RFK Jr. Halts Over $1 B in Medicaid Funds to California and Minnesota Amid Fraud Concerns

At a press briefing on Tuesday, Health and Human Services Secretary Robert F. Kennedy Jr. told reporters that the federal government is putting a temporary pause on more than $1 billion in Medicaid payments to California and Minnesota. The money isn’t being taken away forever—officials say the states can get it back if they can show every dollar meets federal rules.

CMS, the agency that runs Medicaid, is holding back about $867.5 million from California and roughly $199 million from Minnesota, according to a HHS news release. Kennedy emphasized that the deferral is a matter of “common sense”: if a state can’t document that services were legit, the federal share stays in the treasury.

Both governors were called out by name. “All Governor Newsom and Governor Walz need to do is hand over the basic paperwork proving the services were real,” Kennedy said, adding that the administration is now using artificial‑intelligence tools and advanced analytics to spot suspicious spending patterns.

Dr. Mehmet Oz, the CMS administrator, was less diplomatic. “CMS is done chasing down stolen and misused funds after they’ve already left the building,” he declared, noting that stopping fraud “before the check clears” is delivering record‑high savings for taxpayers.

The audit flagged several red‑flag areas. In California, the spotlight fell on in‑home care programs where spending growth was far above the national average. In Minnesota, claims in 14 high‑risk service categories were linked to providers previously flagged in program‑integrity reviews.

HHS isn’t stopping at paperwork. Under Kennedy’s direction, the department and its Office of Inspector General are using exclusion authorities to bar bad actors from returning to Medicare or Medicaid, in some cases permanently.

This move follows an April crackdown dubbed “Operation Never Say Die,” where the Justice Department charged eight people in a $50 million scheme that billed Medicare for hospice services that never existed. One operator in Anaheim, for example, discharged patients at an 85 percent rate—nearly five times the national average—and allegedly paid kickbacks in cash‑filled envelopes.

It’s also the second time the Trump administration has targeted these two states. Back in February, Vice President J.D. Vance announced a $259 million pause on Medicaid payments to Minnesota as part of a broader “war on fraud.”

Governor Tim Walz fired back, calling the action political retribution that punishes children, seniors, and people with disabilities rather than the fraudsters themselves. Federal prosecutors in Minnesota, however, estimate that total fraud in the state could top $1 billion.

For now, the money remains in limbo, and the two states face the pressure of proving their claims are clean. The administration says the approach is about protecting taxpayer dollars, but the debate over federal‑state relations and the human impact of the pause is far from settled.