Trump Deals Massive Blow to Minnesota, California for Alleged Fraud

The Trump administration is pausing more than a billion dollars in Medicaid funding to California and Minnesota because of suspected fraud.

“That includes more than $860 million for California and over $200 million for Minnesota,” Health and Human Services Secretary Robert F. Kennedy Jr. said Tuesday at a press conference. “If those states want that money, they need to provide documentation that these payments are legitimate.”

Kennedy also announced that he is expanding the authority of the Centers for Medicare & Medicaid Services and the Office of Inspector General to exclude bad actors from funding.

“We will be able to use that authority to remove bad actors from federal healthcare programs and, in many cases, to permanently ban them from returning,” Kennedy said.

According to a Department of Health and Human Services release, the Centers for Medicare & Medicaid Services identified “spending growth that far exceeded national trends” in California in-home care programs. In Minnesota, CMS found Medicaid claims “that require additional documentation, including expenditures linked to providers flagged through program integrity reviews and other claims with potential eligibility or billing concerns.”

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The secretary added that California and Minnesota can recover their funding if they “find basic documentation” revealing that questionable funding recipients “are legitimate and not fraudulent.” 

“We want them to come alongside us, federal partners, to ensure that Medicaid dollars go to the services that are required by real people with real problems getting real care,” said Dr. Mehmet Oz, CMS administrator.

The state Medicaid offices for California and Minnesota did not immediately respond to the Daily Signal’s request for comment. 

In response to a question from the Daily Signal, Oz said the Trump administration has been working with the administrations of California Gov. Gavin Newsom and Minnesota Gov. Tim Walz to guide them into compliance so the funds can be released. The Walz administration has already returned some requested documents, he said.

“The purpose is to give the money back if they can demonstrate that it’s truly being well spent,” he said. “We’re still working many issues with California. It’s much bigger program and lots of different kinds of issues happening here for you.”

Dan Brillman, director of the Center for Medicaid and CHIP Services, said the blue states need to do three things to once again receive funding.

“They need to produce complete documentation supporting the claims that were submitted,” he said. “Second, they need to validate that the beneficiaries were eligible, that providers were qualified to bill for Medicaid, services were actually delivered, claims complied with federal and state requirements, and third, most importantly … when states identify problems, they need to take action.”

Brillman said if the documentation supports the claims, federal funds will move forward. He said the administration’s goal is to make sure every dollar goes to where it’s supposed to go.

“If it does not, taxpayers should not be paying for these services or these claims,” he said. “This is exactly how the stewardship of taxpayer dollars is supposed to work.”