The Trump administration announced on Tuesday it is halting more than $1 billion in federal Medicaid payments to California and Minnesota. The Centers for Medicare and Medicaid Services (CMS) deferred approximately $867.5 million to California and $199 million to Minnesota after financial reviews uncovered unsupported claims related to in-home care programs, according to axios.com.
CMS identified spending growth in California's in-home care programs that exceeded national trends and flagged claims requiring additional documentation. In Minnesota, Medicaid claims in 14 service areas were scrutinized, including expenditures linked to providers previously flagged through program integrity reviews. The Department of Health and Human Services also plans to expand its authority to remove bad actors from federal health programs and potentially bar their return. CMS Administrator stated that the agency is no longer pursuing recovered funds after they have been misused.
This move continues the administration's crackdown on Medicaid fraud, particularly targeting blue states. It follows last year's enforcement surge in Minnesota justified by the state's inability to control fraud. The freeze underscores ongoing federal scrutiny of state safety net funding and aligns with broader efforts to tighten oversight of Medicaid expenditures. The deferred payments represent a significant portion of federal Medicaid funding to these states, highlighting the administration's focus on program integrity.
CMS's decision to withhold these funds will remain until California and Minnesota take additional steps to investigate and address the questionable claims. The freeze affects critical Medicaid payments totaling over $1 billion, with the agency emphasizing the need for stronger documentation and fraud prevention measures before releasing the funds.