Trump Admin Freezes $1 Billion In Medicaid Funds To California And Minnesota

The Trump administration paused more than $1 billion in Medicaid payments to California and Minnesota Tuesday, saying the states must answer questions about high-risk claims before the federal government releases the money.

Health Secretary Robert F. Kennedy Jr. said at a news conference that the hold stems from suspected fraud and noncompliance in the two states. Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz joined the announcement as governors Gavin Newsom and Tim Walz accused the administration of using health-care oversight as political payback.

The Department of Health and Human Services said it will hold back about $867.5 million from California and $199 million from Minnesota. Federal officials described the move as a deferral, not a permanent cut, and said both states can recover the money by showing that the claims meet federal standards.

In California, CMS pointed to claims tied to some in-home care programs. The agency said it saw spending growth that outpaced national trends, including roughly $646 million tied to in-home supportive services. Officials also identified about $221 million in claims involving people Oz described as having “unsatisfactory immigration status.”

In Minnesota, CMS said it reviewed claims across 14 service areas that it considers high risk for fraud. The agency focused mostly on in-home and personal care services and said some claims appeared improperly billed or tied to ineligible enrollees. Oz said Minnesota has already sent documents back to CMS and that officials are reviewing them.

The administration said the freeze does not affect Medicaid benefits or eligibility. That distinction matters because the dispute centers on reimbursement between state and federal governments, not on whether people can enroll or receive covered care. Still, the dollar amounts are large enough to trigger a political row in two Democratic-led states that already had Medicaid money on hold.

California was already facing a $1.3 billion Medicaid reimbursement hold that began in May. Minnesota had nearly $260 million withheld before Tuesday’s announcement. California officials previously accused the administration of targeting blue states after Vice President JD Vance announced the May deferral, and the latest action revived that argument almost immediately.

Newsom’s press office called the latest move “the same recycled political stunt we’ve seen before” in a post on X. Newsom's press office also wrote on X, “We are being targeted for political reasons — and because Dr. Oz doesn't understand” that the state is saving taxpayer money by keeping people out of costlier nursing homes.

Minnesota Governor Tim Walz made a similar argument after the announcement. He said the administration “is cutting more money in healthcare than they've prosecuted for fraud,” according to U.S. News. He also told Stateline, “This isn't about fraud — it's about cutting your health care so that Trump can afford the tax cuts he gave to billionaires.”

Minnesota Medicaid director John Connolly criticized the agency’s explanation, saying, “CMS touts their new fraud-detection capabilities, yet has not provided data or explanation on how the deferral amount was calculated or what it was based on,” according to The Hill.

Federal officials have not presented public proof of fraud in the claims at issue, according to an Associated Press report, which noted that Oz did not provide concrete examples when justifying the deferrals. Last month, California's Medicaid director told a congressional committee that CMS had not yet provided any instances of fraud, waste, or abuse to the state to justify the earlier $1.3 billion deferral announced in May, the same report noted. The states, meanwhile, argue the administration has turned routine program oversight into a political weapon.

The fight now moves to paperwork, and possibly court. CMS says California and Minnesota can get the money if they prove the claims follow federal rules. The governors, for their part, want CMS to back up its numbers and stop using Medicaid dollars as leverage against states that oppose the president.