Federal government denies $112M in Minnesota Medicaid reimbursements

(The Center Square) – The federal government has blocked more than $112 million in federal Medicaid reimbursements to Minnesota. The Minnesota Department of Human Services said it already paid the provider claims and was awaiting reimbursement by the federal Centers for Medicare and Medicaid Services. “The Centers for Medicare & Medicaid Services used 78 disallowed claims totaling approximately $112,000 to extrapolate a disallowance of more than $112 million; an expansion roughly 1,000 times greater than the 78 disallowed claims,” temporary MDHS Commissioner John Connolly said in a statement on Thursday. “We have more questions than answers right now, including CMS’s extrapolation methodology and how they selected the 330 claims for review in a quarter with more than six million high-risk claims.” This comes after CMS announced in February a pause on $259 million for Minnesota services determined to be high risk. While that was a temporary rejection of reimbursement primary for services provided in the period between July and September 2025, this new announcement is a permanent rejection. A federal CMS spokesperson told The Center Square that the agency, which is part of the U.S. Department of Health and Human Services, is committed to ensuring taxpayer funds are properly spent. “CMS is committed to protecting taxpayer dollars and ensuring Medicaid resources serve the people who depend on the program,” the spokesperson said. “Holding states accountable for compliance with federal requirements is central to that responsibility.” More than 1 million Minnesotans are enrolled in Medicaid. Over the past year, the state’s Medicaid programs have faced increased scrutiny as federal and state officials work to address widespread fraud. Meanwhile, $350 million in other federal CMS funding to Minnesota has also been frozen. Connolly said the department is determining next steps. “We are actively reviewing information we received late Friday and plan to request more information from CMS before determining next steps,” he said on Thursday. MDHS reiterated that position in response to questions from The Center Square, adding that the department also remains uncertain about the potential impact on state taxpayers, who initially funded the services. “The department is reviewing the information we received from CMS late Friday and is considering its options before determining next steps,” MDHS said. In a letter sent to MDHS staff on Tuesday by Connolly and shared with The Center Square, the commissioner said they were expecting some funds to be blocked, but not $112 million. “While we have been bracing for some sort of disallowance, this amount is deeply concerning,” Connolly said. “We are also bracing for the possibility that CMS will issue additional Medicaid funding deferrals.” He added that the funding disputes have raised concerns about how CMS is handling the reimbursement process, particularly for Minnesota. “Over the past year, CMS has continued to engage in unprecedented ways and has not responded to multiple requests for transparency, partnership and a path to resolution,” Connolly said. “We remain concerned about the transparency and fairness of the process CMS is using to deny reimbursements for claims the state has already paid.” More from this section News Australia cricket captain describes Khawaja's Sandpapergate claim as 'utter nonsense' Updated 13 hrs ago Military 15th annual appreciation breakfast honors veterans Nov 11, 2026 News Fallout from the Nvidia scandal may dampen the exuberance around the AI boom Updated 1 hr ago Local News TAAN announces: A multiverse holiday experience for all abilities Nov 11, 2026 Inside Killeen Podcast