The Trump administration is asking California and Minnesota to work with the federal government to crack down on Medicaid fraud, and it's stopping payouts to those states in the meantime.
The announcement comes amid a broader effort by the administration to catch fraudulent uses of taxpayer dollars, as fraud cases in Minnesota have gained national attention, including the $250 million Feeding Our Future fraud scandal.
“[Centers for Medicare & Medicaid Services] is pausing more than a billion dollars in federal Medicaid payments to California and to Minnesota because of suspected fraud and noncompliance,” Health and Human Services Secretary Robert F. Kennedy Jr. said at a news conference on Tuesday.
.@AFergusonFTC: All of these benefit programs were designed for a high-trust society. Our society has disintegrated from the high-trust society that it has been, and the only way that we can restore that high trust is to ensure that the money goes to people who actually need… https://t.co/PG2aDYzS5Q pic.twitter.com/3tmF3ZuzFu
— Rapid Response 47 (@RapidResponse47) July 21, 2026
“That includes more than $867 million for California and over $200 million for Minnesota. If those states want that money, they need to provide documentation that these payments are legitimate,” Kennedy added.
Dr. Mehmet Oz, CMS Administrator, said 14 programs in Minnesota are considered “high-risk” in Minnesota, and said that in California, “spending in these in-home programs went up 24%” in the last two fiscal years.
“The rest of the country's average is about 12%. So California increased spending at twice the rate of the average of the rest of the entire nation. That doesn't make sense,” Oz said.
“In Minnesota and California, our reviews are going back to just over the last few years, turn 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," he said, adding that spotting consistent "anomalies" at the state-level requires a pause in accordance with federal law.
.@DrOzCMS: “In Minnesota and California, our reviews are going back to just over the last few years, turn 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.” pic.twitter.com/wuZk7yAYb7
— HHS Rapid Response (@HHSResponse) July 21, 2026
“We’re not gonna pay for healthcare for dead people,” Oz also noted, referencing the potential issue of payments going for care of deceased patients.
In other departments, the Minnesota Health Care Fraud Takedown from the Justice Department announced in May that 15 individuals were charged in schemes resulting in roughly $90 million in “intended loss.”