In Fraud Focus, Vance, Oz Halt Medicaid Funding In Minnesota

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Following President Trump's February 24, 2026 announcement, during this State of the Union (SOTU) address, that Vice President Vance would be in charge of the administration's "war on fraud," the VP and the Centers for Medicare and Medicaid Services (CMS) Administrator Mehmet Oz on February 25, 2026, announced new steps to crack down on fraud in the Medicare and Medicaid programs.

LeadingAge recently engaged with the CMS administrator on fraud in hospice and home health and has been tracking the statements, actions, and potential actions across our continuum of care, including in the Medicaid program.

In terms of policies, Vice President Vance and Administrator Oz announced the following:

The Administration is withholding federal dollars from Minnesota's Medicaid program. Administrator Oz detailed that CMS had reviewed Minnesota's Medicaid spending from the fourth quarter of 2025 and is withholding $259.5 million in federal matching funds for services already rendered and reimbursed by the state. Minnesota has 60 days to respond to CMS's request for a corrective action plan or risk further deferral of additional federal Medicaid dollars. In its press release on the announcement, CMS notes that personal care services and HCBS services are program integrity hot spots. When asked by a reporter about the legal authority for withholding the federal Medicaid dollars, Vice President Vance said, "We're the ones who spend this money. Congress appropriates it. We're the ones who actually make sure this goes to the people it ought to go to. And inherent in that is making sure that it only goes to the people that Congress says that it should go to. We shouldn't be sending money to fraudsters." Administrator Oz also indicated in his remarks that other states will be the subject of similar actions.

Medicaid is an appropriated entitlement. This means that while the level of spending is mandatory, i.e., not dictated by the annual appropriations that govern discretionary spending, the money for the federal share of the Medicaid match is appropriated by Congress. LeadingAge anticipates, as with other instances around impoundment and withholding of federal funds that have occurred recently, that this action will likely be challenged in court, though no legal action has yet been announced.

A nationwide moratorium on Medicare enrollment of durable medical equipment (DME) providers: Administrator Oz also announced a 6-month, nationwide moratorium on Medicare enrollment of new durable medical equipment (DME) providers citing fraud, especially in South Florida. He noted the need for a nationwide moratorium to stop the bad actors from simply moving to another location. This temporary moratorium will allow for CMS to explore additional actions to further mitigate fraud, and Administrator Oz mentioned an initiative underway with the Treasury Department, specifically the Internal Revenue Service (IRS) but did not elaborate. LeadingAge will analyze further the announcement around the moratorium in order to understand the rationale and impacts should this action be taken on any other Medicare providers.

Request for Information to Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH): A request for information (RFI) was also announced and published in the Federal Register. It has a 30-day comment period. LeadingAge will be responding to the RFI and will be engaging closely with state partners and members over the course of the next month as we develop our response.