Minnesota clarifies Medicaid audit: only flagged claims paused up to 90 days; Optum reviewing
Minnesota’s Department of Human Services says the audit Gov. Tim Walz ordered will have Optum run billing analytics on 14 designated “high‑risk” Medicaid services and only claims flagged as anomalous — not all submitted claims — will be paused for up to 90 days for DHS review (with the state noting it intends to comply with federal 90‑day payment rules). The review, funded by 2025 legislative authorization and prompted in part by recent fraud prosecutions, adds oversight steps and has drawn warnings from provider groups about destabilizing care while lawmakers debate the scope and timing.
📌 Key Facts
- Minnesota DHS ordered an audit of Medicaid billing and will pause payments tied to 14 designated “high‑risk” Medicaid services while prepayment review proceeds; DHS says only claims flagged as anomalous will be paused for up to 90 days (consistent with federal 90‑day rules) and may be denied if found fraudulent.
- Optum was contracted (funded by money authorized in the 2025 legislative session) to perform billing analytics and flag irregular claims for DHS review; DHS will verify flagged claims and refer suspected improper billing to the DHS Office of Inspector General.
- The 14 targeted services named by DHS are: EIDBI (autism services), Integrated Community Supports, Nonemergency Medical Transportation, Peer Recovery Services, ARMHS (adult rehabilitative mental health services), Adult Day Services, PCA/CFSS (personal care assistance and community first services and supports), Recuperative Care, Individualized Home Supports, Adult Companion Services, Night Supervision, ACT (assertive community treatment), IRTS (intensive residential treatment services), and Housing Stabilization Services.
- DHS emailed providers to clarify it is not holding all submitted claims for 90 days; however, it warned that payment‑processing delays may still occur as the new prepayment review process rolls out — language that providers (including ARRM and CEO Sue Schettle) said caused confusion and no advance notice and that could destabilize an already fragile care network.
- The Walz administration is scaling program‑integrity actions beyond the flagged‑claims audit — announcing added oversight for high‑risk programs (enhanced fingerprint background studies, initial screening visits and unannounced visits) and planning a pause on licensing adult day care programs as part of the expanded fraud‑control effort.
- Political reactions were mixed: Gov. Tim Walz framed the move as restoring public trust and 'pumping the brakes' on suspected fraud; some Democratic leaders praised the proactive audit, while several Republican lawmakers criticized the timing and scope and urged stronger oversight (including calls for a state Office of Inspector General).
- Law‑enforcement and oversight context: federal prosecutors have described Minnesota Medicaid fraud as significant (citing recent HSS and EIDBI prosecutions), the DOJ is reported to be investigating UnitedHealth’s PBM, and Optum did not respond to questions about review timelines.
📊 Relevant Data
Nearly all defendants in recent major Minnesota Medicaid fraud cases, including those involving autism services and other high-risk programs, are from the Somali community.
A Somali-American former investigator: why you’re hearing about fraud in my community — Minnesota Reformer
Autism prevalence among Somali children born in Minnesota is 1 in 16, compared to the state average of about 1 in 54.
Research finds 1 in 16 Somali children diagnosed with autism, 3 times more than state — MPR News
Minnesota has experienced over $1 billion in fraud across various state programs, including Medicaid, since before the COVID-19 pandemic.
Minnesota officials saw signs of massive fraud even before COVID hit — CBS News
📰 Sources (7)
Walz administration expands fraud probe, plans pause on licensing adult day cares
New information:
- Positions the adult day care licensing pause as an additional front in the expanded fraud‑control effort beyond the flagged‑claims audit process.
- Signals continued scaling of program‑integrity actions under the Walz administration.
Shaky rollout of Medicaid payments audits caused confusion, concern for Medicaid providers
New information:
- DHS emailed providers hours after the announcement stating it is not holding all submitted claims for the 14 services for 90 days (in bold).
- Rep. Tina Liebling said lawmakers urged the administration to correct misinformation; Rep. Mohamud Noor said 'clean claims' should be paid on time.
