Trump administration denies Minnesota more than $112M in Medicaid reimbursements
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The federal Centers for Medicare and Medicaid Services has denied Minnesota more than $112 million in Medicaid reimbursements for the quarter ending Sept. 30, 2025, raising concerns about the potential impact on more than 1 million state residents who rely on the program.
Minnesota Department of Human Services temporary Commissioner John Connolly sent a message to department leaders Tuesday informing them that the state anticipated some form of disallowance, but the amount denied is roughly 1,000 times greater than the claims initially identified, according to the letter shared with MPR News.
The disallowance is related to a $259 million Medicaid funding deferral issued by CMS to the state in February, primarily concerning high-risk services provided between July and September 2025.
While deferrals are temporary pauses on federal Medicaid funds, disallowances are permanent rejections.
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Since the initial $259 million deferral, CMS has also deferred payments totaling $91 million and $199 million, resulting in a total of $550 million in frozen Medicaid funds.
Connolly stated that DHS is still reviewing a letter received from CMS late Friday and currently has more questions than answers regarding the federal agency's decision but plans to request additional information before determining how to proceed.
Among Minnesota’s concerns are the selection process CMS used to review 330 claims from more than 6 million high-risk claims submitted during the quarter, as well as how it calculated the final disallowance amount.
According to the state's preliminary review, CMS cited administrative documentation deficiencies as the basis for rejecting the claims. These deficiencies include missing or incomplete signatures, sign-offs, dates and addresses in billing records, along with other supporting documentation.
This latest disallowance adds to ongoing uncertainties surrounding federal Medicaid funding in Minnesota. In his letter, Connolly said CMS has yet to make decisions on two additional Medicaid funding freezes totaling $350 million for services provided in subsequent quarters.
Connolly also expressed concern that CMS could issue more Medicaid funding deferrals.
The state has criticized what it describes as a lack of transparency and collaboration from CMS, saying the federal agency has not responded to multiple requests for information, partnership and a path toward resolving the funding disputes.
DHS maintains that the federal review process raises questions about fairness because the disputed reimbursements involve Medicaid claims Minnesota has already paid to providers.
The disallowance will become final if DHS decides not to challenge it. Connolly said state officials intend to continue working with CMS and will provide updates as more information becomes available.
