The Trump administration just sent a blunt message to states allowing fraud to flourish: the money stops now.
Vice President JD Vance, who chairs the White House anti-fraud task force, announced Tuesday that the federal government is temporarily deferring $259 million in Medicaid payments to Minnesota, citing widespread abuse of taxpayer funds.
Gov. Tim Walz now has 60 days to respond.
“What we’re doing is we are stopping the federal payments that will go to the state government until the state government takes its obligations seriously to stop the fraud that’s being perpetrated against the American taxpayer,” Vance said during a press conference at the Eisenhower Executive Office Building alongside Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services.
The United States of America is a generous country and we take care of our own. It's disgraceful that fraudsters out there are taking advantage of programs like Medicaid. That stops today. @DrOzCMS pic.twitter.com/pBhSPXiG85
— JD Vance (@JDVance) February 25, 2026
Minnesota has already paid providers using state funds, but the federal reimbursements are now on hold — and that’s the point.
Vance described elaborate schemes in which individuals “set up sham businesses, set up sham clients,” adding that “a lot of people are getting rich off the generosity of American taxpayers.”
“But more fundamentally and more importantly than that, it means that there are kids in Minnesota who deserve these services, who need these services, and they’re not going to those kids; they’re going to fraudsters in Minneapolis,” Vance said. “That’s unacceptable, and that’s the sort of thing that we’re cutting off with this action today.”
He made clear this is not a one-off.
“And we are going to start very aggressively in the administration, cracking down on the people and the organizations that are defrauding Americans,” Vance said.
Dr. Oz underscored that Minnesota is just the beginning.
“This quarter-billion-dollar deferment is hopefully going to get on the radar screen of the state of Minnesota and make sure they are responsive to our requests,” Oz said, adding that announcements regarding other states are coming soon.
Minnesota Gov. Tim Walz responded with outrage, accusing the administration of political targeting.
This has nothing to do with fraud.
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. https://t.co/DKRDgBykRu
— Governor Tim Walz (@GovTimWalz) February 25, 2026
But administration officials point to staggering numbers that suggest something far bigger than politics.
Oz announced a six-month nationwide moratorium on all new enrollments for durable medical equipment suppliers — including prosthetics and orthotics — to curb abuse in an industry he says has become a fraud magnet. Southern Florida alone has twice as many durable medical suppliers as McDonald’s locations, according to Oz.
One investigation uncovered $23 billion in fraudulent billing, savings that Oz says will translate to about $132 back into the pockets of American seniors this year.
The broader estimate? Roughly $300 billion in fraud annually across the country.
“We have to take these crimes seriously and treat them as seriously as if they were bank robberies, because they’re more dangerous than bank robberies,” Oz said. “People get hurt during them.”
He warned that prison sentences alone aren’t enough, as many offenders are foreign nationals who flee.
“Instead, we’re launching the largest action against fraud that we’ve ever taken. The money is not going to ever leave the building again,” Oz said. “We’re going to start draining the swamp of the crooks that have inhabited it and are defrauding us.”
Oz detailed shocking examples, including parents allegedly paid $1,000 per child to falsely enroll them as autism patients — triggering millions in fraudulent federal payments. Another provider reportedly billed for 450 days of services, including claims exceeding 24 hours in a single day.
The administration is also urging whistleblowers to come forward via 1-800-HHS-TIPS or cms.gov/fraud.
The message from the White House is clear: If states won’t police the fraud, Washington will — and the money won’t flow until they do.
