HHS & CMS Defer More Than $1 Billion in Medicaid Payments to Minnesota and California

By: Alexandra Hembrough, Esq., General Counsel, SGS

On July 21, 2026, the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) announced the deferral of more than $1 billion in federal Medicaid payments to California and Minnesota, pending the submission of additional documentation on high-risk claims. CMS officials framed the action as part of a broader crackdown on fraud, waste, and abuse, emphasizing that the holds are temporary deferrals rather than permanent cuts. States can recover the funds by demonstrating that the claims meet federal requirements.

In Minnesota, the focus centers on personal care and home-based services across multiple high-risk categories. CMS is holding approximately $199 million tied in part to claims from the roughly 3,000 providers disenrolled earlier this year during state revalidation efforts aimed at program integrity. Payments remain deferred until supporting documentation is provided. In California, the primary target is In-Home Supportive Services (IHSS). CMS deferred about $867.5 million linked to claims involving beneficiaries with unsatisfactory immigration status, again until the state supplies the required documentation verifying eligibility and compliance.

Although non-emergency medical transportation (NEMT) was not cited in the HHS announcement, the timing underscores ongoing scrutiny of Medicaid transportation fraud. Just days later, on July 24, 2026, the owner of a Long Island ambulette company was sentenced to more than eight years in prison for a scheme that defrauded Medicaid of more than $19 million. The case involved false claims for transportation services and the use of proceeds for luxury assets, highlighting persistent vulnerabilities in related service areas, even as federal authorities intensified reviews of home-based and personal care claims.