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Federal officials are withholding nearly $200 million in federal Medicaid payments to Minnesota, attributing the move to suspected fraud in the state’s public health insurance programs.

The U.S. Department of Health and Human Services and the Centers for Medicare and Medicaid announced Tuesday that it is holding back millions while awaiting documentation that shows Minnesota's claims meet federal Medicaid requirements.

The deferral is part of a larger action, which also includes approximately $867 million kept from California. This brings the total to more than $1 billion in paused federal Medicaid payments to the two states.

Minnesota has previously taken action to respond to prior funding freezes. The amount previously withheld added up to more than $350 million. State officials called the new freeze rooted in politics while the federal government said it was safeguarding taxpayer money.

“Medicaid exists to serve vulnerable Americans, not to bankroll unsupported claims,” said HHS Secretary Robert F. Kennedy, Jr. at a news conference alongside CMS Administrator Dr. ​Mehmet Oz. "If those ​states want that money, they need to provide ​documentation that these payments are legitimate.”

Oz also cited Minnesota’s recent disenrollment of more than 3,000 Medicaid providers following an audit. He said these providers’ billing is a major driver of the $200 million deferral.

Minnesota’s Department of Human Services said it has worked in good faith with the federal government to shore up program defenses and avoid misuse of health dollars. Minnesota has been in a court fight with the Trump administration over prior funding holds.

Temporary DHS Commissioner John Connolly said the federal agency hasn’t provided Minnesota with information about how it is identifying potentially fraudulent claims.

“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,” Connolly said. “Partnership — not politics — is required to stop criminals and protect services for the people who need them.”

Oz and Vice President JD Vance said the federal government would freeze funds

 because Minnesota had not adequately addressed fraud in certain Medicaid programs, including those related to autism treatment.

The Minnesota Department of Human Services said that the corrective action plan accepted by CMS was submitted on Jan. 30.

CMS wrote a letter to the Minnesota’s Department of Human Services on March 19 informing the state that its plan to fix vulnerabilities was deemed sufficient. An additional expectation from CMS was that the state will implement a revalidation program for high-risk service providers by the end of May.

Along with the payment deferrals, HHS announced it will broaden its exclusion authority. This expansion will allow both CMS and the HHS Office of Inspector General to remove providers from federal healthcare programs. In certain instances, providers may be permanently barred from returning to these programs.

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Fraud in Minnesota

Erica Zurek

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The deferral of aid to Minnesota is part of a larger action, which also includes approximately $867 million kept from California. This brings the total to more than $1 billion in paused federal Medicaid payments to the two states.

A stethoscope rests on a stack of $50 and $100 bills.

Feds announce new freeze of Medicaid money for Minnesota over fraud concerns

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