Federal health officials have uncovered what they’re calling one of the largest Medicaid fraud schemes in U.S. history. Over $1 billion was stolen from Minnesota’s Medicaid programs, according to the Centers for Medicare and Medicaid Services (CMS).
Dr. Mehmet Oz, who leads CMS, announced the investigation on December 6, 2024. He said his staff had “never seen anything like this in Medicaid” and called for investigations into Minnesota Governor Tim Walz and state officials.
The fraud centered on two main programs. Minnesota’s Housing Stabilization Services was designed to help disabled homeless people. The Early Intensive Developmental and Behavioral Intervention program paid for therapy for children with autism.
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Both programs were small at first. The housing program was supposed to cost $2.6 million per year. Last year, it paid out over $100 million. The autism program grew from $3 million in 2018 to nearly $400 million in 2023.
CMS officials say criminals used the stolen money to buy luxury cars and overseas property. Some suspects offered kickbacks to parents who enrolled children at fake autism treatment centers. Federal investigators are also looking into whether some money went to the terrorist group Al-Shabaab.
According to a report in The New York Times, state officials knew about the problem but were slow to act. A Somali-American fraud investigator told the newspaper that Minnesota leaders worried that “forcefully tackling this issue might cause political backlash.”
Dr. Oz criticized Governor Walz directly. “Everyone from Gov. Tim Walz on down needs to be investigated, because they’ve been asleep at the wheel,” he said in his statement.
Minnesota officials told CMS about the fraud problem last year. They promised to handle it themselves. By summer 2024, federal officials decided the state wasn’t doing enough. CMS shut down the housing program and froze enrollment in several other programs.
Now CMS is demanding action. Minnesota must provide weekly updates on fraud prevention. The state must freeze all high-risk provider enrollment for six months. Officials must verify that all current providers are legitimate.
Minnesota has 60 days to submit a corrective action plan. If CMS isn’t satisfied, the federal government will stop paying its share of these programs. “Either fix this in 60 days or start looking under your couch for spare change,” Dr. Oz said.
The scandal has sparked national attention on Medicaid oversight. Arkansas Governor Sarah Huckabee Sanders commented on welfare reform, saying programs should be “a hand up” not “a handout.”
Other state controversies have also emerged. Social media posts claim Florida Governor Ron DeSantis and his wife diverted $36.2 million from child welfare and Medicaid for political advertising. These claims have not been independently verified by federal agencies.
CMS says vulnerable Americans who depend on Medicaid deserve better protection. The agency is working with Minnesota to recover stolen funds and prevent future fraud.
Governor Walz’s office has not released a detailed public response to the CMS demands. State officials face mounting pressure to explain how the fraud grew so large without detection.
The investigation continues as federal officials review other states’ Medicaid programs for similar problems.
