The Trump administration is temporarily halting $259 million in Medicaid funding to Minnesota, Vice President JD Vance announced Wednesday.

Vance said the payments will be paused “until the state government takes its obligations seriously to stop the fraud that’s being perpetrated against the American taxpayer.”

The news of the temporary halting of the massive amount of federal funding — which provides health insurance to low-income people — comes as the state has been a target of the federal government following allegations of fraud perpetrated by child care providers in the state. In December, federal officials froze $185 million in child care funds to Minnesota, and last month, the administration announced it was freezing $10 billion in funding for social services programs in five Democratic-led states, including Minnesota.

The latest news also follows President Donald Trump’s announcement at the State of the Union address Tuesday night that he was tasking the vice president with waging a “war on fraud.”

Dr. Mehmet Oz, administrator for the Centers for Medicare and Medicaid Services, said Wednesday that officials identified “scammers” who he claimed “hijacked … a certain part of the Minnesota Medicaid system.”

Federal prosecutors have confirmed there was large-scale social services fraud in Minnesota, with dozens of people — many of whom are Somalis — having been convicted of stealing more than $1 billion in public funds intended for food, housing and services for people with disabilities. But the administration did not provide detailed evidence on Wednesday of the alleged large-scale Medicaid fraud in Minnesota that Oz claimed.

“These schemes disproportionately involve immigrant communities,” Oz said. Generally, undocumented people are not able to be enrolled in Medicaid.

Vance mentioned a program that he said claimed to offer after-school services to autistic children but did not actually do so, though he did not offer any identifying information.

Oz added that the top fraudulent biller in the state “submitted 450 days where they claim they were working more than 24 hours a day,” but also did not provide corroborating information.

According to the health policy research organization KFF, Medicaid covers nearly 1.2 million kids and adults in Minnesota, more than half of whom are nursing home residents. More than three-quarters of Medicaid enrollees in the state are working full time, that data also shows.

Oz said the federal government will only release the funds “after they propose an act on a comprehensive corrective action plan to solve the problem,” adding that Gov. Tim Walz, D-Minn., has 60 days to do so. He suggested similar announcements to come in other states “soon,” and mentioned Florida, New York and California as potential future targets.

“This is not a problem with the people of Minnesota,” Oz said. “It’s a problem with the leadership of Minnesota and other states who do not take Medicaid preservation seriously.”

Vance added: “The main reason that we’re doing this is that we want to make sure that the people of Minnesota have access to the services that they’re entitled to.”

In a post on X on Wednesday night, Walz said the announcement “has nothing to do with fraud,” and added, “The agents Trump allegedly sent to investigate fraud are shooting protesters and arresting children. His DOJ is gutting the U.S. Attorney’s Office and crippling their ability to prosecute fraud. And every week, Trump pardons another fraudster.”

Minnesota lawmakers and the state’s attorney general, Keith Ellison, have introduced legislation that would add more than a dozen new staffers to the AG office’s Medicaid Fraud Control Unit and that would strengthen state fraud laws.

In a statement provided to MS NOW, Ellison hinted the state may sue in response.

“Courts have repeatedly found that their pattern of cutting first and asking questions later is illegal, and if the federal government is unlawfully withholding money meant for the 1.2 million low-income Minnesotans on Medicaid, we will see them in court,” he said.

Shireen Gandhi, commissioner of the Minnesota Department of Human Services, which administers Medicaid, said the government’s actions “significantly harm the state’s health care infrastructure and the 1.2 million Minnesotans who depend on Medicaid,” adding that federal officials “chose to ignore more than a year of serious and intensive work to fight fraud in our state.”

Spokespeople for Sen. Tina Smith, D-Minn., and Sen. Amy Klobuchar, D-Minn., did not immediately respond to MS NOW’s request for comment.

Nour Longi and Emily Hung contributed reporting.

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