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Minnesota officials said Tuesday they’re appealing the Trump administration’s decision to withhold $2 billion in Medicaid funding earmarked for the state. They warned of “catastrophic consequences” for more than 1 million Minnesotans in need if that money doesn’t come through.

intended to hold up the money to Minnesota and four other states

John Connolly, deputy commissioner of the Minnesota Department of Human Services and state Medicaid director, said the state’s been working since October 2024 to address fraud concerns but that its plans for change were rejected by Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services.

“We were disappointed to find that our draft corrective action plan was summarily rejected in an unprecedented way, with little substantive analysis of the facts and no time for the state and federal agencies to discuss and agree upon a corrective action plan that would be implemented,” Connolly told reporters Tuesday.

DHS has not said definitively when it will start withholding funds, he added.

The state has moved forward with other corrective actions, including a six-month enrollment moratorium for 13 Medicaid  programs with the highest risk for fraud. But losing $2 billion would hobble those efforts, said Shireen Gandhi, temporary commissioner of DHS.

“Unfortunately, CMS’ recent decision to withhold Medicaid funds is putting the people whom both agencies are sworn to serve at risk,” Gandhi said. “Minnesota cannot absorb the loss of more than $2 billion in annual funding programs without catastrophic consequences for the people we serve.”

Of the more than 1 million Minnesotans who depend on the aid, some 600,000 are children.

Gandhi and Connolly also expressed concern at the nature of the withholding decision, which they claim is based in political opinion over facts.

“This is unprecedented,” Gandhi said. “We can't find another example of CMS taking this kind of action in any other state. It's not corrective action. It's a punitive action. We are appealing the action because it appears that CMS is not basing its decision on a factual look at the scope of the fraud that they are concerned.”

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A key Minnesota official on Tuesday warned of “catastrophic consequences” for more than 1 million Minnesotans in need, including 600,000 children, if that money doesn’t come through.

Minnesota appealing feds’ move to withhold $2B in Medicaid funds

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