Trump Freezes Minnesota Medicaid Funds as Fraud Scandal Deepens

The Trump administration is freezing $259 million in Medicaid funding to Minnesota, escalating its crackdown on what officials say is rampant fraud in the state’s public benefits system.

Vice President JD Vance and Centers for Medicare and Medicaid Services Administrator Mehmet Oz announced Wednesday that the money will remain on hold until Minnesota takes what the administration considers meaningful steps to clean up the program.

The move is significant not just for Minnesota, but for other states as well. Federal officials made clear this is not a one-off and warned that similar freezes could follow elsewhere as Washington tightens the screws on Medicaid abuse.

The administration has already kept Minnesota under a harsh spotlight, citing the state’s repeated failure to control fraud as part of the justification for its recent immigration enforcement surge targeting the Somali community.

Last month, the Department of Health and Human Services notified Minnesota that it would withhold roughly $515 million in federal Medicaid matching funds on a quarterly basis until the state meets federal program integrity requirements. The agency also launched a review into how Minnesota has been spending federal Medicaid dollars.

Minnesota has appealed.

According to CMS, a review of Minnesota’s Medicaid spending during the fourth quarter of fiscal year 2025 uncovered $243.8 million in potentially fraudulent claims and another $15.4 million in claims tied to individuals who do not have satisfactory immigration status.

“I feel quite confident we have the legal authority to do this,” Vance told reporters Wednesday.

Under the arrangement, Minnesota has already paid providers, while the federal government is now withholding reimbursement to the state for that quarter, according to Vance.

The freeze is likely to intensify the fight between the Trump administration and Democratic leaders in Minnesota, who have insisted the move is politically motivated.

Gov. Tim Walz lashed out on X, writing that the action has nothing to do with actual fraud.

“The agents Trump allegedly sent to investigate fraud are shooting protesters and arresting children. His DOJ is gutting the U.S. Attorney’s Office and crippling their ability to prosecute fraud. And every week Trump pardons another fraudster,” Walz wrote.

RELATED: WATCH: ‘Quality Learning Center’ Employee Snaps At Reporter After Viral Minnesota Fraud Report

Minnesota Attorney General Keith Ellison also threatened legal action, saying he would sue if the administration is found to be unlawfully withholding money meant for low-income Medicaid recipients.

RELATED: NEW: Trump Admin To Offer Whistleblower Rewards For Information On Minnesota Fraud

Still, the White House appears eager to frame the move as proof that it is serious about policing abuse in government health programs, particularly in states where billions in taxpayer dollars are flowing with what critics say is too little oversight.

The administration also announced a six-month halt on new Medicare enrollment for durable medical equipment suppliers, another area officials say has become a magnet for fraud. CMS said it stopped more than $1.5 billion in suspected fraudulent billing in that category last year alone.

Download the FREE Trending Politics App to get the latest news FIRST >>