WASHINGTON — Federal officials are holding back more than $1 billion in Medicaid money from California and Minnesota. The pause comes after federal audits found signs of potential health care fraud in both states.
Health and Human Services Secretary Robert F. Kennedy Jr. and Medicare administrator Dr. Mehmet Oz announced the decision on Tuesday. The government is deferring over $800 million for California and nearly $200 million for Minnesota.
Federal leaders said the states can get the money back. To unfreeze the cash, state officials must prove the health care claims meet all federal rules.
“We have reason to believe that taxpayer money is being misused, especially through fraud. We have a duty to stop the payments, demand answers, and then follow the evidence wherever it leads,” Kennedy said in the press briefing.
Recent audits by the Centers for Medicare & Medicaid Services sparked the sudden hold. In California, inspectors found that spending on in-home care programs grew much faster than national averages.
In Minnesota, federal workers flagged 14 service areas as high risk. These include personal care and home-based care services with potential billing or eligibility problems.
“If Governor Gavin Newsom or Governor Tim Waltz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent,” Kennedy said.
This decision builds on a larger White House push to cut waste across federal programs. Health officials previously promised to audit all 50 states and warned that non-compliant states could lose funding.
This is not the first time California faced a Medicaid freeze. The administration deferred over $1 billion in Medicaid reimbursements from California over similar fraud concerns earlier this year in May.
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