Minnesota fights fraud as Medicaid money still frozen



State of Minnesota officials said they are making progress in their effort to revalidate nearly 5,600 medical care providers across the state amid federal accusations of widespread fraud in the program that provides health insurance coverage to low income residents.

The Trump Administration froze more than $259 million in Medicaid funding to the state, and it is threatening to withhold billions more annually over fraud concerns. Last month, the federal Centers for Medicare and Medicaid Services approved the state’s corrective action plan, a decision called “encouraging” by state officials.

Nonetheless, the federal Centers for Medicare and Medicaid Services has refused to release the money, and a federal judge this week declined to block the Trump administration from continuing to withhold funds.

In a briefing Thursday, Minnesota Medicaid Director John Connolly said the decision was disappointing, but the corrective action plan is underway. The state is evaluating a total of 5,583 Medicaid providers in the 13 service areas that have been determined as having a high-risk of fraud. That includes checking their licenses and conducting unannounced inspections.

So far, 550 health care providers have completed the process and have been approved. About 2,500 providers — a little less than half — have not responded yet or have incomplete applications. And 160 have been disenrolled — Connolly said most of them were inactive.

“We're approaching disenrollment much more aggressively than we have in the past, but it's imperative that we meet the federal government's requirement to execute this corrective action plan,” he said.

Late last year, then-U.S. Attorney Joe Thompson alleged that $9 billion in fraud had been committed by Minnesota Medicaid providers, but he provided no evidence to back up the figure and state officials have said they don’t know how it was reached.

“We don't yet have a number, so we don't know that to be true, and numbers that are placed out there at this point are speculative, because investigations are continuing,” Connolly told reporters in February.

He added Thursday that, so far, inspections of Medicaid providers haven’t found evidence of widespread fraud.

“We're finding providers doing the work that they said they would do, and of course, operating as they stated in their paperwork,” he said. “That is the vast majority of providers in the program, and what we found to date in the site visits.”

Connolly added it is critically important that the federal government restore the funding as soon as possible.

“More than 20 percent of Minnesota's population relies on Medicaid for life-saving and life-affirming health care services,” Connolly told reporters Thursday. “We have to ensure we secure the funding for those necessary services.”

The state should complete the revalidation process by the end of May, Connolly said. But it's not clear when the federal government will release the money and how much future funding will be withheld.

“(Centers for Medicare and Medicaid Services) Administrator (Mehmet) Oz and the vice president signaled that they could very possibly do this again in future quarters, in which case we would have another set of deferrals and another set of documentation requests,” he said. “So, this could go on for many quarters.”

Connolly said despite the potential funding shortfall, there won’t be an immediate impact on the services themselves or revalidated providers.

“At some point in the future, should there be a financial or cash flow impact of the state as a result of these actions, it would take an action of the legislature to to stop financing or to stop including that service or benefit in the program,” Connolly said.



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A Republican lawmaker charged in an alcohol-related driving offense won’t have to appear in court again until after the Legislature adjourns for the year.

A June 10 arraignment hearing is set for Rep. Elliott Engen, a Lino Lakes Republican who faces three misdemeanor charges following an arrest early Friday. He was stopped for speeding and other infractions in White Bear Lake; officers detected alcohol and he later tested well above the legal limit for driving, according to a citation.

Engen has apologized for a lapse in judgment; he promised to learn from his actions and “do better.” Aside from being a second-term legislator, he is also a candidate for state auditor.

A second lawmaker, GOP Rep. Walter Hudson, was in Engen’s truck at the time of the stop and an open bottle of alcohol was found in a rear seat. Hudson, a second-term legislator from Albertville, was in possession of a permitted handgun, which could cause him legal problems if he is determined to have been intoxicated.

Police officers wrote in their report that Hudson disclosed he had the gun as the truck was being searched. The report said police took the firearm for safekeeping and said he could pick it up at a later time, which Hudson agreed to.

“I regret the poor decisions that were made during this incident, and commend the White Bear Police Department for their professional response,” Hudson said in a written statement. “I’m grateful that no harm was done to ourselves and others.”

Two lawmakers stand and look around
Rep. Walter Hudson, R-Albertville, (center) and Rep. Bidal Duran, R-Bemidji, (right) join other Republican lawmakers gather in the House chambers Jan. 27, 2025.
Tim Evans for MPR News file

A third, unidentified passenger was in the truck as well, according to police. Hudson and that person were transferred to the police department until they could arrange rides.

The Minnesota lawmakers had been at the Capitol late into the evening Thursday as the House debated procedural motions on gun, immigration and social media legislation. The motions failed on 67-67 votes.

There is no indication yet that either Hudson nor Engen had been drinking on Capitol grounds, which would be a violation of a House rule against consumption of alcohol or drugs in spaces under that chamber’s control.

According to a White Bear Lake Police report, Engen initially said he had not been drinking when asked by the police officer who pulled him over — “nothing at all,” he is quoted as saying. He performed a field sobriety test, which the report says showed signs of impairment.

Engen gave a preliminary breath sample there, the report says, which estimated a 0.142 blood alcohol level. After he was taken by squad car to the police department “Engen spontaneously stated, ‘Sir, I had a drink three hours ago,’” the report says.

He told the Minnesota Star Tribune in an interview Monday that he had also consumed alcohol in the afternoon on Thursday as well.

Engen is charged with two impaired driving offenses and speeding. White Bear Lake police also said he was driving a vehicle with expired registration and an inoperable headlight.

Engen has not returned calls from MPR News. A court docket lists a “notice of appearance” on Tuesday.

He is being represented in the criminal case by Chris Madel, an Excelsior attorney who waged a brief Republican campaign for governor.



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