JD Vance makes dramatic move withholding Minnesota Medicaid funds in first battle of his ‘war on fraud’

WASHINGTON — Vice President JD Vance will announce Wednesday afternoon that $259.5 million in Medicaid funds for Minnesota won’t be reimbursed pending investigation — along with a national pause on firms that can seek subsidies through Medicare for durable medical equipment like canes and walkers, The Post has learned.

Vance will appear alongside Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid
Services, and Robert F. Kennedy Jr., health and human services secretary, to make the announcement — one day after President Trump announced a “war on fraud” in his State of the Union address.

The unusual mass-withholding of reimbursement to Minnesota impacts nearly half of the receipts submitted for the low-income Medicaid program in the past fiscal quarter.

The “deferment” focuses on 14 programs identified by the state as having a high risk of fraud, including autism care, at-home rehabilitation, non-emergency medical transports and night supervision — some of which have been implicated in a large fraud scandal in the Twin Cities.

The funding for Medicaid reimbursement will be deferred for Minnesota until “further investigation is completed” into possible fraud impacting billing, an administration official said.

The Trump administration in January announced plans to pause future disbursement to all states pending review — after pausing various social-services funds for five Democrat-run states including Minnesota and New York — but the Wednesday announcement impacts receipts already submitted.

The new durable medical equipment policy, meanwhile, will restrict new companies from enrolling in the old-age Medicare program’s reimbursement system.

Officials last year identified an error rate of roughly 20% — or $1.5 billion — in durable medical equipment charges, of which about $1 billion is suspected to be fraudulent, officials said.

The pause in new companies enrolling is intended to allow for a vetting of already-enrolled companies to weed out bad apples.

Unlike the Minnesota Medicaid pause, issues with Medicare equipment charges are clustered in Republican-led states, with disproportionate suspected fraud in South Florida and Harris County, Texas, one official said.

Trump announced at the State of the Union that Vance would be in charge of a national crackdown on abuse of government programs.

“I am officially announcing the war on fraud to be led by our great vice president, JD Vance,” Trump said, predicting, “we will actually have a balanced budget overnight. It will go very quickly. That’s the kind of money you’re talking about.”