On July 21, 2026, HHS Secretary Robert F. Kennedy Jr. and Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz announced that the federal government was deferring more than $1 billion in Medicaid payments to California and Minnesota, citing suspected fraud in high-risk programs, primarily in-home and personal care services. The Centers for Medicare and Medicaid Services, known as CMS, is the federal agency within the Department of Health and Human Services responsible for administering both programs. The administration deferred approximately $867.5 million in funding to California and $199 million to Minnesota. Neither Kennedy nor Oz presented new evidence of fraud at the announcement. Federal officials said they used advanced data analytics to flag suspicious claims in both states, but the underlying data was not released publicly. Governor Gavin Newsom of California called the announcement a recycled political stunt. Governor Tim Walz of Minnesota said the administration was cutting more in healthcare than it had prosecuted for fraud. The administration warned other states they could be next.
What Is Being Frozen and Who It Affects
Medicaid is the joint federal-state health insurance program that covers roughly 80 million Americans, primarily low-income adults, children, elderly people, and people with disabilities. The federal government matches state spending on Medicaid at rates that vary by state. The frozen payments are federal matching funds — money the federal government sends to states to reimburse them for Medicaid services already delivered. In California, the freeze targets the state’s In-Home Supportive Services program, known as IHSS, which provides assistance with daily living activities to approximately 900,000 seniors and people with disabilities who would otherwise require nursing home placement or hospitalization. California’s IHSS spending grew 24 percent over two years, double the national rate, accounting for $391 million of the deferred funds. Federal officials also cited claims associated with deceased beneficiaries and claims where a beneficiary’s immigration status could not be verified. In Minnesota, the freeze targeted 14 programs flagged as high-risk, mostly personal care assistance and home health services. Officials cited claims for services allegedly provided to deceased individuals and documentation gaps in provider billing records.
No New Proof of Fraud Was Presented
The administration’s announcement was notable for what it did not include. Neither Kennedy nor Oz produced new evidence or documentation of actual fraudulent transactions at the press conference. Officials said they identified the claims using advanced data analytics that flagged patterns consistent with potential fraud, including billing anomalies, claims for deceased recipients, and rapid program growth. But data analytics flags are not findings of fraud. They identify claims for review, not confirmed cases of theft or abuse. The KFF, a nonpartisan health policy research organization, noted that CMS’s approach to flagging high-risk claims represents a new and more aggressive posture toward states, one that involves pausing funds first and demanding documentation afterward, rather than investigating and then acting. Legal experts noted that the administration’s authority to unilaterally freeze approved Medicaid matching funds raises significant questions about whether the action is consistent with the terms of the Medicaid statute, which generally requires notice and a hearing before federal payments are withheld.
Who Kennedy and Oz Are
Robert F. Kennedy Jr. was confirmed as Secretary of Health and Human Services in February 2025. Before his cabinet appointment, he was best known as the founder of Children’s Health Defense, an organization that promoted skepticism of vaccines and disputed mainstream public health consensus on a range of medical topics. His confirmation was controversial among public health experts. Dr. Mehmet Oz, the television personality formerly known for his daytime talk show, was appointed as CMS Administrator and confirmed by the Senate in 2025. CMS administers Medicare, Medicaid, the Children’s Health Insurance Program known as CHIP, and the federal marketplace for health insurance under the Affordable Care Act. Oz has no prior government or public health administrative experience. Together, Kennedy and Oz oversee federal health programs that cover more than 150 million Americans.
What the Governors Said
Governor Gavin Newsom of California said through his press office that the announcement was the same recycled political stunt the state had seen before, argued that California was being targeted for political reasons rather than evidence of fraud, and said the state would collaborate with CMS in good faith. His office said the freeze would harm seniors and people with disabilities who depend on in-home services. Governor Tim Walz of Minnesota was more direct. He said the Trump administration was cutting more money in healthcare than it had actually prosecuted for fraud, and that the freeze was not aimed at fraudsters but at children, seniors, working families, and people with disabilities. Walz said the cuts were about redirecting healthcare money to pay for the tax cuts the administration had given to billionaires, a reference to the fiscal impact of the One Big Beautiful Bill, the sweeping tax and spending legislation signed by Trump in 2025. Both governors said their states would work to provide the documentation the federal government was requesting in order to have the funds released.
The Administration’s Warning to Other States
The administration made clear the California and Minnesota freezes are not isolated. Kennedy and Oz said similar actions could be taken against other states if they do not aggressively prosecute Medicaid fraud. As of March 2026, CMS had sent formal letters to four additional states requesting information about their program integrity practices. Eleven states had received letters from the House Committee on Energy and Commerce raising concerns about their Medicaid programs. The administration’s announcement did not name the four states under CMS review. California and Minnesota are both Democratic-led states that have historically expanded Medicaid programs broadly under the Affordable Care Act. The administration cited California’s recent decision to extend Medicaid eligibility to undocumented adult residents as a contributing concern in its review of that state’s program.