Minnesota clarifies Medicaid audit: only flagged claims paused up to 90 days; Optum reviewing
Gov. Tim Walz ordered a third‑party audit of Medicaid billing across 14 designated “high‑risk” services, contracting Optum to run analytics and flag anomalous claims for DHS review — a move funded in the 2025 session and prompted in part by recent federal fraud prosecutions. DHS clarified it is not withholding all payments but will pause only Optum‑flagged claims for up to 90 days for prepayment review (and possible denial if found fraudulent), saying it will still meet federal 90‑day payment rules, a step that providers warn could destabilize care and has drawn mixed political reactions.
📌 Key Facts
- Minnesota DHS ordered an audit and will pause payments for up to 90 days for claims tied to 14 designated “high‑risk” Medicaid services while suspicious billing is reviewed; only claims flagged as anomalous will be held (clean claims will be paid on time), and suspected improper claims may be denied if found fraudulent.
- The 14 services named by DHS are: EIDBI (autism treatment), Integrated Community Supports (ICS), Nonemergency Medical Transportation (NEMT), Peer Recovery Services, ARMHS (adult rehabilitative mental health services), Adult Day Services, PCA/CFSS (personal care assistance and Community First Services and Supports), Recuperative Care, Individualized Home Supports, Adult Companion Services, Night Supervision, ACT (Assertive Community Treatment), IRTS (intensive residential treatment services), and Housing Stabilization Services.
- DHS says it identified the services based on vulnerabilities, evidence of fraud, or anomalous billing patterns; the state also said it will comply with federal 90‑day payment rules during the prepayment review process.
- Optum, a third‑party contractor, will run billing analytics to flag irregular claims for DHS review; DHS will verify flagged claims and refer suspected improper claims to the DHS Office of Inspector General; Optum did not provide timelines for its review when asked.
- The audit contract is funded by money authorized during the 2025 legislative session.
- DHS emailed providers to clarify that it is not holding all submitted claims for the 14 services for 90 days, but warned there may still be payment processing delays as the new prepayment review rolls out.
- Provider and stakeholder reactions were mixed: ARRM CEO Sue Schettle and others said the rollout wording and lack of advance notice caused confusion and could destabilize care networks; lawmakers were split politically (some praising the action as proactive and others criticizing its timing, scope, or calling for stronger oversight).
- Officials and prosecutors have framed the action in the context of recent fraud prosecutions — an Assistant U.S. Attorney called Minnesota Medicaid fraud “staggering” — and reports note a Department of Justice probe involving UnitedHealth’s PBM has been mentioned in related coverage.
📰 Sources (6)
Shaky rollout of Medicaid payments audits caused confusion, concern for Medicaid providers
New information:
- DHS emailed providers hours after the announcement stating it is not holding all submitted claims for the 14 services for 90 days (in bold).
- Rep. Tina Liebling said lawmakers urged the administration to correct misinformation; Rep. Mohamud Noor said 'clean claims' should be paid on time.
- DHS warned there may still be payment processing delays as the new prepayment review process rolls out.
- ARRM CEO Sue Schettle said the press release wording caused confusion and providers received no advance notice.
- Optum, the third‑party auditor, did not respond to questions about the review timelines; the article notes DOJ is investigating UnitedHealth's PBM.
- The report details that only claims flagged for anomalies will be paused for up to 90 days and denied if found fraudulent.
Walz announces audit of ’14 high-risk Medicaid services,’ pauses payments due to suspected fraud
New information:
- Direct quote from Gov. Tim Walz framing the action as necessary to restore public trust and 'pump the brakes' on 14 programs targeted by fraud.
- Explicit, full list of all 14 'high-risk' services named by DHS (including EIDBI for autism, ICS, Nonemergency Medical Transportation, Peer Recovery, ARMHS, Adult Day Services, PCA/CFSS, Recuperative Care, Individualized Home Supports, Adult Companion, Night Supervision, ACT, IRTS, and Housing Stabilization Services).
- Process detail: Optum will flag irregular claims; DHS will verify flagged claims and refer suspected improper claims to the DHS Office of Inspector General.
- New political reaction quotes: House Speaker Lisa Demuth and Floor Leader Harry Niska criticize the timing and scope; Senate Minority Leader Mark Johnson calls the audit 'too little, too late.'
- Contextual quote from Assistant U.S. Attorney Joe Thompson calling Minnesota Medicaid fraud 'staggering,' citing recent HSS and EIDBI prosecutions.
Minnesota halts payments in 14 Medicaid programs over fraud concerns, orders audit
New information:
- Enumerates additional affected programs beyond earlier lists: adult rehabilitative mental health services, intensive residential treatment services, adult companion services, individualized home supports, and recuperative care (along with autism services, integrated community supports, nonemergency medical transportation, peer recovery services, adult day services, personal care assistance and community first services and supports, and Housing Stabilization Services).
- Quote from Gov. Tim Walz emphasizing restoring public trust and 'pumping the brakes' on 14 high‑risk programs.
- House Speaker Lisa Demuth criticizes scope of alleged fraud and urges creation of a new Office of Inspector General to investigate state-program fraud.
- Senate Majority Leader Erin Murphy praises the action as proactive and says the audit provides enhanced tools to stop fraud.
- Confirms payment pause is for up to 90 days to detect suspicious billing while Optum flags anomalies for DHS review.
Tim Walz orders audit of Medicaid billing as fraud prosecutions continue
New information:
- Audit contract funding source: paid with money authorized during the 2025 legislative session.
- High-risk programs will face added oversight such as enhanced fingerprint background studies, initial screening visits, and unannounced visits.
- Article explicitly links two targeted programs (Housing Stabilization Services and autism services) to recent federal fraud prosecutions.
- Includes on-record reaction from ARRM CEO Sue Schettle calling delays an “existential threat.”
- Political reaction: Rep. Kristin Robbins, chair of the GOP-created House Fraud Prevention and State Oversight Committee, criticized Walz and referenced her earlier call for a federal audit.
Walz pauses payments for 14 ‘high-risk’ Medicaid programs
New information:
- Minnesota will pause payments for 14 designated 'high‑risk' Medicaid services for up to 90 days while the audit proceeds.
- DHS identified the services based on vulnerabilities, evidence of fraud, or anomalous billing patterns; a DHS letter from Temporary Commissioner Shireen Gandhi cites the criteria.
- Optum will perform the billing analytics and flag issues for DHS review; the state says it will still meet federal 90‑day payment rules.
- ARRM (representing 200 disability‑service providers) warned the pause could destabilize an already fragile care network.
- The affected list includes: Integrated Community Supports, Nonemergency Medical Transportation, Peer Recovery Services, ARMHS, Adult Day Services, PCA/CFSS, Recuperative Care, Individualized Home Supports, Adult Companion Services, Night Supervision, ACT, and IRTS; Medicaid autism treatment and the now‑defunct Housing Stabilization Services are also named.