The Centers for Medicare and Medicaid Services has moved to defer an additional $91 million in federal Medicaid funding to Minnesota, escalating a dispute over alleged fraud and oversight failures in the state’s health programs.
In a video announcement, CMS Administrator Dr. Mehmet Oz said the agency notified Gov. Tim Walz (D-MN) and state officials of the funding freeze following what he described as “serious red flags” in Minnesota’s administration of Medicaid funds.
The action builds on roughly $250 million in federal Medicaid payments that were already deferred earlier this year as part of a broader audit and review by the task force to eliminate fraud, headed by Vice President JD Vance.
“CMS is deferring an additional $91 million in federal Medicaid funding,” Oz said, calling the move “necessary” to ensure taxpayer dollars are properly spent.
Oz said the latest action stems from expanded scrutiny after a federal audit of the fourth quarter of fiscal 2025 identified possible irregularities. He pointed to multiple concerns, including alleged fraud tied to childcare programs, vulnerabilities exposed in prior state scandals, and claims that individuals improperly accessed benefits.
Oz said roughly $14 million in questionable spending involved individuals who were not eligible for coverage under federal standards.
The agency framed the deferral as temporary, pending further documentation from the state to verify claims.
“CMS will continue to use every tool available to safeguard Medicaid,” Oz said. “This program exists as a safeguard to protect our most vulnerable citizens, and we have an obligation to protect it, both for them and for every taxpayer who helps fund this beautiful program.”
Vance, amplifying the announcement on social media, said the move is part of the administration’s “war on fraud” effort, highlighting the cumulative funding freeze now exceeding $300 million.
WALZ SKIPS STATE OVERSIGHT HEARING ON FRAUD PREVENTION: ‘HE’S PROBABLY IN THE BASEMENT’
The move follows further investigations into Minnesota’s alleged widespread fraud. FBI agents raided two dozen facilities in the state on Tuesday, with many involved with Somali-linked businesses.
On the same day, Walz failed to appear for a Minnesota House oversight hearing. He was slated to testify about how his administration is actively combating fraud in the state’s taxpayer-funded childcare services.