Administration

Minnesota’s Medicaid Fraud Crackdown

Unintended negative consequences

BY Alea Zemlicka

That case is not unusual. It is one of more than a dozen applications IHN, an independent practice association founded in 2010 that serves clinics in Minnesota, Wisconsin, North Dakota and Iowa, has tracked since May 2026. Approval times among those applications have ranged from seven days to more than 130, with no consistent relationship to when an application was submitted. The cause traces back to a much larger fight between Minnesota and the federal government over Medicaid fraud, a fight that has frozen routine enrollment processing for physicians, physician assistants, physical and occupational therapists and speech-language pathologists who were never accused of anything, as well as for clinics themselves trying to open new locations or bring on new providers.

A Manufactured Deadline

The fraud concerns behind Minnesota’s enrollment backlog predate the federal funding fight that made headlines. On Oct. 29, 2025, Gov. Tim Walz ordered a third-party audit of billing for 14 Medicaid services identified as high-risk, pausing payments for those services for up to 90 days while claims were reviewed for irregularities. Optum, a division of UnitedHealth Group, was selected to conduct the audit. “We cannot effectively deliver programs and services if they don’t have the backing of the public’s trust,” Walz said when announcing the audit. “If you attempt to defraud our public programs and steal taxpayer dollars out from under the people who need them most, you will be stopped, and you will be held accountable.”

No process exists to open a case or escalate a stalled application.

Three months later, the fight escalated. In January 2026, the Trump administration, through the Centers for Medicare and Medicaid Services (CMS), threatened to withhold roughly $2 billion in annual Medicaid funding from Minnesota over concerns about fraud in the state’s program. To avoid the withhold, DHS agreed to a corrective action plan that paused new provider enrollment in the state’s high-risk service categories beginning Jan. 27, 2026, and required DHS to revalidate more than 5,500 providers already enrolled in those categories by May 31, 2026.

DHS did not act quickly after the January threat and did not begin implementing the revalidation effort, branded Minnesota Revalidate 2026, until May 1, 2026, one month before the May 31 deadline. This deadline was posted on the DHS website and described as urgent. During May, DHS told IHN by phone that no provider or clinic enrollment applications, of any kind, were being reviewed or worked on while the high-risk revalidations were underway. DHS did not proactively notify clinics, credentialing contacts or industry groups that enrollment processing would stop. IHN learned of the shutdown only after applications stalled, and then informed its own member clinics as well as contacts across the industry through the Healthcare Leaders Association of Minnesota (HLAMN), a professional association whose payor relations and government affairs committee, which includes IHN staff, said it had not been told about the change either.

DHS’s own public postings confirm the shape of the effort, if not the notice failures. DHS has extended the high-risk enrollment moratorium twice: a July 10, 2026 posting on its provider news page states that CMS approved extending the enrollment moratorium on 12 of Minnesota’s 14 designated high-risk services through Jan. 27, 2027, and a separate moratorium specific to nonemergency medical transportation providers in the seven-county metro area was extended to the same date in a July 23, 2026 posting. Both postings state explicitly that DHS will not process new enrollment applications, including those already pending, for the named high-risk categories during the moratorium.

Those categories do not include the disciplines IHN’s member clinics work in. That distinction matters: DHS’s own published moratoriums have applied to a defined list of high-risk services. The delays IHN’s clinics experienced in initial enrollment and affiliation processing, for providers entirely outside those categories, were not part of any published freeze. When DHS redirected its staff to meet the high-risk revalidation deadline, ordinary enrollment and affiliation processing for everyone else slowed regardless. Clinics that had done nothing wrong, operating entirely outside any high-risk category, were pushed to the back of the line and have borne the consequences ever since.

Inviting Confusion

The distinction between enrollment, affiliation and revalidation matters because DHS, providers and the public often describe these three different processes as though they were one. Revalidation applies to a provider or clinic with an existing, active enrollment; it requires submitting a recredentialing application attesting that the information on file is still accurate. Enrollment applies to a provider who is new to Medicaid and needs an initial application, or to an existing provider being added to a new place of employment. A clinic can also enroll a secondary location under an existing enrollment.

