(VINnews) – The Trump administration on Tuesday deferred more than $1 billion in federal Medicaid payments to California and Minnesota, citing concerns over suspected fraud and requiring both states to provide additional documentation before the funds are released.

Health and Human Services Secretary Robert F. Kennedy Jr. said the payments would remain on hold until the states demonstrate that the claims comply with federal Medicaid requirements.

“If Governor Gavin Newsom or Governor Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent,” Kennedy said during a news conference.

According to the Department of Health and Human Services, the Centers for Medicare & Medicaid Services (CMS) is deferring approximately $867.5 million in payments to California and $199 million to Minnesota while it reviews what it described as high-risk Medicaid claims. Federal officials said the move is a payment deferral rather than a permanent funding cut, and both states will have an opportunity to submit records supporting the claims.
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CMS said California’s review focused on certain in-home care programs after identifying spending growth that exceeded national trends, while the Minnesota review examined 14 service areas flagged for potential program integrity concerns, including claims involving providers previously identified through oversight reviews.

Kennedy said the administration is shifting away from recovering fraudulent payments after they are made and instead aims to stop questionable claims before federal money is distributed.

CMS Administrator Dr. Mehmet Oz said the agency is “done trying to chase down stolen and misused funds after they’ve already left the building,” describing the payment deferrals as part of a broader effort to strengthen Medicaid program integrity.

The announcement is the latest step in the Trump administration’s campaign to combat fraud, waste and abuse in federal health care programs. HHS also said it is expanding its authority to exclude individuals and entities found to have engaged in fraud from participating in federal health care programs.

State officials in California and Minnesota had not immediately responded to the announcement. Critics have previously argued that similar funding actions disproportionately target Democratic-led states, while administration officials maintain the reviews are based on program integrity concerns.