CMS has denied Minnesota more than $112 million in Medicaid reimbursements for the quarter that ended Sept. 30, 2025, MPR News reported Nov. 10.
Seven things to know:
1. The disallowance stems from a $259 million deferral CMS issued to the state in February, mostly involving high-risk services delivered from July through September 2025. Deferrals pause federal Medicaid funds temporarily, while disallowances reject them permanently. Minnesota sued CMS and HHS over the frozen funds in March.
2. Minnesota Department of Human Services Temporary Commissioner John Connolly, PhD, told department leaders that the state expected some disallowance, but the denied amount is about 1,000 times larger than the claims first flagged.
3. The state is questioning how CMS chose 330 claims to review out of more than 6 million high-risk claims filed in the quarter, along with how the agency arrived at the final disallowance figure.
4. A preliminary state review found CMS rejected the claims over administrative documentation gaps, such as missing or incomplete signatures, sign-offs, dates and addresses in billing records.
5. CMS has deferred $550 million in Minnesota Medicaid funds since February. The agency has not yet ruled on two additional freezes totaling $350 million for services provided in later quarters. Dr. Connolly said he is concerned the agency could issue more deferrals.
6. Minnesota officials have said CMS has not responded to repeated requests for information, and they argue the process is unfair because the state already paid providers for the disputed claims. In October, the department told Becker’s it might need to claw back funds from providers if CMS issued a disallowance.
7. The state has 60 days to appeal the disallowance, according to The Hill. Dr. Connolly said the state will seek more information before deciding its next steps.