- DHS warned there may still be payment processing delays as the new prepayment review process rolls out.
- ARRM CEO Sue Schettle said the press release wording caused confusion and providers received no advance notice.
- Optum, the third‑party auditor, did not respond to questions about the review timelines; the article notes DOJ is investigating UnitedHealth's PBM.
- The report details that only claims flagged for anomalies will be paused for up to 90 days and denied if found fraudulent.
Walz announces audit of ’14 high-risk Medicaid services,’ pauses payments due to suspected fraud
New information:
- Direct quote from Gov. Tim Walz framing the action as necessary to restore public trust and 'pump the brakes' on 14 programs targeted by fraud.
- Explicit, full list of all 14 'high-risk' services named by DHS (including EIDBI for autism, ICS, Nonemergency Medical Transportation, Peer Recovery, ARMHS, Adult Day Services, PCA/CFSS, Recuperative Care, Individualized Home Supports, Adult Companion, Night Supervision, ACT, IRTS, and Housing Stabilization Services).
- Process detail: Optum will flag irregular claims; DHS will verify flagged claims and refer suspected improper claims to the DHS Office of Inspector General.
- New political reaction quotes: House Speaker Lisa Demuth and Floor Leader Harry Niska criticize the timing and scope; Senate Minority Leader Mark Johnson calls the audit 'too little, too late.'
- Contextual quote from Assistant U.S. Attorney Joe Thompson calling Minnesota Medicaid fraud 'staggering,' citing recent HSS and EIDBI prosecutions.
Minnesota halts payments in 14 Medicaid programs over fraud concerns, orders audit
New information:
- Enumerates additional affected programs beyond earlier lists: adult rehabilitative mental health services, intensive residential treatment services, adult companion services, individualized home supports, and recuperative care (along with autism services, integrated community supports, nonemergency medical transportation, peer recovery services, adult day services, personal care assistance and community first services and supports, and Housing Stabilization Services).
- Quote from Gov. Tim Walz emphasizing restoring public trust and 'pumping the brakes' on 14 high‑risk programs.
- House Speaker Lisa Demuth criticizes scope of alleged fraud and urges creation of a new Office of Inspector General to investigate state-program fraud.
- Senate Majority Leader Erin Murphy praises the action as proactive and says the audit provides enhanced tools to stop fraud.
- Confirms payment pause is for up to 90 days to detect suspicious billing while Optum flags anomalies for DHS review.
Tim Walz orders audit of Medicaid billing as fraud prosecutions continue
New information:
- Audit contract funding source: paid with money authorized during the 2025 legislative session.
- High-risk programs will face added oversight such as enhanced fingerprint background studies, initial screening visits, and unannounced visits.
- Article explicitly links two targeted programs (Housing Stabilization Services and autism services) to recent federal fraud prosecutions.
- Includes on-record reaction from ARRM CEO Sue Schettle calling delays an “existential threat.”
- Political reaction: Rep. Kristin Robbins, chair of the GOP-created House Fraud Prevention and State Oversight Committee, criticized Walz and referenced her earlier call for a federal audit.
Walz pauses payments for 14 ‘high-risk’ Medicaid programs
New information:
- Minnesota will pause payments for 14 designated 'high‑risk' Medicaid services for up to 90 days while the audit proceeds.
- DHS identified the services based on vulnerabilities, evidence of fraud, or anomalous billing patterns; a DHS letter from Temporary Commissioner Shireen Gandhi cites the criteria.
- Optum will perform the billing analytics and flag issues for DHS review; the state says it will still meet federal 90‑day payment rules.
- ARRM (representing 200 disability‑service providers) warned the pause could destabilize an already fragile care network.
- The affected list includes: Integrated Community Supports, Nonemergency Medical Transportation, Peer Recovery Services, ARMHS, Adult Day Services, PCA/CFSS, Recuperative Care, Individualized Home Supports, Adult Companion Services, Night Supervision, ACT, and IRTS; Medicaid autism treatment and the now‑defunct Housing Stabilization Services are also named.