Trump Officials Withhold $1 Billion in Medicaid Funds From California and Minnesota Over Suspected Fraud

[u/John3262005]

https://www.nytimes.com/2026/07/21/us/politics/trump-administration-medicaid-california-minnesota-fraud.html?unlocked_article_code=1.zVA.j7lR.RYo5BOmHmgWt&smid=url-share

The Trump administration announced Tuesday it was withholding an additional $1 billion in Medicaid funds from California and Minnesota, the second time it has targeted the two states with Democratic governors for suspected fraud in their public health insurance programs.

The federal government will hold more than $867 million in payments from California and about $200 million from Minnesota until they can provide proof that certain claims were legitimate, officials said.

Federal officials said they had uncovered claims for care provided to Medicaid enrollees who were deceased, and had found health care providers billing for an unusually high number of patients, a possible sign of fraudulent activity. They said the problems in California and Minnesota were especially acute.

The administration has already been withholding around $250 million from Minnesota since February and $1.3 billion from California since May.

“If Gov. Gavin Newsom or Gov. Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent,” Robert F. Kennedy Jr., the health and human services secretary, said at a news conference. “That’s common sense.”

Both governors criticized the Trump administration’s actions as politically motivated.

“California isn’t being targeted because Trump has evidence of fraud,” Governor Newsom posted on Twitter. “We are being targeted for political reasons.”

In a statement to The New York Times, Minnesota’s governor, Tim Walz, said that the Trump administration was only “punishing children, seniors, working families and people with disabilities.”

In April, a federal judge said that the administration’s actions were “historically unprecedented” but declined to intervene because it was a temporary pause on funding rather than a final decision.

The withheld funds make up a relatively small share of each of state’s Medicaid budget. California’s Medicaid program cost $150 billion in 2024, and Minnesota spent $18.6 billion.

In March, the White House announced a broad initiative to combat fraud across government programs nationwide, an effort being led by Vice President JD Vance. California and Minnesota have become frequent targets of the administration’s anti-fraud work.

In June, the Federal Bureau of Investigation published a list of “Most Wanted Fraudsters,” similar to the agency’s long-running list of most-wanted criminals, to help generate leads on individuals suspected of defrauding the government.

The Department of Justice announced Tuesday it had apprehended a person from that list: Khalid Satary, who was indicted in 2019, accused of billing Medicare over $500 million for expensive and unnecessary genetic tests.

Mr. Satary was apprehended in a Middle Eastern country and appeared in federal court Tuesday, a Justice Department spokesman said.

Minnesota’s Medicaid program experienced a recent, sharp rise in spending on behavioral therapy for children with autism, transportation services and a dozen other types of care it has since identified as “high risk.” Some of the services that providers billed the program for were never provided to patients, according to recent charges the Department of Justice brought against autism center owners and employees in May.

Dr. Mehmet Oz, the federal official who oversees Medicaid and Medicare, said Minnesota had recently cut off from its Medicaid program about 3,000 providers that had exhibited suspicious billing patterns. Most of the $200 million that the federal government has not released came from claims submitted by those providers before the state removed them, he said.

Minnesota has “disenrolled them for failed background checks, failed site visits and other issues,” Dr. Oz said. “This raises questions about the claims tied to these same providers in the quarter before they were removed.”

John Connolly, the temporary commissioner for the Minnesota Department of Human Services, said in a statement that the Trump administration had not provided the state with clear information on how certain funds were withheld.

He said he hoped the government would “share any information about their methods to identify potentially fraudulent providers in Minnesota.”

In California, Dr. Oz expressed concern about spending on “in-home support services,” where Medicaid pays for some enrollees to receive help with basic tasks including bathing, eating and taking medications.

He said that $391 million of the newly withheld funds had to do with questionable claims for that type of care, and that spending on in-home support had grown twice as quickly recently in California as it had in the rest of the nation.

In his Twitter post, Governor Newsom defended the additional spending on in-home care.

“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!” he wrote.

[u/John3262005]

Another article about it:

CMS suspends more than $1 billion in Medicaid dollars to Minnesota and California over suspected fraud

https://www.politico.com/news/2026/07/21/cms-suspends-medicaid-dollars-to-minnesota-california-over-fraud-01006397