In a significant escalation of efforts to combat fraud, the Centers for Medicare & Medicaid Services (CMS) under Administrator Dr. Mehmet Oz has deferred an additional $91 million in federal Medicaid funding to Minnesota. The announcement was made today, April 30, 2026.
This follows an earlier deferral of approximately $259 million for Q4 FY 2025 expenditures. This week, the FBI also raided more than 20 businesses, including the infamous “Learning Center” childcare center that became a national meme for fraud in Minnesota.
Of the latest $91 million withheld, roughly $14–15 million may relate to claims involving individuals lacking satisfactory immigration status, while about $76 million ties to 14 high-risk service categories that are highly vulnerable to fraud. Illegal immigrants are barred form Medicaid. But the unusual way Minnesota treats public dollars for health care on this group goes a long way to help explain exactly how this state became a fraud magnet.
Dr. Oz emphasized Medicaid’s fundamental purpose: “At CMS our responsibility is clear: the federal government covers more than half of Medicaid payments, which means we have both the duty and the authority to make sure these funds are used properly.”
The Center of the American Experiment has detailed how a controversial Minnesota plan to cover healthcare costs for undocumented immigrants was quickly overwhelmed by enrollment and mired in questionable entanglements with ineligible federal funding. The Walz administration’s guidance offered immediate enrollment in taxpayer-provided health care to undocumented immigrants — even if they had previously lied about their immigration status to obtain Medicaid. The estimated cost of providing care to 20,000 illegal immigrants for one year was $104 million.
The MinnesotaCare (MNCare) program that paid for the health care of illegal immigrants was supposed to be funded exclusively with segregated state-only dollars. However, the Health Care Access Fund — from which the money was drawn — is notorious for mixing state and federal money and diverting it to all kinds of non-healthcare spending.
The $14 million withheld for improper payments to undocumented immigrants is important for two reasons.
First, Minnesotans are struggling with out-of-control health insurance costs. It is simply unfair that Minnesota families go without coverage so that others can cheat the system and obtain millions in taxpayer dollars meant for the poor.
Second, it highlights why Minnesota has become a national center for public program fraud. Those in charge did more than look the other way — they enabled it, cheered it on, and actively designed a system that invited fraud and made it hard to find.
In the November 7, 2024, bulletin titled “Expanding MinnesotaCare Eligibility to Include Undocumented Individuals,” the Walz administration created a pathway for anyone to enroll in free MNCare with almost no chance of detection if they simply claimed to have no Social Security number or income history. Those enrollees faced no additional review and received immediate coverage.
Dr. Oz has promised to “not pay claims that don’t meet federal standards.” He concluded: “Medicaid exists to protect our most vulnerable citizens and we have an obligation to protect it.” It is not yet clear where the $14 million was flagged, but (like most fraud in Minnesota) feels a lot like the tip of an iceberg.