ “days of stealing from the American taxpayer are over.”

“In Minnesota and California, our reviews are going back to just over the last few years, [turning] up the same recurring theme again and again, every single quarter: claims in the same high-risk categories that the states have not yet been able to document fully,” Oz added.

Democratic California Gov. Gavin Newsom’s press office wrote in an X post that the move “is the same recycled political stunt we’ve seen before.”

“California isn’t being targeted because Trump has evidence of fraud,” Newsom’s press office said in the social media post. “We are being targeted for political reasons — and because Dr. Oz doesn’t understand that we are *SAVING* taxpayers money by keeping seniors and people with disabilities out of far more expensive nursing homes!”

When reached for comment, Newsom’s office referred the Daily Caller News Foundation to its X post from Tuesday.

“CMS is intensifying its actions against California’s in-home care system, affecting children and adults with significant disabilities and seniors who rely on these services to remain safely at home,” a California Department of Health Care Services (DHCS) spokesperson told the DCNF in a statement. “CMS has deferred an additional $646.4 million from in-home care, which keeps Medi-Cal members with disabilities in their homes and out of institutions. This follows a previous $1.1 billion deferral from May, bringing the total to $1.7 billion deferred.”

“Rather than identify any instances of fraud, waste, or abuse, CMS is punishing California for growing in-home care to serve the Californians who need it,” the spokesperson added. “In-home care growth reflects intentional, federally encouraged expansion, not improper spending. Growth in eligibility, increased wages for caregivers, and support for higher-acuity members are all in line with longstanding federal policy. In essence, CMS now seeks to punish California for what was CMS’ own policy.”

The DHCS spokesperson also claimed that California’s “approach, which had been long approved by CMS, saves federal and state taxpayers money.” The spokesperson added that California “is calling on CMS to stop threatening care for California’s most vulnerable residents.”

“The math doesn’t add up,” Walz continued. “They’re not punishing fraudsters, they’re punishing children, seniors, working families, and people with disabilities. This is about cutting healthcare for people they don’t care about in their campaign of retribution against Minnesota.”

Tuesday’s announcement comes as the Trump administration has been moving to stamp out healthcare fraud across the U.S. in recent months.

In May, the administration announced it was deferring $1.3 billion in Medicaid payments to California, claiming that the state has failed to do enough to combat healthcare fraud. The administration also announced in April that it was withholding an additional $91 million in Medicaid funds for Minnesota amid concerns over potential fraud, MinnPost reported.

Editor’s note: This story has been updated to reflect comment from DHCS.