Feds defer more federal Medicaid funding to Minnesota citing fraud concerns
Feds freeze another $91 million in Medicaid funding for MN
The Trump administration is freezing another $91 million in Medicaid funding for Minnesota. FOX 9's Soyoung Kim has more.
(FOX 9) - Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz announced an additional $91 million of Minnesota Medicaid funding is being deferred.
This announcement comes amid an active legal battle over roughly $250 million dollars in Medicaid funding federal officials had previously halted for Minnesota.
In response, Gov. Tim Walz says, "Minnesota will not stand for this continued campaign of retribution."
Oversight breakdown
The backstory:
"Earlier this year, our audit of fourth quarter fiscal year 2025 billing, led us to defer over a quarter of a billion dollars. These findings were concerning enough that we expanded our review and that’s what led to this latest $91 million deferral," said Dr. Oz.
Last month, the state had sued the Trump administration over the frozen Medicaid funds of roughly a quarter billion dollars.
What they're saying:
Dr. Oz also referenced this week’s federal raid in Minnesota "tied to child care billing concerns" pointing to a pattern of breakdowns in other social service programs as well.
"These aren’t isolated problems. These are deeper vulnerabilities in how funds may be managed," said Oz. "Here’s the issue. Minnesota state-run programs have raised serious red flags."
Federal officials say of the $91 million deferred, $76 million is tied to 14 service categories highly vulnerable to fraud and the remaining $14 million involves program integrity concerns, including payments for ineligible individuals.
The other side:
The Minnesota Department of Human Services (DHS) says its corrective action plan to address and prevent fraud was approved by federal officials last month.
DHS Commissioner Shireen Gandhi sent FOX 9 this statement.
"For more than a year, the Minnesota Department of Human Services has been taking aggressive action to both prevent fraud and recoup fraudulent payments. We have been reporting to our federal partners and the public about those efforts. We are disappointed to learn that CMS will extend deferrals of needed funds for another quarter. Nonetheless, the department will continue to fight against the criminals who target Medicaid programs."
Gov. Walz responded with a statement to FOX 9.
"While Minnesota is working to stop fraud, the Trump Administration is working to exploit it. This is a transparent effort to cut funding for the same working people and rural Minnesota hospitals they’ve had in their crosshairs for months. Minnesota will not stand for this continued campaign of retribution."
Minnesota State Senate Majority Leader Erin Murphy (DFL-St. Paul) also addressed the impact of this latest funding freeze while speaking with reporters about the budget process.
"That action by Dr. Oz and the feds doesn’t make this job any easier for us. The impacts are going to be felt by Minnesotans, and it’s really, really frustrating, but it is what we’ve come to expect from this administration and Washington D.C. I expect there will be legal action on that before we know the answer on that."
What's next:
Federal officials are asking the state for further documentation to verify all charges billed before federal funding is released.