Trump Administration Pauses $250 Million in Medicaid Funding to Minnesota Over Fraud Concerns

The Trump administration is taking steps to “temporarily halt” some Medicaid funding to Minnesota over concerns about alleged fraud in the state’s public services, Vice President JD Vance announced Wednesday.

The move comes just hours after President Donald Trump declared “war on fraud” during his State of the Union address Tuesday night and that Vance would lead the charge. Trump specifically called out Minnesota’s Somali immigrant community as one of his targets.

At a press conference Wednesday afternoon, Vance and Dr. Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, said the federal government would pause more than $259 million in Medicaid reimbursements for Minnesota, a publicly funded health care program for low-income Americans.

“People are billing the government millions, tens of million, billions of dollars, saying they are providing a service, but there’s no actual confirmation,” Vance said during the press conference, held at the Eisenhower Executive Office Building across from the White House.

The Trump administration has, for months, threatened Minnesota with cuts to Medicaid funding unless the state took greater steps to investigate and prosecute fraud within the system.

But even as Vance and Dr. Oz made their announcement, state officials had already committed additional resources to do just that. The press conference came hours after state officials in Minnesota unveiled a staffing increase to the Attorney General’s Medicaid Fraud Control Unit, in addition to a revised definition of Medicaid fraud, said Minnesota Attorney General Keith Ellison during a Wednesday morning press conference. He added that the new, broader definition would be especially helpful in building cases against accused fraudsters.

“Such a narrow definition is challenging for prosecutors because it does not capture all the criminal conduct that can be part of a Medicaid fraud case,” Ellison said.

During his State of the Union address Tuesday night, Trump declared that Vance would lead a nationwide crackdown on fraud. The administration first latched on to fraudulent activity in Minnesota last year after state officials uncovered what they alleged was a massive fraud scheme involving members of the state’s Somali community.

Since then, NOTUS has reported that many Republicans across the country have adopted similar allegations of fraud in their campaign messaging.

Speaking Wednesday, Vance said there are “millions and millions of people” distributing federal Medicaid funding without confirming recipients’ validity.

“It’s a defrauding of the American taxpayer,” he said. “And we’re stopping it.”

Minnesota officials have been in discussions with the administration about its concerns with the state’s Medicaid programs since early October. I a Jan. 13 statement, the state claims it “acted to meet or exceed the steps CMS requested.”

“However, Administrator Oz has now deemed the Minnesota Department of Human Services’ actions inadequate — without time for state and federal agencies to discuss and agree upon a corrective action plan,” the statement continued.

Federal prosecutors claimed that more than half of the $18 billion in Medicaid funding granted to Minnesota since 2018 could have been fraudulently used, a claim state officials adamantly deny.

In mid-December, former Assistant U.S. Attorney Joseph Thompson, who led the investigation into fraud in Minnesota, flagged 14 Medicaid services at “high risk” of fraudulent activity, including rehabilitation services, adult daycare services, night supervision and autism support.

“The fraud is not small. It isn’t isolated,” Thompson said. “What we see in Minnesota is not a handful of bad actors committing crimes. It’s a staggering industrial scale of fraud. It’s swamping Minnesota and calling into question everything we know about our state.”

Thompson, however, resigned in January alongside other senior Department of Justice officials in Minnesota after the Attorney General’s office reportedly pushed his office to investigate the widow of Renee Nicole Good, the woman fatally shot by federal agents in Minneapolis earlier this year.

In January, Minnesota officials appealed a decision by CMS to halt $2 billion in annual Medicaid funding over fraud concerns. That case is still pending.

John Connolly, human services deputy commissioner and Minnesota’s Medicaid director, said in a statement last month that the federal government’s claims were unsubstantiated and warned against halting funds.

“These sweeping allegations and unprecedented actions are not based on facts,” Connolly said. “Eliminating fraud in Minnesota’s Medicaid program remains a top priority. Cutting off funding that is essential to health care, without full review of the facts, would be disastrous for 1.2 million Medicaid members in Minnesota — almost half of them children.”