Minnesota Budget Project Details CMS's $3.1 Billion Medicaid Funding Threat
In an analysis, Minnesota Budget Project reports that the Trump administration has threatened Minnesota's Medicaid funding through two mechanisms starting January 2026: a potential $515 million quarterly withhold (about $2 billion annually) tied to Minnesota's Corrective Action Plan on program integrity, and a review of up to $550 million in deferred claims for possible disallowance, together totaling an estimated $3.1 billion over a year. The group notes Minnesota's 2025 improper payment rate was 2.2 percent, over a third below the national average, and that CMS has not provided evidence justifying the threats. Minnesota DHS Commissioner John Connolly's letter to CMS is cited describing the state's efforts to comply and requesting evidence of fraud claims. The timing of any final federal decision and the exact financial impact remain unknown, though DHS has estimated county-level impacts, including $125 million in St. Louis County.