When DHS narrowed its focus to high-risk revalidations, clinics whose providers needed initial enrollment or affiliation approval before they could see patients were delayed. Some of the affected applications were already pending before the revalidation effort began. Providers tied to those applications could not see Medicaid patients until their enrollment was approved and effective. DHS has honored the effective date originally requested on an approved application in the past, allowing retroactive billing, but DHS has not made that an explicit guarantee directly and many clinics have been reluctant to rely on it. If DHS did not honor a requested effective date after a provider saw patients while still pending, the clinic could be left with unpaid claims and significant financial loss. Some commercial health plans previously required Medicaid credentialing before their own credentialing could proceed; several plans have since built workarounds allowing providers to be credentialed and see patients without waiting on Medicaid approval, though not universally. That information is not widely published. IHN has learned which plans have workarounds through its own relationships with those plans, not through public guidance.

By the Numbers

IHN does not have statewide figures for how many providers have been affected, only its own member clinics’ experience. Since May 2026, IHN has tracked 13 provider enrollment and affiliation applications. As of mid-August, seven remained pending, including one submitted April 1 that had not been approved after more than four months, and two applications submitted Aug. 5 and 6 that were too new to have been reviewed. Of the six that were approved, turnaround time ranged from seven days to 136 days. Two applications submitted within four days of each other, using the same enrollment record and the same submission process, were treated differently, one approved and one left pending. Raising this inconsistency with DHS, representatives sometimes offered no explanation at all. At other times they suggested enrollment type or submission method might explain the gap, which was clearly not the case.

The financial effect on clinics has been difficult to quantify precisely because losses are largely indirect. Clinics have hired providers who could not begin seeing Medicaid patients until their enrollment cleared, creating scheduling and staffing burdens and, in some cases, salary costs for providers who could only see a portion of their expected patient load. During May, before commercial health plans had built workarounds, several plans would not credential a provider until Medicaid enrollment was confirmed, compounding the delay across both Medicaid and commercial patient populations, until plans adjusted their own processes in late May and early June.

It is difficult to separate the policy substance from the politics surrounding it.

Limbo, With No Way to Escalate

Before 2026, DHS allowed a provider or credentialing contact to open a case on a pending enrollment application once it had been open for 30 days, triggering review within three to five business days. This was DHS’s standard practice prior to the revalidation effort. That option no longer exists. Near weekly calls to DHS’s provider enrollment line, with hold times reaching an hour, have consistently confirmed that no process exists to open a case or escalate a stalled application, and that DHS could not provide a timeline for when applications would be reviewed or when case escalation would resume.

The problem was compounded by a second, unrelated rollout. DHS’s new authentication platform, LoginMN, launched June 13, 2026, in the middle of the revalidation crunch. Since then, IHN has been unable to access the enrollment records of providers whose applications were submitted before the new platform went live, and some providers and clinics have lost access to their own enrollment applications entirely. DHS’s email support for LoginMN issues told IHN to call for help, however in so doing DHS redirected staff back to email. This support loop has not resolved the underlying access problems. The support launch timing compounded problems in an already difficult period. DHS was simultaneously expected to be reviewing enrollment applications that clinics and providers often could not check the status of because of the same platform problems, leaving DHS resources that could otherwise be processing enrollment applications tied up instead in resolving portal access issues.

A Structural Weakness

What happened in Minnesota is not an isolated state failure; it is what happens when a routine, multiyear federal requirement is compressed into months with no added staff, no added technology and no transition plan. Federal regulation, 42 CFR 455.414, already requires state Medicaid agencies to revalidate every enrolled provider at least once every five years. CMS’s decision to demand a functional equivalent of that cycle in a matter of months, for thousands of providers at once, produced the backlog that spilled into routine enrollment and affiliation processing.

