Minnesota officials are beginning a massive statewide push to ensure Medicaid providers in 13 high-risk services have the qualifications required by law. Today, the Minnesota Department of Human Services put out a call across all state agencies to transfer 168 qualified workers to help revalidate over 5,800 Medicaid providers by this summer. The effort is a cornerstone of the state’s efforts to convince the Centers for Medicare & Medicaid Services (CMS) to reverse course on a highly unusual action to withhold over $2 billion in annual Medicaid funding for low-income Minnesotans.
Revalidating Medicaid providers
Revalidation of Medicaid eligibility is done for all providers on a regular basis. The Minnesota Department of Human Services completes this review with high-risk providers at least every three years. The process involves a review of the provider’s paperwork and billing and is followed up with an unannounced site visit.
“Performing an unannounced site visit on every provider in 13 high-risk services is a major step forward in ensuring Minnesota’s Medicaid providers are of high-quality and meet the requirements of the law. We’re pulling in resources from multiple state agencies to make this happen as quickly as possible,” said John Connolly, deputy commissioner and state Medicaid director. “Minnesotans need to have confidence that the money being spent on these programs is helping the people it’s intended to help.”
This week, state workers are being asked to step up to help out with site visits across Minnesota. Minnesota Department of Human Services has staff that normally perform that work, but more people will be called upon to get the job done on time. Training will begin in February, and onsite inspections will start soon afterwards. Providers in all 87 Minnesota counties will get unannounced visits.
CMS to withhold over $2 billion in Medicaid funding
In a December 5, 2025, letter, CMS gave the state 26 days to produce a corrective action plan for combating fraud. That plan was rejected less than a week after it was received. CMS notified the state on January 6, 2026, that it considered the corrective action plan to be deficient and intended to withhold $2 billion dollars in federal funding per year until DHS meets certain conditions, which is highly unusual. However, Minnesota officials say the reasons CMS laid out in its decision letter were inaccurate and based on off-topic reports that were conducted in 2019 and 2021, ignoring work that Minnesota had been doing with the federal agency over the last year.
While an appeal of the CMS decision moves forward, the state is also attempting to work with federal officials. On Jan. 30, a revised corrective action plan was submitted to CMS to address the federal agency’s concerns.
“We’re implementing their recommendations, and we are taking action above and beyond those requests to minimize the risk of fraud, harden our systems against bad actors, and catch fraud quickly when it does happen,” said Connolly.
Progress fighting fraud
A review released this month by CMS of improper Medicaid payments found that Minnesota’s error rate is well below the national average. The agency reviewed billing and then compared payments to medical records for actual services that were performed. An error rate of 2.1% was found, well below the national average of 6.1%.
Moving forward, Minnesota is implementing a series of initiatives to combat fraud including:
- Enhanced training for providers and state employees to work on Medicaid provider training and education
- Enhanced training for state employees who work on Medicaid
- Increased oversight of managed care organizations under contract with the Medicaid program
- A temporary halt to admitting new providers into 13 high risk Medicaid services
- Reexamining and revalidating over 5,800 Medicaid providers before this summer
- Enhanced review of claims before they are paid
- A top to bottom independent review of how Medicaid programs are run by the state of Minnesota to identify vulnerabilities and organizational needs
- Expanded use of analytics, including artificial intelligence to prioritize review of payments before and after they are made
“Even one dollar lost to fraud, waste or abuse is too much. It’s a dollar that isn’t being used to offer lifesaving or life-enhancing medical care. The State of Minnesota and CMS are both mandated by law to provide that care, and we’re committed to carrying out that mission,” said Connolly.
Since the fall of 2024, the Minnesota Human Services Department has introduced new processes and reforms to detect and prevent fraud by:
- Identifying 14 high-risk services and establishing a licensing moratorium on new service providers in those programs
- Discontinuing the Housing Stabilization Services program
- Auditing Autism Service providers, including onsite visits
- Implementing licensure for autism centers
- Disenrolling inactive providers
- Beginning enhanced pre-payment review before fee-for-service payments are made to providers in the 13 high-risk services
More information about Minnesota’s efforts to fight fraud can be found on the Medicaid program integrity webpage.
