Last week a federal judge ruled that the Centers for Medicare and Medicaid Services (CMS) can continue deferring $243 million in funding from Minnesota’s Medicaid program, causing a total deferral of $260 million.  

This deferral disrupts Minnesota’s budget. If not reversed, it will blow a $260 million hole in the General Fund, and this disruption will increase with every additional deferral. It could blossom into $1 billion over a year given CMS’ admitted expectation that it will issue more deferrals and each deferral will likely take several quarters to resolve. Combined with CMS’ threatened withhold of $2 billion per year, Minnesota must now account for the potential loss of more than $3.1 billion. This comes on top of the cuts already coming to Medicaid in the next several years from the 2025 federal reconciliation bill, H.R. 1, that President Trump signed into law last July.

While Minnesota will have to evaluate how services may be impacted as we move through the deferral process, we have a duty to let you know about the potential negative effects. Minnesotans need to understand: These funding losses are catastrophic and should be ringing alarm bells for everyone in the state. They will cause serious consequences by threatening the foundation of our state’s health care infrastructure. Medical Assistance, Minnesota’s Medicaid program, serves one in five Minnesotans – even more in some counties. It covers 3 out of 10 births and about 40% of the state’s kids. By insuring so many, the program is an indispensable source of support for many providers, helping them maintain access to services and keep their doors open for everyone. When providers go uncompensated and need to shutter services and facilities, everyone is impacted, whether enrolled in Medical Assistance or not.

These withholds and deferrals initiated by the Trump Administration do nothing to fight fraud. Instead, they hurt the state’s entire health care system. The Minnesota Department of Human Services has expanded and accelerated program integrity work over the past 18 months developing a nation-leading model. On March 19, CMS approved the department’s revised corrective action plan (CAP) without changes and noted the department had already met the CAP’s first two milestones. The department continues to work toward completing the remaining CAP deliverables by the current dates outlined.

While the department is appealing the $2 billion noncompliance withhold and will continue actively working to recoup all deferred amounts, we need to prepare for these very large, possible funding losses. And we need help educating and informing the public about what is at risk. The department has created a suite of materials for you to use to communicate the potential impacts we now face. The materials give tangible examples that translate these sums of money into real services, looking at not only the current deferral and withholding, but also if the deferrals and withholds last four quarters as expected. Find a new webpage on our Medicaid Matters website at mn.gov/dhs/medicaid-matters/federal-funding-losses. Get some fact sheets and social media posts to share at mn.gov/dhs/medicaid-matters/communications-toolkit. Please join us in sharing this information within your networks.

While the situation is alarming, no program impacts have happened yet. 

• Enrollees can continue to receive care and fill their prescriptions. 
• Health care providers will be reimbursed for Medicaid services as required under state and federal law. 
• Medicaid changes will not occur unless the Legislature enacts changes to the program, and we will communicate specifics with you well before those take place. 

However, we have a duty to let you know now about the potential negative impacts should the state experience these tremendous funding losses. We need a collaborative approach to minimize harm and preserve resources for the critical care that Medicaid supports. 

Thank you for your work to provide access to health care for Minnesotans. Our communities need all of us now more than ever.