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US Official Threatens to Cut Minnesota Medicaid Funding Over Fraud Allegations

2025-12-07

The BareStory

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.

Left Perspective

  • Federal officials allege a massive fraud scheme has compromised Minnesota's Medicaid program.
  • The administration has demanded immediate corrective action from the state.
  • The allegations have been linked to national security and immigration enforcement.

Right Perspective

  • The state faces a threat of losing significant federal funding for its Medicaid programs.
  • Minnesota's administration is being placed under direct federal oversight and investigation.
  • The state's Somali residents are facing targeted immigration enforcement actions.

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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