Minnesota Medicaid Error Rate Far Below U.S. Average, Federal Review Finds

ST. PAUL, MN — Minnesota’s Medicaid program is operating with a significantly lower rate of improper payments than most states, according to new federal data released this month.

A review by the U.S. Centers for Medicare and Medicaid Services found Minnesota’s Medicaid error rate was slightly above 2.1 percent, compared with a national average of 6.1 percent. The review examined billing statements and compared them with medical records to determine whether payments were made correctly.

State officials say the data was compiled before the Minnesota Department of Human Services began rolling out a series of new anti-fraud measures in late 2024.

"No amount of error or fraud is acceptable. Even one dollar is too much," said Temporary Human Services Commissioner Shireen Gandhi. "This review shows we have strong internal controls that we continue to improve, and we are not stopping there as we accelerate our efforts to fight fraud."

The federal findings come as Minnesota faces the possibility of losing up to $2 billion annually in Medicaid funding tied to program integrity requirements.

Since last fall, the Department of Human Services has implemented multiple reforms aimed at reducing fraud and billing errors, including identifying 14 high-risk services, auditing autism service providers through on-site visits, discontinuing the Housing Stabilization Services program, and placing a moratorium on adding new providers in high-risk service categories.

Other steps include licensing autism centers, removing inactive providers, increasing pre-payment reviews for certain services, and developing plans to revalidate providers considered higher risk.

State officials say the CMS review is the first concrete data in the past year measuring the scope of improper payments in Minnesota’s Medicaid program. The federal reviews are conducted regularly to comply with a law passed by Congress in 2019.

“The CMS review confirms DHS is doing better than the national average in complying with Medicaid payment requirements,” Gandhi said. “As part of our ongoing effort to reduce errors and strengthen program integrity, the state is bringing on independent consultants to audit processes and recommend additional changes going forward.”