CMS freezes another $91M in Minnesota Medicaid funds
Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz announced a new $91 million deferral of Minnesota Medicaid funds, adding to an earlier freeze and threatening payments to providers.
Federal officials said $76 million of the deferral covers 14 service categories they consider highly vulnerable to fraud. The remainder, about $14 million, targets payments for ineligible individuals and other program-integrity concerns. The move follows an earlier audit that froze roughly $250 million in federal Medicaid dollars. Officials also noted federal agents raided 22 Minnesota child-care locations over alleged billing fraud, which Oz cited as evidence of oversight breakdowns.
The episode traces back to CMS's audit of fourth-quarter fiscal 2025 billing that prompted the prior quarter-billion freeze. Minnesota has already sued over that earlier action. DHS Commissioner Shireen Gandhi says CMS approved the state's corrective action plan last month, a move state officials say should have addressed the agency's concerns. Gov. Tim Walz accused the administration of exploiting the fraud issue and targeting working people and rural hospitals.
The dispute appears set to continue in court. Senate Majority Leader Erin Murphy said more legal action is expected over the new deferral as Minnesota contests the federal withholding.
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📌 Key Facts
- CMS Administrator Dr. Mehmet Oz announced a new $91 million deferral of Minnesota Medicaid funds, in addition to roughly $250 million already frozen from an earlier audit of Q4 FY 2025 billing.
- Federal officials say $76 million of the new deferral involves 14 service categories deemed highly vulnerable to fraud, with the remaining $14 million tied to payments for ineligible individuals and other program‑integrity concerns.
- Gov. Tim Walz accuses the Trump administration of "exploiting" Minnesota’s fraud issues and targeting working people and rural hospitals, while DHS Commissioner Shireen Gandhi says CMS approved the state’s corrective action plan last month.
- The new deferral was announced the same week federal agents raided 22 Minnesota child‑care locations over alleged Medicaid billing fraud, which Oz cited as evidence of a pattern of oversight breakdowns.
- Minnesota has already sued over the earlier quarter‑billion‑dollar freeze, and Senate Majority Leader Erin Murphy says more legal action over the latest $91 million deferral is expected.
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