Minnesota Medicaid Improper Payments Review Results
Published 1/30/2026 — Updated 2/12/26 | By: Ahmed Hassan
New federal data from the Centers for Medicare & Medicaid Services (CMS) shows that Minnesota’s Medicaid improper payment rate is far below the national average. CMS found Minnesota at just over 2.1%, compared to 6.1% nationally.
This review looked at whether claims were billed correctly by comparing billing statements with medical records. Importantly, the data reflects the period before Minnesota began rolling out its newest fraud‑prevention steps to prevent mistakes and fraud.
CMS reviewed Minnesota’s Medicaid payments for the period July 1, 2023 – June 30, 2024, as part of the federal Payment Error Rate Measurement (PERM) program, which checks whether states and providers followed the rules when billing Medicaid. Please note this was not a fraud investigation.
So, what counts as an “Improper Payment”?
Under OMB Circular A‑123, Appendix C, a payment is considered “improper” if it:
- Required documentation is missing
- Provider enrollment steps weren’t completed
- Eligibility information wasn’t fully verified
- A claim was processed incorrectly
CMS applies this federal definition in its Medicaid improper payment reviews, including PERM.
Once a payment is labeled improper, CMS takes a second step: they determine whether the service was real and the client was eligible. If both are true but the paperwork was incomplete, the claim becomes a technically improper payment.
Hassan's Insight
This is why strengthening processes and controls matters. With technically improper payments, providers won’t owe money back, but the State will flag you as they must report these under their corrective action plan to the Feds. Strong documentation, clean enrollment, and thoroughly reviewed billings protect you from being part of the problem.
Want to see how a claim flows into this category?
Image Source: OMB Circular A-123, Appendix C
What Else CMS Found
- CMS reviewers confirmed that most claims were billed correctly.
- Errors were generally tied to documentation or process, not intentional fraud.
State leaders emphasized that even low error rates require ongoing improvement. Minnesota continues to strengthen internal controls and tighten oversight.
Recent DHS Actions to Strengthen Program Integrity
Since fall 2024, Minnesota has implemented major changes to reduce fraud and prevent improper payments:
- Identified 14 high‑risk services and launched a public program‑integrity webpage
- Conducted audits and on‑site visits for autism service providers
- Discontinued Housing Stabilization Services
- Placed a moratorium on new providers in the 14 high‑risk services
- Implemented licensure requirements for autism centers
- Disenrolled inactive providers
- Began enhanced pre‑payment review for fee‑for‑service claims in high‑risk areas
- Developed plans for provider review and revalidation in those same services
These steps are designed to prevent improper payments before they occur and strengthen Minnesota’s overall Medicaid oversight.
How Providers Should Interpret This
Providers should expect:
- More documentation checks
- Stricter enrollment and revalidation
- Increased pre‑payment review in high‑risk services
- Continued audits and monitoring
Hassan's Viewpoint
Minnesota’s results in this federal review should prompt a very important question: if the data shows our Medicaid payments were largely supported, why did the media's narrative lean so heavily toward fraud? Why was the $9B figure thrown around when Governor Walz highlighted on his 12/19/25 conference that the actual confirmed number of Fraud was in the millions, not billions (see first entry in our Series titled 'Medicaid Fraud Accountability and Investigation Status').
The CMS findings make it clear that most errors were technical due to missing documentation, incomplete enrollment steps, or verification gaps and not intentional wrongdoing. Yet for the past two years, the conversation has often centered on fraud rather than the underlying control weaknesses that actually drive improper payments. When documentation is incomplete or enrollment steps aren’t followed, even legitimate services fall into the “improper payment” category. Still, that doesn’t mean widespread fraud occurred, even at 2.1%. Fraud is concealed and would be mixed in with valid claims. To date, there is no evidence supporting the idea of widespread fraud in Minnesota’s Medicaid program. No dataset, audit, or prosecution record has substantiated the $9B figure.
I can't stop emphasizing that controls are one of the key issues for both providers and state. The following is an excerpt from the DOJs findings while investigating Housing Stabilization Services: “In July 2020, Minnesota became the first state in the country to offer Medicaid coverage for Housing Stabilization Services. The Housing Stabilization Services Program is a Medical Assistance (that is, Medicaid) benefit designed to help people with disabilities, including seniors and people with mental illnesses and substance use disorders, find and maintain housing. By design, the HSS Program had low barriers to entry and minimal records requirements for reimbursement that combined to make the Program susceptible to fraud.”
It seems clear that we need to also start addressing the programs that were built with low barriers to entry and without strong control requirements. Those design choices contributed to the problem, and hopefully a system of trust will no longer be the answer because criminals will exploit it. Unfortunately, damage to an entire community has already been done, even though the $9B figure has yet to be proven with actual numbers or prosecutions. This CMS review confirms that Minnesota is performing well as it relates to improper payments, but Minnesota’s Medicaid program documentation and process issues still create risk.
Media: “$9B fraud” → Governor: "Fraud is in the millions" → CMS: 2.1% improper payments
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Sources:
www.justice.gov
Six Additional Defendants Charged, One Defendant Pleads Guilty in
MINNEAPOLIS – Six additional defendants have been charged federally with participating in schemes to defraud the government in the Autism fraud scheme and the Housing Stabilization Services (HSS) fraud scheme. One defendant charged in the Early Intensive Developmental and Behavioral Intervention (EIDBI) Autism scheme pled guilty today. And this morning, federal agents executed a search warrant relating to fraud in an additional state program, the Integrated Community Services (ICS) program, ann
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