Vice President JD Vance and CMS Administrator Dr. Mehmet Oz say funding pause targets alleged unsupported claims and immigration-related eligibility concerns, while Gov. Tim Walz calls the move political retaliation.
By yourNEWS Media Newsroom
Vice President JD Vance announced Wednesday that the Trump administration will temporarily pause $259.5 million in federal Medicaid funding to Minnesota, citing concerns over fraud and unsupported claims within the state’s program.
Vance made the announcement alongside Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services (CMS), describing the move as part of a broader national effort to crack down on misuse of public funds.
“We’re temporarily halting these funds in order to ensure that the state of Minnesota takes its obligations seriously to be good stewards of the American people’s tax money,” Vance said.
Oz said the withheld funds include approximately $244 million in unsupported or potentially fraudulent Medicaid claims and about $15 million in claims involving “individuals lacking a satisfactory immigration status.” Federal law prohibits individuals living in the United States illegally, as well as certain lawfully present immigrants, from enrolling in Medicaid programs that provide near-free health coverage.
“This is not a problem with the people of Minnesota, it’s a problem with the leadership of Minnesota and other states who do not take Medicaid preservation seriously,” Oz said, referring to those committing fraud as “self-serving scoundrels.”
Oz said CMS will release the funds once Minnesota submits and implements a comprehensive corrective action plan addressing the alleged deficiencies. Gov. Tim Walz will have 60 days to respond. Oz advised concerned health care providers and beneficiaries to contact the governor’s office.
In a pair of social media posts, Walz rejected the administration’s explanation. “This is a campaign of retribution. Trump is weaponizing the entirety of the federal government to punish blue states like Minnesota,” Walz said. “These cuts will be devastating for veterans, families with young kids, folks with disabilities, and working people across our state.”
A spokesperson for Minnesota Attorney General Keith Ellison referred inquiries to the state Department of Human Services, which administers Medicaid. The department said it was preparing a statement. Earlier in the day, Ellison held a news conference promoting legislation that would expand staffing and legal tools to combat Medicaid fraud.
CMS stated that if Minnesota fails to meet federal requirements, the agency may defer up to $1 billion in federal funds to the state over the next year. CMS spokesperson Catherine Howden said the review process would include sampling claims for compliance with federal standards and potentially requesting additional documentation.
Akeiisa Coleman, senior program officer for Medicaid at the Commonwealth Fund, described the funding deferral as a “highly unusual step.” She said that if the state cannot cover the gap, provider payments could be interrupted, potentially affecting patient care.
The funding pause follows a series of high-profile fraud cases in Minnesota, including the nonprofit Feeding Our Future, which prosecutors allege diverted $300 million in pandemic aid intended for school meals. Federal authorities have also scrutinized day care centers run by Somali residents in Minneapolis, prompting an immigration enforcement crackdown that led to protests.
During his State of the Union address Tuesday, President Donald Trump announced that Vance would lead a national “war on fraud.” Trump also nominated Colin McDonald to serve as assistant attorney general overseeing a new Justice Department division focused on combating fraud.
Oz said CMS is simultaneously implementing additional safeguards in Medicare. For six months, the agency will block new Medicare enrollments for suppliers of durable medical equipment, prosthetics, orthotics and related supplies. The Office of Inspector General for the U.S. Department of Health and Human Services found that Medicare improperly paid nearly $23 million for such equipment between 2018 and 2024, though most improper payments occurred before reforms implemented in January 2020.
Oz also unveiled a public crowdsourcing initiative designed to solicit tips and recommendations from Americans. “All of us are smarter than any one of us,” he said.
The administration has previously threatened to withhold funding from several Democrat-led states, including California, Colorado, Illinois and New York, over alleged improper benefit payments. One federal judge blocked those actions and ordered payments to continue, while another ruled against cutting administrative funding for 22 states that declined to share certain food assistance data.
In January, CMS notified Minnesota that it intended to freeze portions of Medicaid payments deemed high-risk. State officials said at the time that the reductions could total more than $2 billion annually if sustained and filed an administrative appeal.
The latest funding pause marks a significant escalation in the administration’s national anti-fraud initiative and sets up a potential legal and political confrontation between federal officials and Minnesota’s state government in the weeks ahead.
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