Vice President JD Vance announced Wednesday that the administration will temporarily halt $259.5 million in Medicaid funding to the state, citing what officials describe as serious concerns over fraud and improper payments. Standing alongside Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz, Vance framed the move as a necessary step to protect taxpayers.
“We’re taking this action to ensure that the state of Minnesota takes its obligations seriously to be good stewards of the American people’s tax money,” Vance said.
Oz didn’t mince words. He called those committing fraud “self-serving scoundrels” and made clear the federal government is drawing a hard line. The funding pause includes roughly $244 million in unsupported or potentially fraudulent Medicaid claims, along with another $15 million tied to claims involving individuals “lacking a satisfactory immigration status,” according to CMS.
“This is not a problem with the people of Minnesota,” Oz emphasized. “It’s a problem with the leadership of Minnesota and other states who do not take Medicaid preservation seriously.”
The freeze is part of President Donald Trump’s broader “war on fraud,” announced during Tuesday night’s State of the Union address. Trump tapped Vance to spearhead the nationwide effort, signaling a major crackdown on misuse of public funds. The administration has also nominated Colin McDonald to lead a new Justice Department division focused exclusively on rooting out fraud.
Minnesota Gov. Tim Walz, however, blasted the move almost immediately.
“This is a campaign of retribution,” Walz wrote on social media. “Trump is weaponizing the entirety of the federal government to punish blue states like Minnesota.”
Walz warned the funding freeze could harm veterans, families with children, individuals with disabilities, and working-class residents. But federal officials insist the funds are not permanently cut — at least not yet.
Vance Moves Against Minnesota, Blocks Federal Medicaid Funding To Combat Fraud, Walz Lashes Out
Vice President JD Vance announced Wednesday that $259.5 million in Medicaid reimbursements to Minnesota will be withheld over alleged fraud concerns. The state has been given 60 days… pic.twitter.com/JRZ2Reg99Z
— The No Cap Press (@TheNoCapPress) February 26, 2026
Should federal Medicaid funding to Minnesota be temporarily halted due to fraud concerns?
Oz said Minnesota will have 60 days to propose and implement a comprehensive corrective action plan. If the state complies, the money will be released. If not, CMS says it could defer up to $1 billion in federal funds over the next year.
The announcement comes amid mounting scrutiny of fraud cases in Minnesota, including the massive “Feeding Our Future” scandal, in which prosecutors allege $300 million in pandemic school meal funds were stolen. The fallout from that case triggered intense investigations and, more recently, immigration enforcement actions targeting segments of Minnesota’s Somali community.
Trump referenced the situation during his State of the Union, claiming “pirates” had “ransacked Minnesota.” The administration has since taken additional steps, including requiring tighter Treasury verification rules for wire transfers to Somalia.
Meanwhile, CMS is expanding its fraud crackdown beyond Minnesota. Oz announced a six-month block on new Medicare enrollments for suppliers of durable medical equipment, prosthetics, and orthotics — sectors flagged by inspectors for improper payments. A federal watchdog report found Medicare improperly paid nearly $23 million for such equipment between 2018 and 2024, though most of those payments occurred before reforms implemented in 2020.
Oz also unveiled a crowdsourcing initiative aimed at encouraging Americans to submit tips to help “crush fraud.”
“All of us are smarter than any one of us,” he said.
Still, some experts are raising eyebrows. Akeiisa Coleman of the Commonwealth Fund described the funding deferral as a “highly unusual step,” warning that if Minnesota lacks sufficient reserves, providers could face delayed payments — potentially affecting patient care.
Legal battles are already underway. One federal judge previously blocked the administration from cutting off payments to Minnesota and several other Democrat-led states over similar concerns. Another judge halted efforts to withhold certain food assistance administrative funds from states refusing to share data on benefit recipients.
For now, the spotlight remains squarely on Minnesota. Federal officials say they are sampling claims and may request further documentation as part of their review. State agencies are preparing formal responses, and Attorney General Keith Ellison has pushed for expanded staffing and legal tools to combat Medicaid fraud.
