What’s going on with Minnesota Medicaid funding?

Minnesota vs. Trump administration on Medicaid: Your questions, answered.

Did I hear we got some good news last week on Medicaid?

You heard right. The Center for Medicare and Medicaid Services approved Minnesota’s plan to strengthen oversight over certain Medicaid services, which would pause the Trump administration’s moves in recent months to block retroactive and future Medicaid dollars.

CMS Administrator Mehmet Oz has said in both cases that the government would let go of its funding threats after Minnesota proposes and implements a comprehensive “corrective action plan,” which lists ways the state has changed or plans to change its oversight over the Medicaid programs. The federal administration rejected Minnesota’s first plan on Jan. 6, after which the state submitted a revised plan on Jan. 30.

CMS approved Minnesota’s revised plan on Thursday, noting that Minnesota met its deadlines for February and March. Implementation could take another year — the furthest out deadline in the plan is March 31, 2027.

What’s at stake? 

The Trump administration previously threatened to withhold $2 billion in annual Medicaid funding and claw back an additional $243 million tied to 13 Medicaid programs deemed vulnerable to fraud as well as a housing support service that was shut down by the state due to widespread fraud. Neither funding freeze has taken place yet.

State officials have said that the funding freezes could deliver a serious blow to the state’s budget, health facilities and Medicaid enrollees. Medical Assistance, which is what Minnesota calls its Medicaid program, cost $18 billion in 2024, with 60% paid by the federal government.

The 13 Medicaid services help Minnesota’s most vulnerable, and include services geared toward disabled people, autistic youth and the elderly.

Why are the feds doing this? 

We know President Trump has a particular ax to grind with Minnesota, but the fact of fraud in our safety net programs is real and has been investigated by Democratic and Republican administrations.

Federal investigations have found that, in the 13 high-risk Medicaid services, some providers billed for services they didn’t provide. For example, an autism service provider allegedly paid kickbacks to families for enrolling their children while delivering a fraction of the services billed.

The back-and-forth over Medicaid oversight and funding is part of an ongoing conflict between Minnesota and the Trump administration, which sent a small army of immigration enforcement officers and other federal officials to the state, in part to investigate various programs that receive federal money. Minnesota’s state government has been beset with a wave of revelations of fraud in its safety net programs in recent years, beginning with a pandemic-era food relief program.

So is that it? 

Unfortunately, the federal government is about as clear on this issue as Trump’s various tariff plans and Iran war aims.

In the Thursday letter, the Center for Medicare and Medicaid Services stopped short of explicitly stating that its approval would at least temporarily halt its funding threats to Minnesota, though that’s what it has previously indicated.

It did circuitously confirm that the state’s implementation of the corrective action plan would moot its attempt to withhold $2 billion: Minnesota had appealed the $2 billion withholding, and on Thursday, CMS said that “successful completion” of the plan “would moot (Minnesota’s) appeal.”

Oz previously wrote in his Jan. 6 letter: “The withholding will end when the Minnesota Medicaid agency fully and satisfactorily implements a comprehensive (corrective action plan)” for the high-risk Medicaid programs.

He also said, when announcing the additional $243 million deferral, that the federal government will release the money “after (Minnesota officials) propose and act on a comprehensive corrective action plan to solve the problem.”

The Minnesota Department of Human Services said Friday that it has yet to hear confirmation from the Trump administration that it would withdraw its threat to defer $243 million in past payments tied to the high-risk Medicaid programs.

Minnesota sued over the $243 million deferral in early March. In a Friday letter to the judge presiding over the lawsuit, Brandon Boese, an attorney in the Minnesota Attorney General’s Office, said they are trying to understand how the approval will affect the $259 million deferral.

“CMS has now approved Minnesota’s (corrective action plan), which Minnesota has already been acting on, so we trust Dr. Oz and CMS will stand behind what they told the American public,” DHS said in a statement.

CMS did not respond to a request for comment.

Are they only looking at Minnesota? 

Not anymore. The Medicaid funding drama in Minnesota could offer a preview of what’s to come in other states where Oz has launched campaigns alleging widespread public programs fraud in California, Florida, Maine and New York and sent letters to officials in those states questioning their handle on Medicaid fraud.

“We might have another Minnesota on our hands,” Oz said in a video announcing $45.6 million in improper Medicaid payments to autism treatment centers in Maine.

Medicaid’s autism spending has exploded in recent years, The Wall Street Journal reported, with the number of companies offering autism treatment nearly doubling between 2019 and 2023, and spending rising even faster.

Federal scrutiny over autism services predates the current federal administration — for example, a December 2024 federal audit found $56 million in improper payments to autism centers in Indiana — though federal actions nationwide have ramped up following a renewed federal focus on fraud in Minnesota in late 2025.