The Trump administration has temporarily frozen more than $259 million in Medicaid reimbursements to Minnesota, citing an ongoing fraud investigation tied to state-administered social programs. Vice President JD Vance and Centers for Medicare & Medicaid Services (CMS) Administrator Mehmet Oz announced the move Wednesday (February 25) at a press conference in Washington, D.C.
The payment freeze is the first major action in what President Donald Trump dubbed a “war on fraud” during his State of the Union address Tuesday (February 24), in which he named Vance as the leader of the effort. “He’ll get it done,” President Trump said. “And if we’re able to find enough of that fraud, we will actually have a balanced budget overnight.”
Vance said the pause is meant to pressure the state into taking its oversight responsibilities more seriously. “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 obligations seriously to be good stewards of the American people’s tax money,” he said.
Oz said the $259 million figure is based on an audit of Minnesota’s Medicaid claims from the last three months of 2025. He described the action as “the largest action against fraud that we’ve ever taken” at CMS. Oz added that Governor Tim Walz has 60 days to respond to a letter from the administration and present a “comprehensive corrective action plan.” If Minnesota fails to act, Oz warned, the state could face $1 billion in deferred payments by year’s end.
The fraud probe centers on allegations of widespread abuse of federally funded programs, including day care and after-school services. Vance said investigators found that a program designed to provide after-school care for autistic children was instead exploited by fraudsters. “A lot of people are getting rich off the generosity of American taxpayers,” Vance said. “There are kids in Minnesota who deserve these services, who need these services, and they’re not going to those kids.”
The Justice Department has charged 98 people in connection with approximately $1 billion in fraud related to Minnesota programs; 85 of those charged are Somali.
Walz, who was the Democratic vice-presidential nominee in 2024, pushed back sharply. “This has nothing to do with fraud,” he wrote on X. “These cuts will be devastating for veterans, families with young kids, folks with disabilities, and working people across our state.” Anadolu Agency reported that Walz also accused the administration of using the freeze as “a campaign of retribution,” saying President Trump is “weaponizing the entirety of the federal government to punish blue states like Minnesota.”
Minnesota’s Medicaid and MinnesotaCare programs together cover nearly 1.3 million residents — about one in four people in the state. Nationwide, Medicaid provides healthcare coverage to more than 70 million low-income Americans, including children, pregnant women, older adults, and people with disabilities.
Oz sought to reassure Minnesotans that residents would not lose services. “If providers and beneficiaries are worried about getting their money and services, please call your governor,” he said, noting the state has a rainy-day fund to cover costs during the freeze.
Vance said he is “quite confident” the administration has the legal authority to withhold the congressionally appropriated funds. He also said the effort will involve a “full, whole-government approach,” including the Treasury Department reviewing income tax records to identify additional fraud.
Vance is expected to continue promoting the administration’s anti-fraud agenda Thursday (February 26) with a post-State of the Union appearance in Plover, Wisconsin. The administration has given Minnesota 60 days to submit a corrective action plan before further action is taken.
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