Why did CMS defer Medicaid funds to Minnesota?

CMS said its review of Minnesota's spending in the fourth quarter of fiscal 2025 found unusually high spending and rapid growth in areas including personal care services and home and community-based services. The $259.5 million deferral covers $243.8 million CMS called unsupported or potentially fraudulent, plus $15.4 million tied to people lacking satisfactory immigration status.

CMS defers $259.5M in Minnesota Medicaid funds over claims

CMS announced Feb. 25, 2026, that it was deferring $259.5 million in quarterly federal Medicaid funding to Minnesota over questionable personal care and HCBS claims, and warned it could defer over $1 billion.

CMS · Minnesota · Program integrity · HCBS · Policy

G. Edward Johnson, Wikimedia Commons, CC BY 4.0

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 federal fraud crackdown announced at the White House.

What CMS found

CMS said its review of Minnesota's spending in the fourth quarter of fiscal 2025 found unusually high spending and rapid growth in several areas, including personal care services and home and community-based services. The deferral covers $243.8 million in state spending CMS called unsupported or potentially fraudulent, plus $15.4 million tied to people lacking satisfactory immigration status. Minnesota can respond with documentation during the review. CMS warned that it could defer more than $1 billion over the next year if the state doesn't fix its program integrity problems. CMS also sought public input on new fraud rules.

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.

Common questions

Why did CMS defer Medicaid funds to Minnesota?: CMS said its review of Minnesota's spending in the fourth quarter of fiscal 2025 found unusually high spending and rapid growth in areas including personal care services and home and community-based services. The $259.5 million deferral covers $243.8 million CMS called unsupported or potentially fraudulent, plus $15.4 million tied to people lacking satisfactory immigration status.
Could Minnesota lose more?: CMS warned that it could defer more than $1 billion over the next year if the state doesn't fix its program integrity problems. Minnesota can respond with documentation during the review.

Sources

Centers for Medicare & Medicaid Services · February 25, 2026 · federal agency press release