Medicaid Payments Delayed for California and Minnesota
On Tuesday, Health and Human Services Secretary Robert F. Kennedy Jr. revealed that more than $1 billion in Medicaid payments to California and Minnesota, both led by Democrats, will be postponed. This decision stems from concerns regarding high-risk insurance claims related to a recent fraud crackdown.
The Centers for Medicare and Medicaid Services (CMS) is specifically withholding about $867.5 million from California and $199 million from Minnesota. The department clarified that this funding is merely deferred, meaning it can be reclaimed if the states prove their claims align with federal Medicaid standards.
“States receiving federal Medicaid funding need to ensure that every dollar aligns with federal guidelines,” Kennedy mentioned. “If we can’t verify that, then we won’t release federal funds until we can.”
During a press conference, Kennedy pointed out that Governor Gavin Newsom and Governor Tim Walz have been quite clear, suggesting that providing basic documentation of legitimate services should suffice. This, he termed “common sense.” He went on to explain that the government has utilized artificial intelligence and advanced analytics to pinpoint suspicious spending.
CMS Administrator Dr. Mehmet Oz was quite straightforward in his remarks.
“CMS no longer tries to track stolen or misappropriated funds after they’ve left our facilities,” Oz stated, explaining that preventing fraud “before the payment is issued” has led to substantial savings for taxpayers.
The department’s investigation revealed issues with California’s home care program, where spending increases have significantly exceeded national trends. Additionally, in Minnesota, claims in 14 high-risk service areas were found to be associated with healthcare providers who had previously raised red flags during integrity reviews. Under President Kennedy’s guidance, HHS and its Office of Inspector General also use their exclusion powers to remove unscrupulous actors from Medicare and Medicaid, often permanently barring their return.
This latest action comes on the heels of the Justice Department’s earlier actions in April against eight individuals involved in a $50 million healthcare fraud scheme, termed “Operation Never Say Die.” Those charged included operators of fraudulent hospice facilities that billed Medicare for beneficiaries who were not, in fact, terminally ill. Court documents indicated that one business owner in Anaheim recorded a hospital discharge rate around 85 percent, nearly five times higher than the national average, while distributing cash rebates to beneficiaries in envelopes.
This marks the second instance of the administration taking action against these states; a moratorium on $259 million for Minnesota was previously announced by Vice President J.D. Vance in February as part of a broad “war on fraud.”
Governor Walz criticized the delay as political retribution, asserting that it was children, the elderly, and the disabled who would bear the consequences, rather than the actual fraudsters.
Federal prosecutors in Minnesota estimate that the overall fraudulent activity in the state might surpass $1 billion.
