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

At a brisk Tuesday press conference, Health and Human Services Secretary Robert F. Kennedy Jr. told reporters that the federal government is putting a temporary freeze on roughly $1.07 billion in Medicaid payments earmarked for two Democratic‑run states. The money isn’t being taken away, he stressed, it’s simply being held back until the states can show, in plain paperwork, that every dollar was spent the right way.

“When you get federal dollars, you have to demonstrate that every single dollar meets the rules,” Kennedy said, his tone a blend of admonishment and, frankly, a little impatience. “If a state can’t do that, we won’t release the funds until they can.” He pointed directly at Governor Gavin Newsom of California and Governor Tim Walz of Minnesota, suggesting that what the federal government needs is “basic documentation” – essentially, evidence that the services billed were legitimate.

The Centers for Medicare & Medicaid Services (CMS) is withholding about $867.5 million from California and $199.5 million from Minnesota, according to a news release from HHS. The agency says the hold‑up stems from a series of “high‑risk” claims uncovered via artificial‑intelligence analytics and other advanced data‑mining tools. In California, the red flag was an unusually rapid rise in in‑home care spending that outpaced national trends. In Minnesota, 14 service categories tied to providers already on the radar of past program‑integrity reviews raised suspicion.

CMS Administrator Dr. Mehmet Oz didn’t mince words. “We’re done chasing down stolen and misused funds after they’ve already left the building,” he declared. “Stopping fraud before the check clears is saving taxpayers record‑high amounts of money.” The message was clear: the federal government is stepping up its game, using exclusion authority to bar repeat offenders from ever touching Medicare or Medicaid again.

The crackdown is not happening in a vacuum. Just two months earlier, the Justice Department dismantled a $50 million “Operation Never Say Die” scheme that involved sham hospices billing Medicare for patients who weren’t even terminally ill. One Anaheim‑based operator allegedly discharged patients at a non‑death rate of 85 percent—roughly five times the national average—while slipping cash kickbacks into envelopes.

Minnesota’s own U.S. attorney estimates that total fraud in the state could top $1 billion, a figure that adds weight to the federal hold. Earlier this year, Vice President J.D. Vance announced a $259 million pause on Medicaid disbursements to Minnesota as part of a broader “war on fraud.” Governor Walz immediately accused the administration of political retaliation, claiming the move punishes children, seniors and people with disabilities rather than the actual fraudsters.

For now, the ball is in the states’ courts. Both California and Minnesota have until they can provide the requested documentation to have the funds released. Until then, the billions sit in limbo, a stark reminder that federal money comes with strings attached, and that the government is getting increasingly tech‑savvy about catching waste before it drains the taxpayer.