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A federal hold on $243 million to support Minnesota Medicaid programs could be on the verge of ending after a corrective action program to guard against fraud gained approval.

In a letter Thursday, the Centers for Medicare and Medicaid Services informed a state agency that oversees the health programs that a plan to fix vulnerabilities was deemed sufficient. The expectation is that the state will undertake a revalidation program of high-risk service providers by the end of May.

“​The approval of our corrective action plan provides critical confirmation that Minnesota is doing the work necessary to fight fraud and has a robust plan so that every taxpayer dollar is used to deliver vital Medicaid services to the people of Minnesota,” Minnesota DHS Commissioner Shireen Gandhi said in a statement. “CMS’ decision is encouraging, but significant Medicaid funding remains at risk. DHS will continue to make Minnesota a national model for ensuring Medicaid dollars are used as intended.”   

It’s not clear when the federal payments to Minnesota will resume. The freeze in aid prompted a state lawsuit against the federal agency.

CMS indicated it will ask Minnesota attorneys to pause the lawsuit.

Minnesota leaders are assessing the impact. In a Friday letter to the U.S. District Court judge presiding over the case, a Minnesota agency attorney said he was seeking more information.

Brandon Boese, a lawyer in the Human Services Division of the Minnesota Attorney General’s Office, noted past comments by CMS Administrator Mehmet Oz. He said Oz “promised Minnesota that CMS would release the $243 million in deferred Medicaid funding once Minnesota ‘proposes and acts on a comprehensive corrective action plan.’” Boese said more clarity is needed on how the approval will change the funding situation.

Oz and Vice President JD Vance said the freeze would occur

 because Minnesota hadn’t adequately headed off fraud in certain Medicaid programs, including those involving autism treatment.

The Minnesota Department of Human Services said that the plan accepted by CMS was submitted on Jan. 30, and that CMS recognized the state met both its Feb. 1 and March 1 goals before the corrective action plan was approved.

CMS said the corrective action plan includes more regular meetings and steps to safeguard funding.

“CMS remains committed to working collaboratively with Minnesota and looks forward to continued progress protecting critical Medicaid taxpayer dollars and the beneficiaries we serve,” wrote Deputy Administrator and Chief Operating Officer Kimberly Brandt.

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Fraud in Minnesota

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Brian Bakst

The federal government deferred payments to Minnesota over fraud risks in a set of Medicaid health programs but could unlock the money after state leaders provided a plan for a remedy.

Feds approve Minnesota's anti-fraud plan for Medicaid, could release $243 million

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