Politics

US Official Threatens to Cut Minnesota Medicaid Funding Over Fraud Allegations

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Dec 7, 2025

THE BARE STORY

The administrator for the Centers for Medicare & Medicaid Services (CMS), Mehmet Oz, has warned Minnesota it could lose federal Medicaid funding over an alleged large-scale fraud scheme. On Friday, Oz gave the state a 60-day deadline to implement corrective measures to restore integrity to its Medicaid program.

According to Dr. Oz, the warning is a response to what he described as a fraud scheme of over $1 billion carried out by "bad actors" within Minnesota’s Somali community. He cited significant cost overruns in two state Medicaid programs as evidence. Oz also alleged that some of the stolen money may have been funneled to the terrorist group al-Shabab.

As a result, CMS has demanded that Governor Tim Walz's administration provide weekly anti-fraud updates and freeze new high-risk provider enrollments for six months, among other actions. Oz stated that if CMS is not satisfied with the state’s cooperation, the federal government would stop its payments for the affected programs. Governor Walz’s office did not immediately provide a comment.

Separately, President Donald Trump announced new investigations into the alleged fraud, which he cited as the basis for terminating deportation protections for hundreds of Somali migrants. Immigration and Customs Enforcement (ICE) has begun what was described as "enhanced operations" in Minnesota focusing on the state's Somali residents. Treasury Secretary Scott Bessent also announced a department probe into how taxpayer funds were allegedly diverted to al-Shabab.

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• The state faces a threat of losing significant federal funding for its Medicaid programs. Minnesota has been given a 60-day ultimatum by the federal government to address allegations of fraud within its programs. If CMS is not satisfied with the state's response, the federal government has stated it will stop payments for the two affected programs.

• Minnesota's administration is being placed under direct federal oversight and investigation. Governor Tim Walz's administration is now required to provide weekly progress reports to federal authorities and freeze certain provider enrollments. Separately, both President Trump and the Treasury Secretary have announced new federal investigations into the state's handling of the programs.

• The state's Somali residents are facing targeted immigration enforcement actions. As a result of the federal allegations, deportation protections for hundreds of Somali migrants have been terminated by the President. Furthermore, Immigration and Customs Enforcement (ICE) has begun what was described as "enhanced operations" specifically focusing on Minnesota's Somali residents.

How it may affect me

As a U.S. reader:

• Minnesota residents on affected Medicaid programs could lose healthcare coverage if the state fails to meet federal demands within the 60-day deadline.

• Somali residents in Minnesota are subject to increased immigration enforcement and potential deportation after the termination of protections for hundreds of migrants.

• The federal investigation may lead to stricter nationwide oversight and anti-fraud rules for all state-run Medicaid programs funded by taxpayer dollars.

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