WASHINGTON — Vice President JD Vance announced Wednesday that $259.5 million in Medicaid funds for Minnesota won’t be reimbursed due to fraud concerns — giving Democratic Gov. Tim Walz 60 days to submit a “corrective action plan” or face further withholdings.
Vance was joined by Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, to make the announcement, which was first reported by The Post — one day after President Trump announced a Vance-led “war on fraud” in his State of the Union address.
The men also announced a national pause on firms that can seek subsidies through Medicare for durable medical equipment like canes and walkers.
“We are going to start very aggressively in the administration cracking down on the people and the organizations that are defrauding Americans,” Vance pledged after being delegated the role by Trump.
Oz said “Gov. [Tim] Walz has 60 days — 60 days, sir — to respond to our letter” if he wants repayment, which Oz said will require the state to “propose and act on a comprehensive corrective action plan to solve the problem.”
“If Minnesota fails to clean up the systems, the state will rack up $1 billion of deferred payments this year,” he threatened.
‘Far too many people have gotten rich’
The unprecedented withholding impacts nearly half of what the federal government is supposed to pay the state for the low-income Medicaid program in the past fiscal quarter, officials said.
The “deferment” focuses on 14 programs identified as having a high risk of fraud, including autism care, at-home rehabilitation, non-emergency medical transports and night supervision.
The federal government is obligated to reimburse 50% of Minnesota’s Medicaid costs and it’s unclear if the state government will litigate to try to regain the funds, or if it will submit to the requested corrective plan.
Autism-related fraud in particular has drawn recent attention.
The Justice Department has since September indicted seven alleged fraudsters in Minnesota who allegedly recruited members of the Somali immigrant community to enroll their kids in phony autism services, raking in $14 million. One defendant has pleaded guilty.
“One of the examples of fraud that we’ve seen in Minnesota that we verified that is just awful is that a program that existed to ensure that autistic children had access to some after-school services,” Vance said.
The scam “has made a number of people rich, not by providing services to needy children, but by allowing fraudsters to take money that ought by right go to American citizens,” he said.
“Far too many people have gotten rich by taking what is the best of the American spirit and getting rich off of it instead of providing services to kids who need it.”
The Trump administration in January announced plans to pause future disbursement to all states pending review — after pausing various social-services funds for five Democrat-run states including Minnesota and New York — but the Wednesday announcement impacts receipts already submitted.
The withholding of Medicaid reimbursements may expand beyond Minnesota.
“They’re not the only state that’s floundering,” Oz said. “We have more announcements with other states coming soon.”
‘Shut down these bad guys’
The new durable medical equipment policy, meanwhile, will restrict new companies from enrolling in the old-age Medicare program’s subsidized system.
Officials last year identified an error rate of roughly 20% — or $1.5 billion — in durable medical equipment charges, of which about $1 billion is suspected to be fraudulent, officials said.
The pause in new companies enrolling is intended to allow for a vetting of already-enrolled providers to weed out bad apples.
Unlike the Minnesota Medicaid pause, issues with Medicare equipment charges are clustered in Republican-led states, with disproportionate suspected fraud in South Florida and Harris County, Texas, officials said.
“There are twice as many durable medical equipment suppliers in South Florida than McDonald’s,” Oz said.
“Well, and that’s not because [Health and Human Services] Secretary [Robert F] Kennedy [Jr.] is closing down McDonald’s,” he mused. “That’s because the amount of fraud is so massive.”
Oz said that current elderly beneficiaries won’t be impacted but that “we need more time to shut down these bad guys” already making fictitious sales.
Oz cited estimates that $300 billion is lost annually in overall healthcare fraud, waste and abuse — with Vance saying he personally believes that number is “conservative.”
Trump announced at the State of the Union that Vance would be in charge of a national crackdown on abuse of government programs.
“I am officially announcing the war on fraud to be led by our great vice president, JD Vance,” Trump said, predicting, “we will actually have a balanced budget overnight. It will go very quickly. That’s the kind of money you’re talking about.”
Walz’s office did not immediately respond to a request for comment.
