Trump Administration Pauses $1 Billion in Medicaid Payments to CA and MN

Trump Administration Pauses $1 Billion in Medicaid Payments

According to the Centers for Medicare and Medicaid Services (CMS), the agency is deferring $867.5 million in payments to California and $199 million to Minnesota. Officials emphasized that the funding is not being permanently cut, but rather withheld until the states provide evidence that their expenditures meet federal standards.

Basis for the Payment Deferrals

CMS Administrator Dr. Mehmet Oz stated that the move is part of a new approach to program integrity. He noted that the agency is moving away from attempting to recover misused funds after they have already been distributed.

* California: The administration identified spending growth in certain in-home care programs that significantly outpaced national trends, prompting the need for further review of the claims. * Minnesota: The pause affects 14 high-risk service areas identified by the state’s own legislative auditor as vulnerable to fraud. Officials also cited expenditures linked to providers previously flagged through program integrity reviews.

These actions follow a broader effort by the Trump administration to monitor and restrict federal funds in Democratic-led states. Earlier this year, CMS announced a $1.3 billion deferral for California, which officials described at the time as the largest in the agency’s history. In Minnesota, the administration has previously withheld $243 million in Medicaid funds and an additional $91 million in July, citing similar concerns regarding fraud vulnerabilities and program oversight.

Broader Anti-Fraud Campaign

The current payment pauses are part of an “unrelenting” campaign spearheaded by Vice President JD Vance, Secretary Kennedy, and Administrator Oz to target potential abuses in federal programs. This initiative includes the White House Task Force to Eliminate Fraud, which was established earlier this year to address waste and abuse in Medicare, Medicaid, and other public assistance programs.

As part of this expanded enforcement, Secretary Kennedy announced that he is increasing the exclusion authority for both CMS and the HHS Office of the Inspector General. This expansion allows the agencies to remove “bad actors” from federal healthcare programs, with the potential to permanently ban them from future participation.

State Responses and Legal Context

The administration’s focus on Minnesota has been particularly intense, following reports of fraud schemes involving pandemic-era benefits and social service programs. While the state has faced scrutiny, the Minnesota Department of Human Services has maintained that it is taking aggressive action to stop fraud and recoup improper payments.

In response to previous funding restrictions, Minnesota officials have argued that the administration’s actions represent a campaign of retribution. Minnesota previously filed a lawsuit against the administration regarding earlier funding freezes, warning that the loss of federal support could threaten healthcare access for low-income families.

Despite the administration’s claims, officials in both states have faced challenges in satisfying federal documentation requirements. CMS has stated it is offering support to help states address these vulnerabilities, but maintains that it will not release funds until the specific “high-risk” claims are validated.

For more information on the administration’s healthcare policy and agency actions, see coverage from Reuters, Axios, and cbsnews.com.