Federal Government Holds $259M in Medicaid Funding for Minnesota

February 26, 2026

The Trump administration announced on February 25 that it is withholding $259 million in Medicaid payments to Minnesota, until further investigation of fraud in the state is completed.  

“CMS is done trying to catch fraudsters with their hands in the cookie jar—instead, we’re padlocking the jar and letting them starve,” said Center for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz, MD. “This proactive approach will help us crush fraud, protect taxpayer dollars, and make sure the vulnerable Americans who depend on our programs get the care they need.” 

In a statement, Department of Human Services (DHS) Commissioner Shireen Gandhi said: "“Deferring $259 million will significantly harm the state’s healthcare infrastructure and the 1.2 million Minnesotans who depend on Medicaid.” 

The Trump administration is asking for the Walz administration to develop a "comprehensive corrective action plan to stop the problem.” Until this plan is complete, the federal government will withhold funding. 

“These cuts will be devastating for veterans, families with young kids, folks with disabilities, and working people across our state,” Gov. Tim Walz wrote on X.