The prime minister is accusing Hawke's Bay health professionals of being "out of line" for prioritising young Māori and Pasifika.
Young people aged 14 to 24 years are no longer eligible for free GP and nurse services on the basis of these ethnicity groups.
Christopher Luxon said health professionals were wrong to implement the policy, and the health minister has now intervened.
"We have a very simple approach to healthcare which is based off need, not ethnicity or race. That was out of line, out of order.
"The minister made an intervention yesterday and they've confirmed that they've made the changes."
Shane Reti said OurHealth Hawke's Bay's targeting policy went against the government's policy statement that instructs the health sector.
"I needed to remind them of the statements that I'd made in the government policy statement that we will base our resource distribution, our decision-making based on need first of all and then on targeting vulnerabilities after that."
"They obviously want to attend particularly to vulnerable communities and those in need, I get that, but that can be done through the government policy statement which clearly says based on need."
East Coast MP for the Ikaroa-Rāwhiti electorate - Labour's Cushla Tangaere Manuel - said there was good reason to target Māori in the health system.
"So, it's not divisive. It's actually addressing a need we know exists."
Reti stood by the government scrapping the policy, saying both Māori and non-Māori can have high needs.
"I'm not at all contradicting that Māori are a high need but I could also point you towards non-Māori who in any given instance may have an equal need and so we need to distribute based on need first of all."
Following further questions on the targeting tool, Luxon told reporters to "look at the facts".
"What we just said is that doesn't work. We've got a principle here which is that we deliver health to all New Zealanders on the basis of their needs not their ethnicity."
