DHS Prepayment Review Process with Optum
Published 1/4/2026 — Updated 2/12/2026 | By: Ahmed Hassan
Minnesota Medicaid Fraud Prevention Updates as of 12/29/2025
- DHS implementing enhanced prepayment review with Optum for high-risk services
- 11 additional benefits moved to high-risk category
- 800 inactive providers disenrolled; housing stabilization services had some providers terminated
- 2-year pause on new HCBS/adult service provider licenses
- Optum partnership launched December 2024
- 3 years of claims data provided for trend analysis
- Comprehensive review using advanced data analytics
- January findings expected
Hassan's Insight
The old 2‑day payment cycle for 14 programs identified as high risk is gone. Now clean claims are to be released within 30 days while complex claims may take up to 90 days. This is a massive operational change for providers, especially small agencies that rely on predictable cash flow to cover payroll, rent, and quality care.
The 14 high-risk programs are typically run by resource constrained small providers whom primary responsibilities are the health, safety, and livelihood of their patients. The expectation now is that standards must be set higher when dealing with public funds.
Minnesota has moved into a data analytics driven Medicaid oversight model that prioritizes verification prior to payments being made over trust. Overall, Minnesota Department of Human Services has responded strongly with their efforts to improve program integrity. Providers may need to respond with the same level of urgency and accountability.
Prepayment Review Process Implementation
- Two-week claim cycles with systematic review
- 80,000 claims sent to Optum in first cycle (December 25th warrant cycle)
- All 14 high-risk service claims automatically flagged for review
- Clean claims released within 30 days, complex cases within 90 days
- Payment suspension affects all providers in high-risk programs
- Temporary delays replace previous 2-day payment timeline
- Remittance advice shows “suspended” status during review
- Additional documentation may be requested
- Red flag indicators include:
- Unusual service spikes or billing escalations
- Missing eligibility requirements or prior authorizations
- Concerning trends identified through data analytics
Hassan's Insight
I’d like to highlight that prepayment review is a standard internal control identified by CMS in its Billing Validation Methods guidance. It is not punishment or an accusation of wrongdoing, but a verification step designed to ensure claims are supported before payment is issued. The prepayment review is the State’s version of a management review control.
In public companies, a management review control is widely recognized as one of the strongest and most effective preventive manual controls. Its key features include a subjective review by a qualified person with authority (typically senior management) and segregation of duties. It was my favorite control to test when I was an auditor.
This is why I believe the State needed Optum for the pre‑payment review. While the State could have performed it, Optum brings world‑class data analytics and insight that can identify concerning billing patterns such as unusual service spikes or trends that signal potential fraud or improper payments. For a control like this to function correctly, the reviewer must be independent of the payment process.
For Optum, we learned that this type of engagement is a normal part of their services. They work with private health insurers to detect improper billings, identify outlier patterns, and flag unusual utilization. They also provide revenue cycle analytics for health systems and hospitals, helping them strengthen internal billing controls and reduce errors. In other words, what MN DHS asked Optum to do here is not new.
Child Care Center Investigation Response
- Unannounced visits conducted today following video allegations
- Children present at centers during licensing visits
- Several centers previously investigated, no fraud findings
- No payment suspensions implemented yet for named centers
- Ongoing evaluation based on today’s site visits
- Federal DHS operations occurring independently
- Investigation details confidential to preserve integrity
Hassan's Insight
While the focus here is on the State, we need to also identify solutions for small providers. On the provider side, a lack of billing controls creates a high risk of error, not fraud. I'm wondering how financial literacy will impact results and if those without strong billing controls would survive the data analytics of Optum's review. Small providers all need their own manual preventive control, and they may benefit from implementing a management review control.
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