Minnesota Warns It May Claw Back Medicaid Payments From Providers
Minnesota's Department of Human Services told Becker's it may need to recoup Medicaid funds from providers if CMS finalizes a disallowance following a $550 million deferral of state Medicaid funds, disclosed in an Oct. 2 letter from Temporary Commissioner John Connolly. CMS has also proposed deferring $2 billion annually in funding to the state. The dispute follows Minnesota's designation of 14 "high-risk" service areas, a provider enrollment pause across 13 programs starting Jan. 30, 2026, and an off-cycle revalidation of more than 5,000 providers amid fraud concerns federal prosecutors estimated could exceed $9 billion. Minnesota says it has met a CMS-approved corrective action plan and argues deferrals and withholds do not themselves establish fraud; the state's related federal lawsuit over the funding dispute is stayed until at least January.