Vance Freezes 260 Million In Medicaid Funds Over Minnesota Fraud

Vice President JD Vance has taken his first major step as the Trump administration’s newly appointed anti-fraud chief and it sends a clear message to blue-state bureaucracies.

On Wednesday, Vance announced the federal government will withhold nearly $260 million in Medicaid reimbursements to Minnesota following what officials describe as systemic fraud within multiple state-run programs.

The move puts Minnesota’s Democrat leadership including Governor Tim Walz on notice.

Standing alongside Dr Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, Vance made clear that the providers themselves have already been paid by the state.

The federal government, however, will pause reimbursements to Minnesota until state leaders prove they are serious about rooting out fraud.

“What we’re doing is stopping the federal payments that will go to the state government,” Vance said, adding that taxpayers deserve accountability.

Oz warned that if Minnesota fails to fix its systems, the state could face up to $1 billion in deferred payments this year.

The administration has given Minnesota 60 days to respond.

Federal investigators have uncovered widespread abuse across 14 Minnesota programs, including autism services and medical transport operations.

Among the most notorious cases:

• The “Feeding Our Future” scandal, in which tens of millions in federal funds were allegedly diverted instead of feeding hungry children during the COVID pandemic.

• Autism service programs that reportedly paid mothers roughly $1,000 to falsely enroll children as autistic while billing Medicaid for services never rendered.

• Daycare and learning centers receiving state funds despite appearing to serve few or no children.

Dozens of convictions have already resulted from the Feeding Our Future investigation alone.

Medicaid fraud is not a minor issue. The Government Accountability Office estimates improper Medicaid payments nationally exceed $80 billion annually. That’s money meant for vulnerable Americans siphoned off by bad actors.

The administration insists the Medicaid funding freeze will not harm Minnesota residents. The state maintains a substantial rainy-day fund, and officials argue that beneficiaries and providers should continue receiving services uninterrupted.

Oz framed the effort as the “largest anti-fraud effort” in CMS history.

“This is not a problem with the people of Minnesota,” he said. “It’s a problem with the leadership.”

For the Trump administration, the crackdown aligns with broader promises to eliminate waste, fraud, and abuse in federal programs. During his State of the Union address, President :contentReference[oaicite:2]{index=2} pledged aggressive oversight of taxpayer dollars, particularly in entitlement programs where improper payments remain a persistent issue.

The Minnesota freeze is about more than one state.

It signals that the administration is willing to use federal leverage to enforce compliance even if it means clashing with Democrat-controlled governments.

Critics argue the move is political. Supporters counter that safeguarding Medicaid integrity is a bipartisan obligation.

The stakes are enormous. Medicaid covers more than 85 million Americans nationwide. If fraud continues unchecked, both funding sustainability and public trust erode.

Minnesota now faces a clear choice: clean up the programs or risk escalating financial consequences.

For taxpayers watching billions flow through federal pipelines each year, the message from Washington is simple the era of rubber-stamp reimbursements may be over.

Share this article or subscribe to our newsletter for continued coverage on government accountability and the fight against Medicaid fraud.