By News Analyst | Tuesday, July 21, 2026
Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, announced today that his agency is freezing more than $1 billion in federal Medicaid payments to California and Minnesota — an action confirmed by the Department of Health and Human Services as the largest step yet in the Trump administration’s push to stop questionable payments before they are made.
“We’re not letting the money leave the building,” Oz said, adding that the focus is “critical” to preventing tens of billions from being disbursed. The Department of Health and Human Services reported that approximately $867.5 million was withheld from California and $199 million from Minnesota, pending documentation of high-risk claims.
This follows earlier deferrals totaling roughly $400 million against Minnesota this year and a $1.3 billion deferral against California in May, according to Stateline. Oz cited California’s growth rate for in-home services running at roughly twice the national average as a disparity the state has not explained. He also pointed to billing records showing payments for deceased beneficiaries, noting that CMS will halt about $5 million in California payments tied to dead individuals and an additional $2 million in Minnesota.
“In just these two examples,” Oz said, “we have $8 million going to pay for dead people’s healthcare — a situation that defies belief.”
Additionally, CMS has stopped “another 200-plus million dollars” this quarter in California billing related to illegal aliens, bringing the cumulative amount withheld to $2 billion. California has already repaid $1 billion.
Oz framed the pattern as intentional, describing what he called “Medicaiding it,” a practice where states shift expenses to Washington by routing residents into Medicaid-funded job programs. He singled out home healthcare aides paid through Medicaid who are then unionized by state-affiliated unions, stating: “Those unions are using those tax dollars to fund politics in those states. That to me is political patronage. That has to stop.”
California Governor Gavin Newsom rejected fraud allegations tied to the in-home services program, arguing it keeps older and disabled residents out of costlier nursing homes. Minnesota Governor Tim Walz, whose state Department of Human Services reported that CMS approved a corrective action plan in March, called the federal characterization a misrepresentation of their fraud-fighting efforts.
The deferrals are pauses, not permanent cuts. Both states can recover the funds by providing documentation demonstrating compliance with federal requirements.
