Vice President JD Vance announced Wednesday that the Trump administration would “temporarily halt” some Medicaid funding to the state of Minnesota over fraud concerns, as part of what he described as an aggressive crackdown on misuse of public funds.
Vance, who made the announcement with Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, said the administration was taking the action “in order to ensure that the state of Minnesota takes its obligations seriously to be good stewards of the American people’s tax money.”
Oz, who referred to people committing fraud as “self-serving scoundrels,” said the federal government would hold off on paying $259.5 million to Minnesota in funding for Medicaid, the health care safety net for low-income Americans.
“This is not a problem with the people of Minnesota, it’s a problem with the leadership of Minnesota and other states who do not take Medicaid preservation seriously,” Oz said.
Wednesday’s move is part of a larger Trump administration effort to spotlight fraud around the country. That effort comes after allegations of fraud involving day care centers run by Somali residents in Minneapolis prompted a massive immigration crackdown in the Midwestern city, resulting in widespread protests. President Donald Trump, in his State of the Union address on Tuesday, announced Vance would spearhead a national “war on fraud.”
Trump also recently nominated Colin McDonald to serve as the first assistant attorney general in charge of a Justice Department division dedicated to rooting out fraud.
Oz said the administration was simultaneously notifying Minnesota’s Democratic Gov. Tim Walz as he was making the announcement publicly. Messages sent to Walz’s spokespeople were not immediately returned.
“We will give them the money, but we’re going to hold it and only release it after they propose and act on a comprehensive corrective action plan to solve the problem,” Oz said.
He said Walz would have 60 days to respond and advised health care providers and Medicaid beneficiaries who were concerned to contact Walz’s office.
There was no immediate response from a spokesperson for Minnesota Attorney General Keith Ellison, whose office investigates Medicaid fraud. Earlier Wednesday, Ellison held a news conference to promote legislation that would give his office more staff and new legal tools to combat thefts from the program.
Oz said the Centers for Medicare and Medicaid Services were also taking action to crack down on fraud in Medicare, the health care system relied upon by millions of older adults.
He said CMS for six months would block any new Medicare enrollments for suppliers of durable medical equipment, prosthetics, orthotics or other supplies used to treat chronic conditions or assist in injury recovery.
Oz also announced a new crowdsourcing effort he said would help “crush fraud” by soliciting Americans’ tips and suggestions.
“All of us are smarter than any one of us,” he said.
The administration has threatened to cut off funding for various programs for some Democratic-run states over fraud concerns over the last few months.
One judge blocked those actions and required that payments flowing to Minnesota and four other states – California, Colorado, Illinois and New York – for a variety of social service programs. The government had said that there was “reason to believe” that those states were granting benefits to people in the country illegally. It did not initially explain where that information came from, but a government lawyer told the judge it was largely in reaction to news reports about possible fraud.
Another judge said she would not let it cut off funding for administrative costs for 22 states that have refused to hand over information about applicants and recipients of food aid through the Supplemental Nutritional Assistance Program.
The latest action was prompted in part by a series of fraud cases, including a nonprofit called Feeding Our Future accused of stealing pandemic aid meant for school meals. Prosecutors have put the losses from that case at $300 million.
Since then, Trump has targeted the Somali diaspora in Minnesota with immigration enforcement actions and has made a series of disparaging comments about the community. During his State of the Union address on Tuesday, Trump said “pirates” have “ransacked Minnesota.”
Federal agencies have also been enlisted to assist in targeting fraud in Minnesota.
Last December, the U.S. Treasury Department issued an order requiring money wire services that people use to send money to Somalia to submit additional verification to the Treasury.
The Center for Medicare and Medicaid Services told Minnesota in January that it intended to freeze parts of payments for some Medicaid programs that were deemed high-risk. The state said that those cuts would add up to more than $2 billion annually if they lasted and made an administrative appeal.
