The Trump administration paused more than $1 billion in federal Medicaid payments to California and Minnesota on Tuesday, citing "suspected fraud and noncompliance," as Gov. Gavin Newsom (D-Calif.) accused Washington of targeting California "for political reasons."
Federal Officials Cite Suspicious Billing Patterns
The Centers for Medicare and Medicaid Services deferred about $867.5 million for California and $199 million for Minnesota while it reviews claims. Health Secretary Robert F. Kennedy Jr. said states must "provide documentation that these payments are legitimate" before CMS releases the money.
CMS Administrator Dr. Mehmet Oz said, "If it smells like fraud, we’re not paying for it anymore." Officials cited unusual billing patterns and rapid growth in California’s in-home care program but offered no concrete examples proving fraud. AP reported that some providers allegedly billed for several patients simultaneously or after a beneficiary’s death.
The action follows the administration’s earlier decision to defer $1.3 billion in California Medicaid funding and Oz’s order for all 50 states to strengthen Medicaid fraud controls. It remains unclear whether Tuesday’s deferrals overlap with earlier withheld funds.
California Democrats Reject Claims as Political
Newsom called the move a recycled political stunt. "California isn’t being targeted because Trump has evidence of fraud. We are being targeted for political reasons," he said, arguing that expanded home care saves taxpayer money by keeping seniors and people with disabilities out of costlier nursing homes. California said it would "collaborate with CMS in good faith efforts to combat fraud."
Today’s announcement from Dr. Oz is the same recycled political stunt we’ve seen before.
— Governor Newsom Press Office (@GovPressOffice) July 21, 2026
California isn’t being targeted because Trump has evidence of fraud. We are being targeted for political reasons — and because Dr. Oz doesn’t understand that we are *SAVING* taxpayers money… https://t.co/rYyTUSbLqC
State Sen. Scott Wiener (D-Calif.) in a statement said the administration was "blocking healthcare for vulnerable seniors for political reasons."
"This Administration’s claims about fraud are baseless," Wiener said. "When it comes to fraud, the call is coming from inside the house."
Deferrals Remain Temporary Pending State Documentation
Minnesota Gov. Tim Walz (D) similarly called the action political retribution. The administration had already halted some Minnesota reimbursements, while Minnesota says it has cooperated with CMS investigations.
This isn’t about fraud – it’s about cutting your healthcare so that Trump can afford the tax cuts he gave to billionaires.
— Governor Tim Walz (@GovTimWalz) July 21, 2026
They’re cutting more money in healthcare than they’ve prosecuted for fraud. The math doesn’t add up.https://t.co/2jl43FNdNU
The deferrals are temporary and do not change Medicaid eligibility or benefits. States can recover the money by documenting that their claims comply with federal rules.
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