Politics

The Trump Administration Froze Over $1 Billion in Medicaid Payments to Two States Without Proof of Fraud

By Mike Harper · July 22, 2026

The federal government froze more than a billion dollars in Medicaid payments to California and Minnesota this week, citing suspected fraud — but when senators asked how the administration calculated the numbers, it couldn’t give a clear answer.

Health and Human Services Secretary Robert F. Kennedy Jr. told reporters Tuesday that the Centers for Medicare and Medicaid Services had paused approximately $867.5 million owed to California and $199 million owed to Minnesota over what officials described as questionable billing patterns and suspected fraud. Combined, the freeze amounts to more than $1 billion in payments the two states were counting on to fund healthcare coverage for low-income residents.

Federal officials said current Medicaid benefits and eligibility would not immediately change as a result of the freeze. But they also offered no specific proof of the fraud they cited, and Reuters reported that the Pentagon’s explanation of how the payment amounts were calculated was unclear to senators who pressed for details.

The lack of documentation drew immediate pushback. California Attorney General Rob Bonta called the freeze “unlawful” and said his office was reviewing legal options. Minnesota officials said they had not been given specific information about which billing practices triggered the pause, making it impossible to respond to or correct the alleged problems.

Medicaid is jointly funded by the federal government and the states, with the federal share — known as the Federal Medical Assistance Percentage — flowing to states as reimbursement for covered services already provided to beneficiaries. Freezing those reimbursements doesn’t prevent care from being delivered in the immediate term, but it creates cash flow pressure on state budgets and on the providers who serve Medicaid patients. California’s Medicaid program, Medi-Cal, covers roughly 14 million residents — about one-third of the state’s population.

This is not the administration’s first use of Medicaid payment freezes as leverage. Earlier this year, CMS froze payments to several states over disputes about eligibility verification practices and provider enrollment procedures. In each case, the freeze created pressure on states to comply with federal demands without going through the formal regulatory process that would normally govern such disputes.

What makes this week’s freeze different — and what drew particular scrutiny from Democratic senators — is the scale of the amounts and the absence of specific documentation. A freeze of nearly $900 million against a single state, announced publicly without accompanying evidence, functions as a pressure tactic regardless of whether the underlying fraud allegations are ultimately substantiated.

Both states have said they will contest the freeze. The legal mechanisms for doing so — administrative appeals, federal court injunctions, or negotiated settlements — could take months to resolve. In the meantime, the money stays frozen.