Trump administration defers $200M in Medicaid payments to Minnesota over fraud concerns
Fraud review: Feds freeze $200M in MN Medicaid payments
CMS Administrator Dr. Mehmet Oz said the Trump administration is deferring more than $1 billion in federal Medicaid funding to Minnesota and California until the states substantiate claims identified during recent audits. Of that total, over $200 million is being deferred from Minnesota.
(FOX 9) - The Trump administration announced Tuesday it is deferring nearly $1 billion in federal Medicaid payments to Minnesota and California, saying the states must provide additional documentation to address suspected fraud and compliance concerns before the money is released.
Minnesota, California Medicaid Funds deferred
The backstory:
The deferred funds include more than $876 million for California and nearly $200 million for Minnesota, according to Health and Human Services Secretary Robert F. Kennedy Jr.
"If Governor Gavin Newsom or Governor Tim Walz wants this funding released, all they have to do is provide basic documentation showing that these services are legitimate and not fraudulent," explained Kennedy.
CMS Administrator Dr. Mehmet Oz added, "If it smells like fraud, we're not paying for it anymore."
In Minnesota, the review focused on the 14 high-risk Medicaid service areas that the state's legislative auditor has previously identified as especially vulnerable to fraud, Kennedy said.
Oz said roughly $413 million in Minnesota Medicaid claims were under review this quarter. Of that amount, a little over $3 million is tied to documentation gaps, including claims that were allegedly submitted for care to people who were dead.
Another portion of approximately $42 million is tied to claims from nearly 870 providers flagged through fraud detection analytics, Oz said.
The largest share of the deferred funding stems from Medicaid providers that Minnesota recently disenrolled after failed background checks, failed site visits or other compliance issues.
"This raises questions about the claims tied to these same providers," explained Oz. "We looked back to see how much they billed us last quarter, and unfortunately, it was a lot. It’s the majority of the $199 million that we're deferring to Minnesota today."
Oz said the agency has been working with both state administrations, and Minnesota has already submitted documents that are being reevaluated.
"The purpose is to give the money back if they can demonstrate that it's truly been well spent," Oz said.
Other deferrals
Big picture view:
This is the fourth deferral announced by the Centers for Medicare and Medicaid Services related to Medicaid funding for Minnesota in recent months. In February, officials announced they would withhold $243 million from Minnesota – as part of an effort to block $2 billion in funding for the state – as an effort to combat fraud.
Subsequently, the CMS announced deferrals of $260 million and $91 million.
In March, Attorney General Keith Ellison filed a lawsuit over the $243 million in pulled funds, to prevent federal officials from moving forward with plans to block the $2 billion in funding.
In May, a judge granted a mutual stay in that case as Minnesota and federal officials tried to hammer out a deal. It's unclear how the new deferral could affect negotiations in that case.
The other side:
Gov. Tim Walz pushed back on the administration's claims, saying, "This isn't about fraud — it's about cutting your healthcare so that Trump can afford the tax cuts he gave to billionaires. They're cutting more money in healthcare than they've prosecuted for fraud. The math doesn't add up."
In a separate statement, temporary Minnesota DHS Commissioner John Connolly wrote: "We have cooperated in good faith and proactively engaged the Centers for Medicare and Medicaid Services to first raise the alarm on fraud in Minnesota’s Medicaid program, to effectively investigate fraud and to institute further safeguards against future misuse of funds.
"CMS touts their new fraud-detection capabilities, yet has not provided data or explanation on how the deferral amount was calculated or what it was based on. I respectfully ask the federal government to partner with us and share any information about their methods to identify potentially fraudulent providers in Minnesota.
"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. Partnership – not politics – is required to stop criminals and protect services for the people who need them."
FOX 9 reached out to the Minnesota Attorney General's Office for more information.
The Source: This story uses information from a press conference and a statement from Gov. Tim Walz.