The Trump administration has temporarily suspended more than $1 billion in Medicaid funding allocated to California and Minnesota as federal officials investigate what they describe as significant concerns over improper payments and potential fraud.
Speaking at a press briefing on Tuesday, Health and Human Services Secretary Robert F. Kennedy Jr. announced that approximately $867 million in Medicaid funding for California and more than $200 million for Minnesota have been placed on hold pending further review.
According to Kennedy, the administration identified irregularities using a combination of artificial intelligence, advanced data analysis, and traditional financial auditing methods. He said the funds could be released if both states provide documentation proving that the payments were made legitimately and comply with federal Medicaid requirements.
Officials from the Centers for Medicare and Medicaid Services (CMS) outlined several areas of concern uncovered during the review.
CMS Administrator Dr. Mehmet Oz said investigators found issues within several high-risk Medicaid programs in Minnesota, including home health and personal care services. Some payments reportedly involved documentation problems, with a small portion linked to claims submitted for individuals who were already deceased.
In California, federal officials highlighted a sharp increase in spending on in-home care services over the past two years. According to CMS, spending in this area grew significantly faster than the national average, prompting additional scrutiny. Investigators also pointed to billing submitted long after services were allegedly provided and claims that appeared to overlap across multiple patients at the same time.
Federal officials further stated that questions remain regarding eligibility verification for some Medicaid recipients, adding that these issues are still under review.
Kennedy said the Department of Health and Human Services is also expanding its authority to suspend or exclude organizations and individuals suspected of fraudulent activity from participating in federal healthcare programs.
He emphasized that California and Minnesota have the opportunity to regain access to the suspended funding by submitting documentation demonstrating that beneficiaries were eligible, services were properly delivered, and any improper payments are addressed.
CMS Deputy Administrator Dan Brillman said protecting Medicaid funds is essential to ensuring that resources remain available for vulnerable Americans, including children with complex medical conditions, adults with disabilities, veterans, and others who depend on home and community-based healthcare services.
Officials confirmed that Minnesota has already submitted documents for federal review, while California's larger Medicaid system requires a more extensive investigation before any final decision is made.
The administration says the funding pause is part of a broader effort to strengthen oversight, reduce waste, and prevent taxpayer money from being lost through fraud or abuse within federal healthcare programs.