Feds Warn Minnesota: Bolster Medicaid Fraud Fight or Face Funding Cuts
Published Date: 1/14/2026
Notice
Summary
Minnesota’s Medicaid program isn’t doing enough to stop fraud, waste, and abuse, so the federal government may hold back some funding until the state fixes these problems. Minnesota has 15 days to ask for a hearing to explain or challenge this decision. This means the state must step up its game to protect Medicaid money and follow the rules, or risk losing federal support.
Analyzed Economic Effects
3 provisions identified: 0 benefits, 3 costs, 0 mixed.
Federal Funds May Be Withheld
If you have Medicaid in Minnesota, CMS may withhold a portion of federal Medicaid funds from the State until Minnesota fixes program integrity problems. CMS estimated a quarterly federal-share withholding equal to one quarter's prior-year federal payments for 14 high-risk services at $515,154,947.56, and said that amount may increase until Minnesota fully implements an acceptable corrective action plan.
Focused Audit Could Deny Reported Payments
CMS will begin a focused review of Minnesota's quarterly expenditure reports (Form CMS-64) for the 14 self-identified high-risk services, starting with Quarter Four of Federal Fiscal Year 2025. CMS may defer or disallow any federal financial participation claimed for those services that does not meet federal requirements.
Deadlines for Hearing and Corrective Plan
Minnesota has a short timetable to respond: requests to participate as a party must be received within 15 days of the Federal Register notice (January 14, 2026), the State has 10 days from the letter date to request a hearing, and CMS asked Minnesota to submit a revised comprehensive corrective action plan by January 30, 2026. If the State does not request a hearing within 5 days of the letter, CMS said it would impose the withholding contingent on progress.
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