Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. announced on July 21, 2026 that the current administration is now deferring over a billion dollars in Medicaid payments to California and Minnesota, both run by Democrats, due to high-risk claims that were flagged in its operation to crackdown on fraud.
The Centers for Medicare and Medicaid Services (CMS) is withholding $867.5 million from California and $199 million from Minnesota, HHS revealed in a press release. The agency then emphasized that the funds are being deferred, not cut, and that both states still have an opportunity to receive the cash by documenting that the claims meet federal Medicaid requirements.
“States that receive federal Medicaid funding must demonstrate that every dollar meets federal requirements,” Kennedy went on to say about the matter. “When they cannot, we will not release federal funds until they do.” During a news conference, Kennedy name dropped California Democratic Gov. Gavin Newsom and Minnesota Democratic Gov. Tim Walz, saying if they produced basic documentation showing the services were legitimate, they could recover the funds.
“If Governor Gavin Newsom or Governor Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent. And that’s common sense,” Kennedy said during the presser. He then revealed the Trump administration is utilizing artificial intelligence to identify suspicious spending.
According to a report from Breitbart News, Dr. Mehmet Oz, the administrator for CMS, was more blunt in his words concerning the deferred money. “CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” Oz said, going on to add that halting fraud “before the check clears” was saving taxpayers record-setting numbers.
Oz also revealed that the administration’s review uncovered repeated irregularities in both states, including the submission of claims for individuals that were dead. “If it smells like fraud, we’re not paying for it anymore,” he went on to add. The former television personality also said that California’s spending on in-home supportive services went up by 24% over the last two fiscal years.
Close to $646 million connected to in-home services and another $221 million associated with claims involving people with “unsatisfactory immigration status,” in California resulted in the Golden State being responsible for the lion’s share of the funding freeze. Oz then spoke on the funding freeze in Minnesota, saying that the state recently disenrolled 3,000 providers due to failed background checks, failed site visits, and other compliance issues, according to a report from Fox News.
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Kennedy then went on to totally shred the Biden administration’s oversight of Medicaid, making the case that former HHS Secretary Xavier Becerra weakened anti-fraud efforts by cutting program integrity staffing and allowing questionable payments to keep being made while trying to recoup the money later. “The scammers got paid. The taxpayers got stuck with these enormous bills,” Kennedy said. The freeze marks the second time the administration has moved against California and Minnesota in the “war on fraud.”