Minnesota is unlikely to be the last state to face this. In April 2026, CMS sent identical letters to all 50 governors and state Medicaid directors, asking each state to confirm within 10 days whether it would immediately begin revalidating high-risk providers and to submit a two-year revalidation strategy within 30 days. Ohio’s governor signed an executive order accelerating revalidation for certain provider types. Missouri began an expedited review of roughly 2,500 providers. CMS separately sent detailed program-integrity inquiries to California, Florida, Maine and New York, and began reviewing every state’s Medicaid Fraud Control Unit ahead of its annual federal recertification, a level of scrutiny that has already cost Hawaii’s fraud unit its federal funding. The nonpartisan Medicaid and CHIP Payment and Access Commission has recommended that CMS reduce duplicative federal requirements, improve transparency around how “high-risk” designations are made, and examine program-integrity gaps created by managed care structures, changes that speak directly to what went wrong in Minnesota’s rollout.

Minnesota’s own corrective action plan, submitted to avoid the threatened $2 billion annual funding withhold, included 17 specific commitments, according to the health policy research organization KFF. Included was a pause on new enrollment in high-risk service categories beginning Jan. 27, 2026, revalidation of more than 5,500 providers in those categories by May 31, 2026 and increased use of data analytics to screen claims before payment. CMS accepted the plan, resolving the threatened annual withhold, but a separate dispute over already-paid claims has continued. CMS deferred more than $350 million in Minnesota Medicaid payments by June, according to KFF, and an additional $199 million in July, citing insufficient documentation, according to the news organization Stateline.

It is difficult to separate the policy substance from the politics surrounding it. Walz, in a July 2026 post responding to the additional $199 million payment freeze, wrote that the funding fight was an effort “to cut your health care so that Trump can afford the tax cuts he gave to billionaires,” as reported by Stateline. HHS Secretary Robert F. Kennedy Jr., in a news release accompanying that same freeze, framed the administration’s position as straightforward accountability, “States that receive federal Medicaid funding must demonstrate that every dollar meets federal requirements. When they cannot, we will not release federal funds until they do.” Every state that has faced this level of federal scrutiny so far, Minnesota, California, Colorado, Illinois, Maine and New York, is led by a Democratic governor, a pattern state officials and health policy researchers have both noted publicly.

Finding a Way Through

Considering what DHS could have done differently, one decision stands above all others: running the high-risk revalidation effort and the LoginMN platform rollout at the same time, without adding staff to keep standard enrollment processing running. That decision produced a backlog that could take months to resolve, has kept providers from seeing patients, and has kept new clinics from starting practice or securing contracts with health plans that require Medicaid enrollment first. Some health plans have built workarounds; others have not.

There is also uncertainty about how long the current slowdown will last, and conflicting signals about its scope. DHS’s own provider news postings describe moratoriums tied to specific high-risk categories, extended through Jan. 27, 2027, not a freeze on all enrollment. But a commercial health plan that meets regularly with IHN said that DHS told them that new enrollments generally, not just those in the high-risk categories, may not be reviewed again until 2027. DHS has not made that statement publicly, and IHN has not seen it in writing. The gap between what DHS has published and what at least one health plan says it was told in a meeting is a sign of how little clarity clinics currently have to plan around.

For clinics navigating the current process, there are several practical steps that can be taken. Screenshot every enrollment submission, since LoginMN’s access problems have made it difficult to retrieve that information later. Set up LoginMN account access well before it is needed, not after a problem arises. Track every submission date and every call to DHS. Submit applications as early as possible, and build the current processing delays into practice and hiring timelines rather than assuming standard turnaround.

There is currently no formal process to expedite a stalled application. DHS updates its provider news page as changes occur, but does not proactively notify providers or credentialing contacts before those changes take effect, making regular review of DHS’s own website necessary. DHS in the past has honored originally requested effective dates once an application is approved, and it has done so in IHN’s experience so far, but it has not made that a formal guarantee, and the volume of changes during 2026 makes it too risky to advise a provider to see Medicaid patients before enrollment is officially effective.

A broader recommendation is collective rather than individual: join an advocacy or industry group. Few clinics have the staff time to track DHS policy changes, monitor enrollment records daily, or call the department every week. A group of clinics working together, such as IHN’s member network or associations like HLAMN, is better positioned to identify a problem like this early, share information across the industry, and prepare for its effects, than any single clinic working alone. 

Alea Zemlicka is the marketing and credentialing supervisor at Integrity Health Network, an independent practice association serving clinics across Minnesota, Wisconsin, North Dakota and Iowa.