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The Trump administration is freezing more than $1 billion in federal Medicaid funding to California and Minnesota over suspected fraud, with HHS Secretary Robert F. Kennedy Jr. warning Tuesday that states won’t receive another taxpayer dollar until they prove the payments were legitimate.
“If Governor Gavin Newsom or Governor Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent. And that’s common sense,” Kennedy said Tuesday during a press conference on the announcement.
The Centers for Medicare & Medicaid Services (CMS) is withholding roughly $867 million from California and more than $200 million from Minnesota while federal officials review what they described as high-risk Medicaid claims and documentation deficiencies.
TREASURY INTERCEPTS NEARLY $99M IN FEDERAL PAYMENTS TO DECEASED INDIVIDUALS UNDER TRUMP FRAUD ORDER
Health and Human Services Secretary Robert F. Kennedy Jr. stands behind President Donald Trump as he points while delivering remarks about health care costs and affordability from an auditorium on the White House campus in Washington, D.C., U.S., May 18, 2026. (REUTERS/Jonathan Ernst/File Photo)
Kennedy said the Trump administration is using artificial intelligence, advanced analytics and traditional financial reviews to identify suspicious spending, adding that states seeking federal Medicaid funding must demonstrate the payments comply with federal law.
“We are not sending Medicaid and Medicare dollars out the door until we have confidence that they are being spent lawfully and appropriately,” Kennedy said.
CMS Administrator Dr. Mehmet Oz said the administration’s review uncovered repeated irregularities in both states, including claims submitted for deceased beneficiaries, providers previously flagged through fraud detection systems and spending patterns federal officials said were significant outliers.
“If it smells like fraud, we’re not paying for it anymore,” Oz said.
Secretary of Health and Human Services (HHS) Robert F. Kennedy Jr. and Center for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz attend an event about nutrition education, at the U.S. Department of Health and Human Services in Washington, D.C., U.S., June 8, 2026. (REUTERS/Kylie Cooper)
According to CMS, California accounted for the largest share of the funding freeze, with roughly $646 million tied to in-home supportive services and another $221 million associated with claims involving individuals with what Oz described as “unsatisfactory immigration status.”
Oz said California’s spending on in-home supportive services increased 24% over the past two federal fiscal years — roughly double the national average — and said the state has yet to adequately document hundreds of millions of dollars in claims.
WATCH: DR. OZ SAYS NEWSOM, OTHER BLUE STATES HAVE TURNED MEDICAID FRAUD INTO A ‘FEATURE’
In Minnesota, officials said the state was asked to review providers participating in 14 high-risk Medicaid service categories, including personal care and home-based services. Oz said Minnesota recently disenrolled roughly 3,000 providers after failed background checks, failed site visits and other compliance issues, prompting CMS to review nearly $200 million in claims tied to those providers.
Federal officials also cited millions of dollars in claims billed for services allegedly provided to beneficiaries after their deaths, calling such payments a major red flag.
Kennedy said that California Gov. Gavin Newsom, pictured left, and Minnesota Gov. Tim Walz, right, must provide documentation showing that the health services were legitimate before Medicaid payments would resume. (Reuters/Tim Evans; Tom Williams/CQ-Roll Call, Inc via Getty Images, File)
Kennedy also announced that HHS is expanding exclusion authority, allowing both CMS and the HHS Office of Inspector General to remove individuals and entities found to have committed fraud from federal healthcare programs, with some offenders facing permanent bans.
Kennedy sharply criticized the Biden administration’s oversight of Medicaid, arguing former HHS Secretary Xavier Becerra weakened anti-fraud efforts by reducing program integrity staffing and allowing questionable payments to continue while attempting to recover the money later.
“The scammers got paid. The taxpayers got stuck with these enormous bills,” Kennedy said.
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The administration said California and Minnesota can receive the withheld funding if they provide documentation showing the payments were legitimate.
“We have a duty to stop the payments, demand answers, and then follow the evidence wherever it leads,” Kennedy said.
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