HHS, CMS pause $1B in federal matching funds to Medicaid programs in two states

WASHINGTON – The Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) have deferred more than $1 billion in federal Medicaid payments to California and Minnesota while the states provide additional documentation supporting certain claims. CMS says it is withholding approximately $867.5 million from California and $199 million from Minnesota following focused financial reviews that identified claims requiring further scrutiny. “CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” said CMS Administrator Dr. Mehmet Oz. “That’s why we’re deferring payments with respect to certain high-risk services within the Medicaid programs in California and Minnesota as part of our proactive new approach to program integrity.” HHS emphasized that the actions are payment deferrals, not permanent funding cuts, and that both states will have an opportunity to demonstrate that the claims comply with federal Medicaid requirements. In California, CMS reviewed claims tied to certain in-home care programs after identifying spending growth that exceeded national trends, along with other claims requiring additional documentation. Federal matching funds will remain deferred until the state provides information supporting those expenditures. In Minnesota, CMS reviewed claims across 14 service areas considered high risk. The review identified expenditures connected to providers flagged through program integrity reviews, as well as claims with potential eligibility or billing concerns. HHS Secretary Robert F. Kennedy Jr. says states receiving federal Medicaid funding must demonstrate that claims meet federal requirements before funds are released. The agency says it will continue using financial reviews and exclusion authorities to remove bad actors from Medicare and Medicaid.

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