The state formally appealed the CMS decision. The federal agency must now set a date for a hearing.



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NEWS RELEASE



*Jan. 13, 2026*




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Jennifer Amundson
651-431-5692
[email protected]

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Minnesota appeals Dr. Oz decision to withhold $2 billion in Medicaid investments

The Minnesota Department of Human Services is appealing a decision by the Trump Administration to withhold over $2 billion in annual Medicaid funding for Minnesota.

Dr. Mehmet Oz, administrator for the Centers for Medicare & Medicaid Services (CMS), announced the withholding in a social media video last week. He alleged Minnesota has failed to take actions that fight fraud in our state’s Medicaid program.

“These sweeping allegations and unprecedented actions are not based on facts,” said John Connolly, human services deputy commissioner and Minnesota Medicaid director. “The move is counter to federal regulation and would destabilize health care across our state.”

Working with CMS

Since October 2024, the Minnesota Department of Human Services has enhanced its continued work to stop fraud in Medicaid programs, identify risks, and harden programs to prevent bad actors from accessing them. That work is ongoing, but to-date actions include:


* Identifying 14 high-risk services and establishing a program integrity dashboard for the public.
* Auditing autism service providers, including on-site visits.
* Discontinuing the Housing Stabilization Services program.
* Establishing a moratorium on adding new service providers in the 14 high-risk services.
* Beginning enhanced pre-payment review before fee-for-service payments are made to providers in the 14 high-risk services.
* Developing plans to review and revalidate providers in the 14 high-risk services.

The state acted to meet or exceed the steps CMS requested in a December letter to address program integrity concerns. However, Administrator Oz has now deemed the Minnesota Department of Human Services’ actions inadequate — without time for state and federal agencies to discuss and agree upon a corrective action plan.

Appealing the decision

The state formally appealed the CMS decision. The federal agency must now set a date for a hearing.

“We agree that fraud needs to be addressed, and we have worked diligently to propose solutions and partner with CMS in good faith,” said Connolly. “Eliminating fraud in Minnesota’s Medicaid program remains a top priority. Cutting off funding that is essential to health care without full review of the facts would be disastrous for 1.2 million Medicaid members in Minnesota — almost half of them children.”

Details and updates on the Minnesota Department of Human Services’ program integrity work are available on the agency’s Medicaid program integrity webpage [ [link removed] ].

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