Vance Announces $259M Medicaid Funding Pause to Minnesota Over Fraud Probe/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Vice President JD Vance announced a temporary halt of $259.5 million in Medicaid funding to Minnesota over alleged fraud concerns. State officials, including Gov. Tim Walz and Attorney General Keith Ellison, strongly disputed the move. The action is part of a broader Trump administration campaign targeting public benefits fraud nationwide.
Vance Announces Medicaid Funding Pause to Minnesota Quick Looks
- JD Vance says $259.5 million in Medicaid payments paused
- CMS cites unsupported or potentially fraudulent claims
- Minnesota leaders call move political retaliation
- Gov. Tim Walz given 60 days to propose corrective plan
- Attorney General Keith Ellison warns of legal action
- CMS threatens up to $1 billion in deferred funds
- Broader federal crackdown expands to Medicare fraud
Deep Look: Vance Announces $259M Medicaid Funding Pause to Minnesota Over Fraud Probe
WASHINGTON — Vice President JD Vance announced Wednesday that the Trump administration is temporarily pausing certain Medicaid payments to Minnesota, citing concerns about fraud and improper claims within the state’s health care system.
Standing alongside Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services (CMS), Vance said the federal government would withhold $259.5 million in Medicaid funds until Minnesota provides a comprehensive corrective action plan to address alleged irregularities.
“We are taking this step to ensure that the state of Minnesota fulfills its obligation to safeguard taxpayer dollars,” Vance said, framing the decision as part of a broader national effort to eliminate waste and fraud in public benefit programs.
Oz characterized individuals accused of exploiting Medicaid as “self-serving scoundrels” and emphasized that the action was directed at state leadership rather than residents.
“This is not a problem with the people of Minnesota,” Oz said. “It’s a problem with leadership that has failed to preserve Medicaid funds responsibly.”
Details of the Funding Freeze
According to CMS, the paused funds include approximately $244 million in claims considered unsupported or potentially fraudulent, along with about $15 million tied to claims involving individuals lacking satisfactory immigration status.
Under federal law, undocumented immigrants and certain categories of lawfully present immigrants are not eligible to enroll in Medicaid. CMS officials stated that if Minnesota fails to address federal concerns within 60 days, the agency could defer as much as $1 billion in federal funding over the next year.
Oz said CMS will review a sample of claims and may request additional documentation to verify compliance with federal standards.
In addition to Medicaid enforcement, Oz announced that CMS will temporarily block new Medicare enrollments for suppliers of durable medical equipment, prosthetics, orthotics, and related supplies for six months as part of a separate anti-fraud measure.
An inspector general report from the U.S. Department of Health and Human Services previously found that Medicare improperly paid nearly $23 million for durable medical equipment between 2018 and 2024, though most of those payments occurred before 2020 reforms were implemented.
Minnesota Officials Push Back
Minnesota Democratic Gov. Tim Walz sharply criticized the administration’s move, calling it politically motivated.
“This is a campaign of retribution,” Walz said in social media posts. “The federal government is weaponizing its authority to punish blue states like Minnesota.”
Walz argued the funding pause would harm veterans, families with young children, individuals with disabilities, and working-class residents who rely on Medicaid services.
Minnesota Attorney General Keith Ellison also rejected the allegations. In a statement, he said his office has secured more than 300 Medicaid fraud convictions since 2019 and recently requested additional resources from the state legislature to further combat fraud.
“If the federal government is unlawfully withholding money meant for the 1.2 million low-income Minnesotans on Medicaid, we will see them in court,” Ellison said.
Minnesota officials previously appealed administrative plans by CMS to freeze portions of high-risk Medicaid program payments, estimating that extended cuts could total more than $2 billion annually.
Broader Federal Crackdown
The action against Minnesota comes amid a nationwide “war on fraud” initiative announced by President Donald Trump during his State of the Union address. Trump tasked Vance with spearheading the campaign, which includes new oversight measures and coordination across federal agencies.
The administration recently nominated Colin McDonald to lead a newly formed Justice Department division focused exclusively on rooting out fraud in federal programs.
In addition, federal agencies have increased scrutiny of financial transfers and nonprofit organizations linked to fraud investigations in Minnesota, including cases involving pandemic relief funds for school meal programs. Prosecutors allege that a nonprofit called Feeding Our Future orchestrated a scheme involving approximately $300 million in stolen funds.
The heightened enforcement efforts have coincided with increased immigration crackdowns in Minneapolis, particularly within the Somali community, sparking protests and legal challenges.
Last December, the U.S. Treasury Department imposed additional verification requirements on money wire services sending funds to Somalia.
Legal and Political Implications
Recent court rulings have complicated the administration’s broader funding cutoffs to Democratic-led states. One federal judge ordered the continuation of payments to Minnesota and several other states after the administration claimed it had reason to believe benefits were being granted to individuals in the country unlawfully.
Another federal judge blocked efforts to suspend administrative funding for states that declined to share data on food aid applicants under the Supplemental Nutrition Assistance Program.
Health policy experts say the CMS decision to defer Medicaid funding is highly unusual. Akeiisa Coleman of the Commonwealth Fund noted that if Minnesota lacks sufficient funds to cover the withheld amounts, providers could face payment delays, potentially disrupting care delivery.
As Minnesota prepares its response, the dispute highlights an escalating conflict between the Trump administration and Democratic-led states over federal authority, immigration enforcement, and oversight of public assistance programs.
Whether the funding freeze withstands legal scrutiny — and how it affects Medicaid recipients — may shape the next phase of the administration’s broader anti-fraud campaign.
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