The Trump administration is intensifying its effort to crack down on fraud within state Medicaid programs, a move that is already sparking legal challenges and political pushback from several states.
At the center of the initiative is the Centers for Medicare & Medicaid Services (CMS), led by Administrator Dr. Mehmet Oz. Speaking Tuesday, Oz said the agency is becoming increasingly aggressive in identifying and addressing fraud in both Medicaid and Medicare programs.
“We’re getting strict,” Oz said, indicating that multiple states could face heightened scrutiny as federal investigators review how taxpayer funds are being used.
The dispute became particularly visible this week after the administration froze $259 million in federal Medicaid funding to Minnesota, prompting the state to file a lawsuit in federal court.
Minnesota officials argue the freeze violates administrative procedure and oversteps Congress’ authority over federal spending. State leaders warn that the withheld funds represent roughly 7% of Minnesota’s quarterly Medicaid allocation, which they say could lead to significant reductions in healthcare services if the dispute continues.
Oz suggested the Minnesota situation is not isolated. He indicated the federal government is examining several states where officials believe fraud oversight has been insufficient.
“What happened in Minnesota, we’re seeing in California, we’re seeing it in Maine… New York and we’ve seen problems in Florida as well,” Oz said.
The CMS administrator added that federal officials have gathered evidence suggesting systemic problems in certain state programs, including information from whistleblowers.
“It’s a difficult challenge when a state doesn’t seem to have taken fraud seriously, and we have tons of evidence that that’s the case,” Oz said. “I have an obligation to the federal taxpayer, so I intend to fulfill those obligations.”
Vice President JD Vance joined Oz last week when the administration first announced the Minnesota funding freeze. According to officials, the funds will remain withheld until the state implements stronger measures to detect and prevent fraud.
Meanwhile, the administration is expanding its oversight beyond Minnesota. Oz confirmed Tuesday that he has sent a formal letter to New York Governor Kathy Hochul, requesting additional information about that state’s fraud detection systems.
New York has 30 days to respond, according to CMS, before the agency considers further action.
Minnesota Attorney General Keith Ellison sharply criticized the funding freeze, arguing it will harm vulnerable residents who rely on Medicaid coverage.
“President Trump’s attempts to look like he’s fighting fraud only punish the people and families who most need high-quality, affordable healthcare,” Ellison said in a statement.
