Trump admin cites fraud in freezing Minnesota Medicaid funds
Add Axios as your preferred source to
see more of our stories on Google.
Vance, alongside Oz, speaks about combatting fraud. Photo: Oliver Contreras/AFP via Getty Images
The Trump administration is halting $259 million in Medicaid funding to Minnesota until the state takes steps to root out fraud in the program, Vice President JD Vance and Centers for Medicare and Medicaid Services administrator Mehmet Oz announced Wednesday.
Why it matters: CMS served notice that it plans similar freezes to other states' funding as part of the administration's crackdown on fraud.
- It also keeps a focus on Minnesota's safety net funding after the administration used the state's inability to rein in fraud as justification for launching the ICE enforcement surge that targeted the state's Somali community.
State of play: Wednesday's announcement came after Health and Human Services last month notified Minnesota that it would withhold about $515 million in federal Medicaid matching funds going forward on a quarterly basis until the state is in compliance with program integrity requirements.
- The agency said it would also review how the state was spending federal Medicaid funds.
- Minnesota has appealed that decision.
By the numbers: The Trump administration's review of Minnesota's Medicaid spending in the fourth quarter of fiscal year 2025 showed $243.8 million in potentially fraudulent claims, and $15.4 million in claims for individuals who don't have satisfactory immigration status, CMS said.
- "I feel quite confident we have the legal authority to do this," Vance told reporters Wednesday.
- Medicaid providers in Minnesota have already been paid by the state, and CMS is now withholding the funding it would pay to the state for that quarter, Vance said.
Democratic Gov. Tim Walz posted on X the action has nothing to do with fraud.
- "The agents Trump allegedly sent to investigate fraud are shooting protesters and arresting children. His DOJ is gutting the U.S. Attorney's Office and crippling their ability to prosecute fraud. And every week Trump pardons another fraudster," Walz wrote.
- Minnesota Attorney General Keith Ellison said in a statement that he would take the administration to court if it's found to be unlawfully withholding money meant for low-income residents on Medicaid.
Reality check: The Trump administration's fraud takedown is likely to remain more of a threat than "a tangible concern," Capstone analysts wrote in a Wednesday note.
- "Withholding the funding would be deeply unpopular with both voters and vulnerable Republican lawmakers, further entrenching the narrative that Republicans have no health care policy aims other than to cut services," the note says.
Zoom out: The Trump administration is also halting new Medicare enrollment for durable medical equipment suppliers for six months, officials announced.
- CMS stopped more than $1.5 billion in suspected fraudulent billing in the area last year, the agency said.
Editor's note: The story has been updated with Walz and Ellison's comments.
