Feds block nearly $113 million to Minnesota amid fraud concerns

Jessie Van Berkel and Allison Kite, Star Tribune on Nov 10, 2026

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MINNEAPOLIS — The Trump administration does not plan to reimburse Minnesota for nearly $113 million the state spent on Medicaid services deemed a fraud risk.

It’s the latest in a series of actions the federal government has taken to withhold funds from Minnesota in what state officials argue is a retribution campaign. The Trump administration has launched investigations into fraud in the state’s social services programs and lobbed political attacks at Minnesota leaders over it.

Earlier this year the Centers for Medicare & Medicaid Services (CMS) froze $259 million of federal payments to the state over money Minnesota gave last year to providers deemed a high risk for fraud.

CMS said Friday it would release about half of those withheld funds. State officials are still waiting to see if hundreds of millions in additional frozen reimbursements announced this year will come through.

“While we have been bracing for some sort of disallowance, this amount is deeply concerning for the more than 1 million Minnesotans who depend on Medicaid,” Minnesota Department of Human Services Temporary Commissioner John Connolly said in an email to DHS staff Tuesday.

Connolly told staff that officials are reviewing the federal letter and plan to request more information before taking next steps.

If the state does not challenge CMS’s decision, it will become final. DHS officials said Tuesday they are considering options and would not confirm whether they plan to appeal the disallowance.

CMS’s letter to the state said the agency looked at a sample of 330 claims from a timeframe when 6 million claims were filed. Federal officials found 78 of the 330 claims “failed to meet the allowability requirements.”

CMS identified issues including: situations where there wasn’t documentation of assessments or treatment plans; instances where a provider’s notes did not match the claim’s service date; and cases where a provider agreement was lacking a signature.

Minnesota and the federal government have been at odds for months over steps the Trump administration has taken in response to fraud in the state’s social services programs.

While state officials have acknowledged vulnerabilities that allowed providers to bill the state for services they never performed, they’ve cast the Trump administration’s actions as part of a retribution campaign against a state that rejected President Donald Trump at the ballot box. The federal government invoked the state’s fraud problem when it sent thousands of federal immigration agents to Minnesota during Operation Metro Surge. Trump disparaged Somali Americans over the fraud crisis and accused Gov. Tim Walz of stealing money from the state and said if a Republican did so, “they’d give you the electric chair.”

Top Trump officials traveled to Minnesota just ahead of Election Day to issue a scathing rebuke of the state’s leadership and highlight a fresh round of indictments against defendants suspected of stealing from Medicaid.

Fraud in state programs was a defining campaign message for GOP campaigns, though Democrats swept all of Minnesota’s statewide offices and retook control of the state Legislature.

Minnesota Attorney General Keith Ellison’s office has challenged the Medicaid deferrals in court, and an assistant attorney general argued CMS has been “targeting us, attacking us and impeding us” rather than helping the state investigate fraud.

In his email to staff, Connolly said DHS remains “concerned about the transparency and fairness of the process CMS is using to deny reimbursements for claims the state has already paid.”

“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,” he wrote. “We are also bracing for the possibility that CMS will issue additional Medicaid funding deferrals.”