SAINT PAUL, Minn. (KMHL) — Minnesota officials say the state still faces major Medicaid funding losses even after the federal government approved its corrective action plan aimed at preventing fraud.
The Minnesota Department of Human Services said as much as $3.1 billion in annual federal Medicaid funding could be withheld or delayed, creating financial pressure for health care providers and local economies across the state.
State Medicaid Director and DHS Deputy Commissioner John Connolly said a current $260 million quarterly reimbursement deferral alone could significantly disrupt health care services if it continues.
According to DHS, that amount equals the annual cost of health insurance for 35,000 children or a full year of pharmacy services for all Minnesotans under age 18.
Connolly said Minnesota has spent the past 18 months working with the Centers for Medicare and Medicaid Services to strengthen oversight systems and combat fraud, waste and abuse. He said the state has adopted changes requested by federal officials, but funding has not yet been restored.
The state’s corrective action plan includes the Minnesota Revalidate initiative, which will review more than 5,500 Medicaid providers in high-risk program areas by May 31. Providers will either be cleared to continue billing Medicaid or receive notice of disenrollment.
Since fall 2024, DHS said it has also frozen enrollment for some high-risk providers, ended the Housing Stabilization Services program, audited autism service providers, removed inactive providers and expanded pre-payment reviews.
