The Trump administration announced on Tuesday it would withhold more than $1 billion in Medicaid payments to California and Minnesota amid concerns over potentially fraudulent claims in their public health insurance programs. The federal government is deferring approximately $867 million in payments to California and about $200 million to Minnesota until the states provide documentation verifying the legitimacy of certain claims, officials said.

Health and Human Services Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz described the move as part of a broader effort to combat Medicaid fraud. Kennedy emphasized that the funds would be released once the states submit basic proof that the services billed were legitimate. “If Gov. Gavin Newsom or Gov. Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent,” Kennedy said during a news conference.

Federal officials pointed to specific issues, including claims for services provided to deceased Medicaid enrollees and providers billing for an unusually high number of patients. In Minnesota, spending on behavioral therapies for children with autism, transportation services, and other types of care had risen sharply. Several providers were removed from the Medicaid program due to suspicious billing patterns, with much of the frozen funding tied to claims submitted prior to those removals. In California, concerns were raised about rapid growth in spending on in-home support services, which help enrollees with daily tasks such as bathing and eating. Officials flagged $391 million of the withheld funds as associated with questionable claims in this category.

California and Minnesota, both governed by Democrats—Governor Gavin Newsom and Governor Tim Walz—have criticized the administration's actions as politically motivated. Newsom called the federal response a “recycled political stunt” and denied it was based on evidence of fraud, asserting that California’s Medicaid efforts save taxpayers money by supporting seniors and people with disabilities in home care rather than more expensive nursing homes. Walz’s office said the administration’s approach unfairly punishes vulnerable populations, including children, seniors, working families, and people with disabilities.

This latest withholding follows previous freezes earlier in the year. Minnesota has had about $350 million frozen in related actions, including $260 million and $91 million in earlier deferrals. Officials from Minnesota’s Department of Human Services said they have implemented new measures to strengthen fraud prevention, such as pre-payment review and revalidating providers.

The administration did not specify why California and Minnesota were singled out, though they have frequently been focal points in the government’s anti-fraud initiatives. In March, Vice President JD Vance launched a broad initiative aimed at reducing fraud across federal programs nationwide. The Department of Justice also announced the recent apprehension of Khalid Satary, accused of orchestrating a multimillion-dollar Medicare billing fraud.

While the withheld amounts represent a small fraction of the states’ overall Medicaid budgets—California’s spending on Medicaid is projected at $150 billion for 2024 and Minnesota’s at $18.6 billion—the federal government’s actions underscore heightened scrutiny on program integrity amid broader efforts to curtail government fraud.