WASHINGTON, D.C. — Federal health officials have deferred $259,505,491 in federal Medicaid funding to Minnesota and imposed a six-month nationwide moratorium on certain Medicare supplier enrollments as part of a broader effort to combat fraud in federal health programs.
What This Means for You
- $259.5 million in federal Medicaid matching funds to Minnesota is on hold pending further review.
- A six-month freeze applies to new Medicare enrollment for certain medical equipment suppliers.
- CMS is seeking public input on new anti-fraud regulations under its CRUSH initiative.
Vice President J.D. Vance, Health and Human Services Secretary Robert F. Kennedy Jr., and Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz announced the actions Wednesday at the White House, describing them as part of a strategy to prevent improper payments before they occur.
“For decades, Medicare fraud has drained billions from American taxpayers—that ends now,” Kennedy said. He added that the agency is shifting from what he described as a “pay and chase” model to a “detect and deploy” approach using artificial intelligence tools to identify suspected fraud before funds are distributed.
Oz said the agency is moving toward a more proactive enforcement posture.
Minnesota Medicaid Funding Deferred
Medicaid is jointly funded by states and the federal government. CMS oversees state compliance and may withhold or defer federal matching funds if it determines program integrity requirements are not being met.
In January 2026, CMS notified Minnesota that it intended to withhold federal funds until the agency was satisfied with the state’s corrective action plan addressing what CMS described as program integrity shortcomings. The agency also initiated a review focused on whether federal funds were being used for questionable claims.
Following its review of Minnesota’s fourth-quarter fiscal year 2025 Medicaid spending, CMS deferred $259,505,491 in federal matching funds. According to CMS, that amount includes $243.8 million in expenditures tied to unsupported or potentially fraudulent claims and $15.4 million connected to claims involving individuals who lacked satisfactory immigration status under program requirements.
CMS cited unusually high spending and rapid growth in certain service areas, including personal care services, home and community-based services, and other practitioner services.
The agency said Minnesota will have the opportunity to provide documentation and respond during the ongoing review. CMS stated that if the state fails to address identified vulnerabilities or demonstrate that the expenditures are allowable, more than $1 billion in federal funds could be deferred over the next year.
Nationwide DMEPOS Enrollment Moratorium
CMS also announced a six-month moratorium on new Medicare enrollments for certain suppliers of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, known as DMEPOS. DMEPOS includes items such as wheelchairs, braces, oxygen equipment, and other medical supplies billed to Medicare.
The moratorium applies to applications for initial enrollment and changes in majority ownership for medical supply companies. CMS said the action builds on prior efforts that stopped more than $1.5 billion in suspected fraudulent billing in this sector last year.
In addition, CMS plans to publish information identifying providers and suppliers whose participation in Medicare has been revoked, including their National Provider Identifier and the reason for revocation. Officials said the move is intended to increase transparency for patients and insurers.
CMS also cited prior actions addressing pricing practices for certain skin substitute products under Medicare Part B, stating that adjustments to payment rates contributed to an $11 per month reduction in premiums by lowering overall program spending.
CRUSH Initiative and Public Input
As part of its Comprehensive Regulations to Uncover Suspicious Healthcare initiative, known as CRUSH, CMS issued a Request for Information seeking public input on additional anti-fraud measures.
The agency is requesting feedback from states, providers, suppliers, payers, technology companies, patient advocates, beneficiaries, and others on ways to strengthen fraud prevention, detection, and response efforts across Medicare, Medicaid, the Children’s Health Insurance Program, and the Health Insurance Marketplace.
Comments must be submitted by March 30, 2026, through the Federal Register at:
https://www.federalregister.gov/public-inspection/2026-03968/request-for-information-comprehensive-regulations-to-uncover-suspicious-healthcare (refer to CMS-6098-NC).
Details on the DMEPOS moratorium are available at:
https://www.federalregister.gov/public-inspection/2026-03971/medicare-medicaid-and-childrens-health-insurance-programs-nationwide-temporary-moratoria-on.
According to CMS, in 2025 the agency suspended $5.7 billion in suspected fraudulent Medicare payments, prevented $1.5 billion in suspected fraudulent DMEPOS billing, denied 122,658 Medicare claims for failing preliminary approval checks, revoked 5,586 providers’ or suppliers’ billing privileges, and referred 372 cases involving $3.7 billion in billing to law enforcement.
More information on CMS fraud prevention efforts is available at www.cms.gov/fraud.
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