Vice President JD Vance has announced that the Trump administration is temporarily halting certain Medicaid payments to Minnesota as part of what officials describe as an escalating crackdown on fraud in the state’s public assistance programs.
Standing alongside Centers for Medicare & Medicaid Services Administrator Mehmet Oz, Vance said the administration is withholding $259.5 million in Medicaid reimbursements while federal authorities investigate what they characterize as systemic abuse.
“We have decided to temporarily halt certain amounts of Medicaid funding that are going to the state of Minnesota in order to ensure that the state of Minnesota takes its obligation seriously to be good stewards of the American people’s tax money,” Vance said.
He added that federal payments to the state government would be paused until Minnesota demonstrates meaningful action to stop the alleged fraud.
“A lot of people were getting rich off the generosity of the American taxpayer!” Vance said. “There are kids that need these autism services, and the money is not going to those kids — it’s going to fraudsters in Minneapolis! That is unacceptable!”
According to administration officials, 14 Medicaid-related programs have been flagged as high-risk for fraud, including autism services and non-medical transportation programs. The $259.5 million represents funds that will not be reimbursed to Minnesota during the investigation.
Oz emphasized that the administration’s action was directed at state leadership rather than residents.
“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.
“Any delay in services is going to be, should be laid at the seat of Governor Walz. I believe he will take this seriously,” he added, referring to Minnesota Gov. Tim Walz.
Oz also said the administration is “confident” that vulnerable Minnesotans will not ultimately be harmed, noting that the state maintains a budget reserve, commonly referred to as a rainy day fund.
The Minnesota Department of Human Services confirmed to The Hill that the federal government notified the state on Feb. 25 that $259 million in Medicaid funding would be deferred.
“Today’s actions are on top of federal action to withhold more than $2 billion in annual Medicaid funding to Minnesota,” the department said in a statement. “The state has submitted a corrective action plan to convince CMS to reverse course and is appealing.”
Minnesota Human Services Commissioner Shireen Gandhi criticized the move as politically motivated.
“Today’s announcement is part of a broad and sustained attack by the federal government on Medicaid in Minnesota,” Gandhi said. “Deferring $259 million will significantly harm the state’s health care infrastructure and the 1.2 million Minnesotans who depend on Medicaid. The federal government chose to ignore more than a year of serious and intensive work to fight fraud in our state.”
The funding halt is the latest escalation in a broader federal effort targeting Minnesota over alleged fraud in public assistance programs. Earlier this year, President Trump froze federal funding to certain child care providers in the state and deployed approximately 2,000 federal officers as part of an immigration enforcement operation after multiple residents of Somali descent were charged in connection with large-scale fraud schemes.
Vance framed Wednesday’s action as part of a nationwide push to eliminate waste, fraud, and abuse in federal entitlement programs.
“The generosity and good hearts of Americans are being taken advantage of,” he said. “We are not going to allow taxpayer dollars that are supposed to help vulnerable children and families to line the pockets of criminals.”
The administration has not provided a specific timeline for when the withheld Medicaid funds could be restored. Officials said the pause will remain in effect until Minnesota satisfies federal oversight requirements and demonstrates that corrective measures are in place.
Minnesota leaders have vowed to challenge the decision, arguing that the state has already implemented anti-fraud initiatives and that the deferral will disrupt critical services.
As the dispute intensifies, the confrontation sets up a high-stakes clash between the Trump administration and a Democratic-led state over Medicaid oversight, federal authority, and the balance between fraud enforcement and service continuity for more than 1.2 million Minnesotans enrolled in the program.