Kennedy Stops $1B in Payments to California, Minnesota as Medicaid Fraud Collides With The Autism Epidemic

Medicaid fraud is the breaking story. Moments ago, HHS Secretary announced the ​pause of over $1 billion in Medicaid payments to California ‌and Minnesota “because of suspected fraud and noncompliance.”

“If those ​states want that money they need to provide ​documentations that these payments are legitimate,” Kennedy ⁠said at the news conference.

While healthcare fraud is dominating headlines a parallel crisis in Medicaid programs—joint federal-state initiatives serving low-income families, people with disabilities, and children—has siphoned billions in taxpayer dollars meant for the nation’s most vulnerable.

Independent investigations, led on the ground by journalist Nick Shirley along with the Department of Justice and other agencies, have exposed industrial-scale abuse, particularly in autism therapies like Applied Behavioral Analysis (ABA) billing.

The focal point of this scandal is the devastating impact on autism services.

Legitimate providers and families are collateral damage in crackdowns triggered by rampant fraud.

Nick Shirley’s Exposé and Minnesota’s Ground Zero

Shirley’s viral video documented fraud in Minnesota’s daycare and healthcare services complete with empty facilities billing for nonexistent patients and triggering widespread scrutiny.

Minnesota’s Early Intensive Developmental and Behavioral Intervention (EIDBI) program—Medicaid-funded autism services for those under 21—saw claims explode from roughly $600,000 in 2018 to over $400 million by 2025. The time period overlapped almost perfectly with then Governor Tim Walz’s tenure. He has since ended his reelection bid amid the scandals.

In May 2026, the Department of Justice charged 15 defendants with over $90 million in healthcare fraud across multiple programs, including what prosecutors called the largest Medicaid autism fraud scheme ever charged by the DOJ. Two defendants allegedly ran a $46.6 million operation involving false autism diagnoses and billing for services never delivered.

Federal and state actions followed, including pauses on payments for high-risk services before Kennedy’s recent billion-dollar hammer. Widespread payment irregularities across states have also been discovered by HHS Office of Inspector General audits where four states revealed massive improper payments for ABA and related autism services.

Similar patterns appear in California, where Medi-Cal spending has ballooned dramatically with minimal enrollment growth, alongside hospice and home healthcare fraud probes. Federal authorities have responded with a national healthcare fraud enforcement push. The DOJ has charged hundreds in multi-billion-dollar takedowns, and CMS Administrator Dr. Mehmet Oz has highlighted fraud in states including New York—alleging involvement by organized crime syndicates, including Chinese groups operating in areas like Flushing, Queens.

Collateral Damage: Legitimate Providers and Families Pay the Price

Aggressive enforcement has created unintended harm. Jennifer Larson, founder and CEO of Minnesota’s Holland Center (with five locations serving children with autism and disabilities for over 20 years), testified before Congress in January 2026.

Her organization underwent regular audits while delivering real services only to see over $400,000 in Medicaid payments withheld with the total growing daily due to the state’s blanket pauses on autism therapies.

“Loss of services can erase years of progress in weeks, causing lasting trauma for children and families already under extraordinary strain” Larson stated in her testimony.

The Bigger Picture: Rising Autism Prevalence and Trillion-Dollar Costs

This fraud occurs against a backdrop of sharply rising autism rates. Criminals taking money meant for a critical mass of individuals on the autism spectrum.

CDC data for 2022 (released in 2025) shows 1 in 31 children aged 8 identified with autism spectrum disorder (ASD)—up from prior estimates—with even higher rates in California (around 1 in 19).

Lifetime societal costs are staggering. Research estimates total social costs of ASD from 1990–2019 exceeding $7 trillion—equivalent to about two years of federal revenue. Projections for 2029 range from $11.5 trillion (if prevalence stabilizes…which it hasn’t) to nearly $15 trillion (if trends continue).

The U.S. economy has become heavily reliant on healthcare as the top employer in most states, making efficient use of these funds critical.

Moving Forward: Targeted Reform Over Blanket Measures

The autism community deserves better than criminals exploiting weak oversight or governments responding with blunt instruments that punish ethical providers.

Solutions include advanced data analytics for real-time fraud detection (as private insurers and credit card companies already employ), stronger provider screening, and swift, targeted prosecutions that distinguish criminals from caregivers.

Policymakers must also address misplaced priorities—such as recent efforts by New York politicians to restrict communication methods for nonspeaking autistics while fraudsters siphon funds unchecked within the state.

The work of journalists like Nick Shirley and testimony from providers like Jennifer Larson have forced action. Now, sustained political will is needed to protect Medicaid dollars for genuine autism therapies—ensuring children receive the support they require while safeguarding taxpayer resources. The cost of inaction, measured in both dollars and human potential, is simply too high.