Trump Administration Denies $112M in Medicaid Payments to Minnesota

President Donald Trump’s administration has taken steps to deny more than $112 million in Medicaid money from Minnesota after delaying reimbursements on more than half a billion in payments so far this year, state officials said this week.

The disallowance for July through September could mean Minnesota will have to find a way to pay for programs deemed a high risk for fraud — like those that support home care assistance providers and assistance for children with autism.

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The state already shut down one of those programs altogether in October 2025 and ordered third-party audits. As part of demands for further “corrective action,” Centers for Medicare and Medicaid Services (CMS) administrator Mehmet Oz started deferring payments to Minnesota earlier this year.

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State officials warned last month that they might have to start “clawing back” payments from Medicaid providers if they lost federal funding, though they didn’t explain what that would look like.

As of Wednesday, the state Department of Human Services said it would be “considering its options before determining next steps.” Minnesota officials can still ask the federal government to reconsider its decision.

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The $112 million disallowance is attached to a larger $259 million funding freeze to the high-risk state programs that Oz and Vice President JD Vance announced in February.

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At the end of April came another $91 million in deferrals as federal agents raided child care businesses suspected of fraud. Another $200 million came in July. There remains another $350 million that CMS has withheld from Minnesota.

Those freezes could also turn into disallowances, wrote Connolly, who added that he was concerned about further funding freezes on top of the $550 million from this year so far — despite what he described as the state’s cooperation.

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Officials with Minnesota’s Department of Human Services insist they have taken corrective actions like reviewing providers, freezing enrollments in high-risk programs, and providing weekly updates on anti-fraud efforts. But federal officials still haven’t released funding, and now their deferrals are becoming actual withholdings.

The state ended the fraud-ridden Housing Stabilization Services program, started weekly data sharing with federal officials and revalidated more than 5,000 high-risk providers in a process that involved a significant expansion of announced on-site visits.

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