Minnesota adds extra review to high-risk Medicaid programs amid fraud concerns
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Amid accusations of widespread Medicaid fraud in Minnesota, officials provided an update Monday on the state’s extra precautions, but that could mean delays in payments for some providers.
At the end of October, Gov. Tim Walz and the Minnesota Department of Human Services announced an additional level of review for 14 Medicaid programs that have been designated as high risk for potential fraud. At a news conference Monday, DHS announced it has officially started an audit process where health care company Optum will review payments before they are processed to these providers.
The federally funded Medicaid program that Minnesota helps administer has been a target for scammers. John Connolly, the state Medicaid director, said his team is doing this to protect the integrity of Medicaid, which serves low-income Minnesotans.
“These Medicaid benefits are truly critical to the lives of so many Minnesotans, and we’re doing everything we can to protect the services and ensure people get the care they need,” Connolly said. “It's a goal that unites everyone — DHS, providers, legislators, managed care plans and taxpayers.”
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But, this extra step could lead to delays, Connolly warned. Some claims could take longer than 30 days to resolve, but Connolly promised that the state will pay all legitimate claims within the 90 days required by the Centers for Medicare & Medicaid Services.
Some Minnesota providers have voiced concerns that their business won’t be able to survive if these payments are delayed. Connolly said that they are working with Optum to move through the process as quickly as possible.
“We know changes in processes can be confusing and concerning, in cases, for providers,” Connolly said, “and payment delays can cause real challenges for many providers that we work with — the majority of whom are legitimate businesses doing hard work to provide important services to millions of Minnesotans.”
DHS will continue to review claims internally and also send Optum batches of claims to analyze every two weeks. If a claim is flagged, the provider will need to submit additional information and documents before payment is made. And, if signs of fraud are detected, DHS will not pay the claim and the provider will be referred to the Office of Inspector General for investigation.
Connolly said that DHS sent more than 80,000 claims to Optum in the first cycle for review. He said Optum is looking at concerning trends, like a spike in service that doesn’t make sense, an escalation in billing, and missing elements in the claim. These potential red flags don't necessarily mean there’s anything wrong, but it means that the state will need to request additional information.
Republican leaders in Minnesota’s Legislature have said fraud will be their top focus in 2026. Minnesota House Speaker Lisa Demuth, a Republican candidate for governor, said in a press conference Monday that her caucus steered YouTube video creator Nick Shirley to investigate day care sites in Minnesota. The video has since gained local and national attention.
Tikki Brown, the commissioner for the Minnesota Department of Children, Youth, and Families, said at the DHS press conference Monday that her team has visited all of the sites mentioned in Shirley’s video in the past six months and that they’re visiting again this week in response to concerns raised.
DHS stressed Monday that it’s making several moves to eradicate fraud. Since May 2025, it’s added tougher oversight of the 14 programs classified as high risk for fraud, it’s disenrolled about 800 inactive providers in high-risk programs, terminated housing stabilization services due to widespread fraud, and paused licenses for new home and community-based services and adult day care providers.
“DHS has zero tolerance for fraud,” Connolly said. “We are not just talking about reducing fraud. We are taking action.”
MPR News reporter Dana Ferguson contributed reporting to this story.
