Trump admin. suspends $1B in Medicaid payments over fraud claims

WASHINGTON (Gray DC) - Health and Human Services Secretary Robert F. Kennedy Jr. announced the suspension of more than $1 billion in combined Medicaid payments to Minnesota and California, citing alleged fraud. The move is the latest in a series of paused federal payments.

The administration said both states will receive their funding once they provide documentation showing the services in question are legitimate. About $870 million has been deferred from California and about $200 million from Minnesota.

“If it smells like fraud we’re not paying for it anymore. Today we’re deferring more than $1 billion,” said Dr. Mehmet Oz, head of the U.S. Centers for Medicare and Medicaid.

Kennedy said the path to releasing the funds is straightforward.

“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,” Kennedy said.

Administration investigators said billions of dollars are leaving the U.S. healthcare system through fraud, particularly in care provided by unlicensed individuals in unsupervised settings. Oz said the administration believes foreign organizations may be involved.

“We think there are foreign, multinational organizations involved in some of this weaponized fraud,” Oz said.

HHS Inspector General T. March Bell said the fraud backlog is affecting patient access to care.

“It’s like a declaration of independence on the stranglehold that fraud has had on our programs, our tax dollars and our beneficiaries,” Bell said.

Gov. Tim Walz (D-Minn.) accused the Trump administration of using bad math and said the efforts amount to cutting healthcare funding rather than combating fraud.