Technology and Science21 July, 20262 min read
Trump Administration Defers $1 Billion in Medicaid Payments to California and Minnesota Over Suspected Fraud
This article is an automated aggregation of coverage from news outlets. Our editorials offer in-depth analysis curated by the NewsCord team.
The administration deferred more than $1 billion in Medicaid payments to California and Minnesota. CMS reviews flagged high-risk claims requiring additional documentation before release.
Medicaid Deferrals Announced
The Trump administration deferred more than $1 billion in federal Medicaid payments to California and Minnesota on Tuesday, citing “suspected fraud and noncompliance” and pausing $867.5 million for California and $199 million for Minnesota.
HHS Secretary Robert F. Kennedy Jr. said the administration would not send Medicaid dollars “out the door until we have confidence that they are being spent lawfully and appropriately,” framing the move as part of a strategy to “stop the fraud before it happens.”
CMS Administrator Dr. Mehmet Oz said the deferrals are part of a “new approach to program integrity,” and he described CMS as “done trying to chase down stolen and misused funds after they’ve already left the building.”
CBS News reported that the pause comes after CMS reviews identified claims that require an additional look before federal matching funds can be distributed, and it said California’s $867.5 million hold followed examination of claims for some in-home care programs.
State Officials Push Back
Minnesota’s temporary commissioner and state Medicaid director John Connolly said the federal government had not provided “data or explanation on how the deferral amount was calculated or what it was based on,” and he called the actions “unprecedented and punitive.”
California Gov. Gavin Newsom’s office dismissed the announcement as “the same recycled political stunt we’ve seen before,” and it argued “California isn’t being targeted because Trump has evidence of fraud.”
In a Tuesday post on X, Newsom’s office said the state is being targeted for “political reasons,” and it added “We hate fraud. That’s not what this is.”
Newsweek reported that Kennedy said the funding would remain on hold until the two states provide documentation demonstrating the payments comply with federal Medicaid requirements, and it quoted Kennedy saying, “Medicaid exists to serve vulnerable Americans — not to bankroll unsupported claims.”
What Comes Next
HHS said the deferrals are payment deferrals “(not permanent funding cuts),” and it said both states will have the opportunity to provide documentation showing the claims meet federal Medicaid requirements.
HHS.gov said CMS reviewed California’s claims for certain in-home care programs after identifying spending growth that “far exceeded national trends,” and it said CMS is deferring approximately $867.5 million until the state provides information needed to support those claims.
For Minnesota, HHS.gov said CMS reviewed Medicaid claims in 14 high-risk service areas and identified claims that require additional documentation, including expenditures linked to providers flagged through program integrity reviews, while deferring approximately $199 million while that review continues.
Healthcare Dive reported that CMS Administrator Dr. Mehmet Oz said CMS found “the same recurring theme again and again every single quarter,” and it quoted him saying, “And if it smells like fraud, we’re not paying for it anymore.”