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Late Wednesday, the federal government paused $260 million in Minnesota’s Medicaid funding. This represents a catastrophic funding loss for the Medicaid program and the Minnesotans it serves — the children, families, people with disabilities and seniors across Minnesota who rely on it to access necessary health care services.
Minnesota has always been a national leader in health care and, after over a year of fraud-fighting focus, is becoming a national model for program integrity. The unprecedented size of this funding deferral is part of a broad and sustained attack by the federal government on Medicaid in Minnesota.
This funding pause could potentially last several quarters, costing the General Fund more than $1 billion this year alone. It comes at a time when the state already faces a significant structural budget imbalance. It also comes on top of an additional $2 billion funding withhold threatened by the Centers for Medicare & Medicaid Services in a letter to the Governor Jan. 6, and Medicaid funding cuts passed in 2025 in the federal reconciliation bill.
The continued attacks on Medicaid in our state are unsustainable. These cuts disrupt the foundation of our state’s health care system — not just for Medicaid enrollees, for all of us. The Governor and Legislature could have to make impossible decisions about how to balance the budget this session and where cuts will need to be made given these new deficits. Despite what Dr. Oz said in his press conference, there is no “rainy day fund” that Minnesota may use to cover a $260 million deferral.
While a payment deferral like this from CMS does happen from time to time (such as a deferral of $10 million or $13 million for a very specific, narrow area of corrective action), a deferral of $260 million is unprecedented. Our goal is to get as much of the deferred funding back as quickly as possible
Here's what you need to know right now about this latest funding attack.
Keep serving enrollees.
While the situation is dire, no program impacts have happened yet. Enrollees should continue to receive care and fill their prescriptions. Health care providers will be reimbursed for Medicaid services as required under state and federal law. Continue to serve Minnesotans enrolled in Medicaid and reassure them that they have coverage. Medicaid changes will not occur unless the Legislature enacts changes to the program, and we will communicate specifics with you well before those take place.
Stay connected with us
The Medicaid program requires a collective effort, and we rely on partners like you to make it work. We will keep you informed of the latest funding news in our established channels. Sign up for our email updates, or engage with us at our regular monthly roundtables:
Medical Assistance and MinnesotaCare partner roundtables
- Who:
- Tribal and county social services leaders (8 to 8:45 a.m.)
- Managed care organizations and associations (9 to 9:45 a.m.)
- Providers, navigators and community organizations (10 to 10:45 a.m.)
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What: Two-way discussion of developments in Medical Assistance and MinnesotaCare eligibility and policy driven by legislative and other changes
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When: Third Thursday of every month
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Get involved: mhcp.roundtables.dhs@state.mn.us
Continue to partner with us on program integrity
The Department of Human Services has worked steadfastly to implement nation-leading program integrity work in the last 1-1/2 years with your collaboration. Together, we are fighting fraud diligently and transparently, setting an example for the many other states with higher levels of fraud. We are committed to this work. Keep an eye on our program integrity website at mn.gov/dhs/program-integrity.
Your voice matters
Medicaid matters in Minnesota. It’s the largest single source of health insurance in the state. Please continue to highlight its impact within your networks. Find fact sheets to share in the Medicaid Matters toolkit at mn.gov/dhs/medicaid-matters/communications-toolkit. The department will have more impact analyses and fact sheets to share in the coming weeks.
John M. Connolly, Ph.D., M.S.Ed.
Deputy Commissioner | State Medicaid Director
Minnesota Department of Human Services
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