Federal government defers $199 million in Minnesota Medicaid payments pending fraud review

ROCHESTER, Minn. (KTTC) – The U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) announced Monday that approximately $199 million in federal Medicaid payments to Minnesota are being deferred while the state provides additional documentation supporting certain high-risk claims.

CMS said it reviewed Medicaid claims across 14 high-risk service areas in Minnesota. The review identified claims requiring additional documentation, including expenditures linked to providers flagged through program integrity reviews and other claims with potential eligibility or billing concerns.

Officials emphasized the action is a payment deferral, not a permanent funding cut, and that Minnesota will have the opportunity to submit documentation showing the claims meet federal Medicaid requirements.

“Medicaid exists to serve vulnerable Americans — not to bankroll unsupported claims,” said HHS Secretary Robert F. Kennedy, Jr. “Under President Trump’s leadership, we are restoring accountability across our public programs and protecting taxpayer dollars. States that receive federal Medicaid funding must demonstrate that every dollar meets federal requirements. When they cannot, we will not release federal funds until they do.”

CMS Administrator Dr. Mehmet Oz framed the deferral as part of a broader shift toward proactive oversight.

“CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” Dr. Oz said. “By stopping waste and fraud before the check clears, CMS is delivering record-high savings for taxpayers and ensuring that their hard-earned dollars reach the vulnerable Americans Medicaid is meant to serve.”

In addition to the payment deferrals, HHS announced it will expand its exclusion authority, allowing both CMS and the HHS Office of Inspector General to remove providers and other bad actors from federal healthcare programs — and in some cases permanently bar them from returning.

Minnesota’s $199 million deferral is part of a larger action that also includes approximately $867.5 million deferred to California, bringing the total to more than $1 billion in deferred federal Medicaid payments nationwide.

RESPONSE FROM MINNESOTA DEPARTMENT OF HUMAN SERVICES

The Minnesota Department of Human Services confirmed it has received the notice from HHS and CMS.

According to Minnesota DHS, this is the third deferral of Medicaid funds related to alleged program integrity concerns. The above deferral applies to funding owed to Minnesota by the federal government for services paid for in the quarter ending on March 31, 2026.

The previous quarterly deferrals were for $260 million and $91 million.

Minnesota DHS says it implemented new practices to stop fraudulent payments before they “go out the door.” Those new practices include instigated pre-payment review, disenrollment of inactive providers, revalidating thousands of providers, designated programs as high-risk and improved usage of data to track trends and identify anomalies.

We have cooperated in good faith and proactively engaged the Centers for Medicare and Medicaid Services to first raise the alarm on fraud in Minnesota’s Medicaid program, to effectively investigate fraud and to institute further safeguards against future misuse of funds.

CMS touts their new fraud-detection capabilities, yet has not provided data or explanation on how the deferral amount was calculated or what it was based on. I respectfully ask the federal government to partner with us and share any information about their methods to identify potentially fraudulent providers in Minnesota.

Today’s actions show that the federal government is acting again in unprecedented and punitive ways as part of their war on Medicaid and its recipients. Partnership – not politics – is required to stop criminals and protect services for the people who need them.

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