HHS Demands Proof Before Releasing Medicaid Payments: California and Minnesota Patients Left Waiting

The Trump administration has frozen more than $1 billion in Medicaid payments to California and Minnesota, putting patients who rely on home care and disability support in the middle of a federal fraud crackdown. Administration officials say the money will stay on hold until the states prove the claims are legitimate, while insisting the pause is temporary and does not change eligibility or benefits.

The decision has sharpened concern over what the delay could mean for providers waiting on reimbursements to keep services running.

In Minnesota, that scrutiny comes against a backdrop of earlier state action on high-risk Medicaid programmes, including a pause on new provider enrolments and revalidation efforts across several services.

HHS Holds Payments Over Fraud Concerns

U.S. Health Secretary Robert F. Kennedy Jr. said the government is pausing the money because of suspected fraud and noncompliance in Medicaid. He said California and Minnesota must provide documentation showing the disputed claims are legitimate before the funding is restored.

According to HHS, the deferrals total about $867.5 million (£646.3 million) for California and $199 million (£148.2 million) for Minnesota. The department said this is a payment deferral, not a permanent cut, and that the states can recover the funds if the claims meet federal requirements.

Kennedy also said the administration intends to expand exclusion authority so federal health programmes can more easily remove bad actors. Kennedy presented the move as preventative, aimed at stopping questionable claims before federal money is paid out.

Why California and Minnesota Are in the Crosshairs

The federal review is focused on high-risk claims, including in-home care programmes in California and service areas in Minnesota that state auditors had already identified as vulnerable to fraud. Reuters reported that Kennedy said much of the questionable California spending appears to involve in-home services.

Dr Mehmet Oz, the CMS administrator, said the government had identified recurring anomalies and outlier billing patterns in the areas under scrutiny. He also said Minnesota has already submitted documents that CMS is reviewing.

In Minnesota, the state Department of Human Services has separately extended a pause on new Medicaid providers in 12 high-risk services while it continues revalidation work across nearly 5,600 providers in those programmes. That broader backdrop shows how closely the state had already been examining its Medicaid system before the federal deferrals were announced.

California officials have said the state's Medicaid programme follows federal requirements and have questioned the administration's basis for the freeze. Minnesota's Department of Human Services has noted that it had already identified the service areas as high-risk through its own audits and was in the process of revalidating providers before the federal deferral was announced.

Home Care Patients Caught in the Middle

The immediate concern is for people who depend on Medicaid-funded care in the community and at home. HHS says the deferrals do not change who is eligible for Medicaid, but delayed payments can still create uncertainty for providers and the patients they serve.

In California, the review is tied to in-home services that help people remain in their own homes rather than move into more expensive care settings. In Minnesota, the pressure falls on services linked to elder and disability support, adding strain to programmes already under close scrutiny.

That matters because home-based care often runs on tight margins and depends on reimbursement arriving on time. Even if benefits remain in place, delayed funding can affect staffing, scheduling and continuity of care.

More States in the Firing Line?

The pause is the latest in a series of payment suspensions that have largely affected Democratic-led states as the White House steps up what it has called an 'unrelenting' war on fraud. Officials have also signalled that they want to widen enforcement powers against fraudsters in federal health programmes.

For California and Minnesota, the next step is straightforward but high-stakes: provide the paperwork the federal government wants, or keep waiting. Both states dispute the allegations as the review continues.