CMS Chief Mehmet Oz Gives Minnesota 60 Days To Address Alleged Somali-Linked Medicaid Fraud — Or Risk Funding Cuts

CMS Administrator Orders Minnesota To Act On Alleged Medicaid Fraud

Centers for Medicare & Medicaid Services (CMS) Administrator Mehmet Oz on Friday publicly warned Minnesota Governor Tim Walz that the state risks losing federal Medicaid funding unless it restores what he described as the program’s "integrity." In a post on X (formerly Twitter), Oz alleged that more than $1 billion had been taken in a large Medicaid fraud scheme by "bad actors" tied to Minnesota's Somali community and claimed some funds may have been diverted to the Somali terrorist group al-Shabab. These allegations have been reported by Fox News Digital and attributed to CMS statements.

"Our staff at CMS told me they’ve never seen anything like this in Medicaid — and everyone from Gov. Tim Walz on down needs to be investigated, because they’ve been asleep at the wheel," Oz wrote.

Oz outlined a list of corrective actions he wants the state to complete within 60 days:

• Send weekly updates to CMS on anti-fraud efforts.
• Freeze enrollment of high-risk providers for six months.
• Verify all current providers are legitimate and remove those that fail verification.
• Submit a formal corrective action plan to prevent future fraud.

He also warned: "If we’re unsatisfied with the state’s plans or cooperation, we’ll stop paying the federal share of these programs."

Programs Cited And Cost Spikes

Oz pointed to two Minnesota Medicaid initiatives that he said showed dramatic cost increases. According to his statement, the Housing Stabilization Services program — originally projected at about $2.6 million per year — paid out more than $100 million in 2024. He also cited the Early Intensive Developmental and Behavioral Intervention program, which he said grew from roughly $3 million in 2018 to nearly $400 million in 2023.

Oz accused fraudsters of using stolen taxpayer money for luxury purchases and alleged kickbacks to parents who enrolled children in sham autism treatment centers. He reiterated the unproven claim that some funds may have made their way to al-Shabab; those specific allegations are under investigation and have not been independently verified in public court filings.

Federal Response And State Reaction

CMS said it has already taken some steps, including shutting down what it described as the most-abused housing program and freezing provider enrollment in certain heavily used programs. The announcement comes amid broader Trump administration actions and probes into alleged fraud in Minnesota. President Donald Trump has called parts of Minnesota a "hub of money laundering activity" and cited related concerns when ending certain deportation protections for some Somali migrants. Senior administration officials have also announced new investigations, including a Treasury Department review into allegations that taxpayer dollars were diverted to al-Shabab, according to Secretary Scott Bessent.

Walz's office did not immediately respond to Fox News Digital's request for comment. The original report credited Fox News Digital and contributor Breanne Deppisch.

Note: This article summarizes allegations and administrative actions reported by news outlets and CMS statements. Some allegations described above remain subject to ongoing investigation and have not been proven in court.