How much did CMS defer from Minnesota?

$259,505,491 in federal matching funds from the fourth quarter of fiscal 2025, announced Feb. 25, 2026.

Which services were flagged?

Personal care services, home and community-based services and other practitioner services, where CMS said spending was unusually high or grew rapidly.

Could more money be held back?

Yes. CMS said it may defer more than $1 billion over the next year if Minnesota does not fix its program integrity problems.

CMS defers $259.5M in Minnesota Medicaid funds over claims

CMS deferred $259.5 million in federal Medicaid funds to Minnesota on Feb. 25, 2026, over questionable personal care and HCBS claims, and warned it could defer more than $1 billion.

Direct Support News desk · February 25, 2026 · Updated September 26, 2026 · 1 min read

The federal government is holding back $259.5 million in quarterly Medicaid funding from Minnesota while it investigates questionable personal care and home and community-based services claims. The Centers for Medicare & Medicaid Services announced the deferral on Feb. 25, 2026, as part of a broader fraud crackdown announced at the White House.

What CMS found

CMS said its review of Minnesota's Medicaid spending for the fourth quarter of fiscal 2025 found unusually high spending and rapid growth in several areas, including personal care services, HCBS and other practitioner services. The deferral totals $259,505,491 in federal matching funds. It covers $243.8 million in state spending CMS called unsupported or potentially fraudulent and $15.4 million tied to people lacking satisfactory immigration status.

How a deferral works

A deferral holds federal money while the state has a chance to provide documentation during the review. CMS said that in January 2026 it notified Minnesota it intended to withhold funds until it approved the state's corrective action plan. If Minnesota does not fix its program integrity problems or show the spending was allowable, CMS said, it may defer more than $1 billion over the next year.

The rest of the crackdown

The same announcement included a nationwide moratorium on Medicare enrollment for certain medical equipment suppliers and a request for information under CMS's new CRUSH initiative, short for Comprehensive Regulations to Uncover Suspicious Healthcare. CMS asked states, providers, advocates and others for ideas to prevent and detect fraud, with comments due March 30, 2026.

Minnesota was already under pressure. In December 2025, the state paused new licenses for home and community-based services providers through 2027.

Why this matters for providers and DSPs

Federal scrutiny is aimed squarely at personal care and HCBS. When a state loses federal money, legitimate providers can face slower payments and tighter reviews. Agencies elsewhere should expect similar attention to billing and documentation.