The Trump administration has frozen $259 million in Medicaid funding to Minnesota as it tightens enforcement over alleged fraud in the state’s benefits system.
Vice President JD Vance and CMS Administrator Mehmet Oz said the funds will remain withheld until Minnesota implements what federal officials call meaningful program integrity reforms.
The administration warned this action is not isolated and indicated similar freezes could be applied to other states to curb Medicaid abuse.
The move followed an HHS notice that roughly $515 million in federal Medicaid matching funds would be withheld on a quarterly basis until the state meets federal program integrity requirements and triggered a review of Minnesota’s federal Medicaid spending.
Minnesota has appealed the decision.
CMS reported that a review of fourth-quarter fiscal year 2025 spending identified $243.8 million in potentially fraudulent claims and $15.4 million tied to individuals lacking satisfactory immigration status.
“I feel quite confident we have the legal authority to do this,” Vance told reporters Wednesday.
Under the arrangement, Minnesota has already paid providers while the federal government is withholding reimbursement for that quarter, according to Vance.
The freeze is expected to fuel a political clash with Minnesota Democrats who insist the measure is politically motivated rather than an enforcement step.
Gov. Tim Walz lashed out on X, writing that the action has nothing to do with actual 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.
Attorney General Keith Ellison threatened legal action and said he would sue if the administration is found to be unlawfully withholding money meant for low-income Medicaid recipients.
The White House framed the freeze as evidence it is serious about policing abuse in federal health programs, especially where oversight appears weak.
CMS also announced a six-month halt on new Medicare enrollment for durable medical equipment suppliers as part of broader efforts to curb fraud in that sector.
CMS said it stopped more than $1.5 billion in suspected fraudulent billing in that category last year alone.
