REGIONAL — Claims that Minnesota’s Medicaid program has been drained by billions of dollars in fraud have dominated headlines and political rhetoric over the past year. But two recent reviews tell a far more technical, and far less definitive, story.
The reports do not substantiate claims that billions of dollars were stolen from the Medicaid system. Instead, they focus on how the state’s Medicaid policies and payment systems function, and where weaknesses could leave the program vulnerable to improper payments or abuse.
Last fall, Gov. Tim Walz authorized an outside review of 14 Medicaid fee-for-service programs identified by the Minnesota Department of Human Services as high risk. DHS contracted with Optum, a health care analytics firm, to analyze nearly four years of claims data and identify policy gaps and system vulnerabilities.
State officials emphasized that the review was not designed to determine fraud, waste, or abuse. Instead, Optum was asked to assess how clearly Medicaid policies are written, how consistently they are applied, and where ambiguity or weak controls could be exploited.
During the first 90 days of the yearlong contract, Optum identified two figures that have since been widely cited and frequently misunderstood.
The first is $1.7 billion in “potential savings.” That figure represents payments made over roughly four years that might have been avoided if Medicaid policies had been clearer or more specific. It does not represent money recovered by the state.
The second figure is $52.3 million in direct recoveries tied to claims that clearly violated existing policy. Those recoveries span 46 months across the 14 reviewed services and stem from billing that did not meet established requirements.
Minnesota Medicaid Director John Connolly has cautioned against equating either figure with fraud, particularly in response to Republican claims that as much as $9 billion was lost to fraud in Minnesota’s Medicaid programs.
“We don’t know that to be true, and numbers that are placed out there at this point are speculative, because investigations are continuing,” Connolly said.
Connolly said the data reviewed so far does not support that estimate.
One program in particular, early autism intervention services, emerged as the most vulnerable in Optum’s analysis. Formally known as Early Intensive Developmental and Behavioral Intervention, the program grew rapidly in recent years, with the number of providers increasing from 41 in 2018 to 328 in 2023. Minnesota spent at least $229 million in Medicaid dollars on the program in 2024.
Optum found that more than 90 percent of autism-related claims reviewed did not clearly align with existing policy language or procedures. Of the $1.7 billion in potential savings identified across all programs, about $1 billion was tied to autism services.
State officials caution that those figures do not mean 90 percent of autism claims were fraudulent. Claims may be flagged because policies are vague, documentation is incomplete, or providers lack training on billing requirements.
Criminal cases related to autism services do exist, and several providers have been charged. But the Optum review itself does not assign a dollar amount to fraud within the program.
As part of the review, DHS has begun screening claims before payments are issued, a process known as prepayment review. Early results have led to some claims being denied, though none have yet been flagged as fraudulent, according to DHS officials.
State officials emphasized that Optum’s role is limited to identifying irregular billing patterns and policy issues, information that DHS may then use to inform its own investigations. Any determinations of fraud remain the responsibility of state and federal authorities.
Another recent federal review has added to the confusion surrounding Medicaid oversight. In January, the Centers for Medicare & Medicaid Services reported that Minnesota’s Medicaid improper payment rate was just over 2.1 percent, well below the national average of 6.1 percent.
Improper payments, again, are not a measure of fraud. The CMS review examines whether billing matches medical records and program rules, not whether providers intentionally misrepresented services.
Temporary Human Services Commissioner Shireen Gandhi cited the CMS findings as evidence of Minnesota’s compliance with Medicaid payment rules.
“This review shows we have strong internal controls that we continue to improve,” Gandhi said.
The CMS and Optum reports are not contradictory, but they measure different aspects of the Medicaid system. CMS evaluates billing accuracy under existing rules, while Optum examines whether Minnesota’s rules are clear and strong enough to protect the system in the first place.
Both reviews are now being cited by state officials as evidence that Minnesota is strengthening oversight of Medicaid services. What neither provides is a definitive answer to how much fraud has existed, or may continue to exist, in the system.
For now, the audits point to a Medicaid system strained by rapid growth, complex services, and policies that have not always kept pace. How much might have been lost to fraudsters taking advantage of those weaknesses remains to be seen.
State launches Medicaid fraud fact-check page
The Minnesota Department of Human Services on Wednesday launched a new webpage aimed at countering what it says are misleading and false claims about Medicaid fraud in Minnesota.
The page presents fact-check responses to common assertions circulating in public debate, including claims of exaggerated fraud totals, allegations raised in social media videos, and questions surrounding the federal government’s decision to withhold $2 billion in Medicaid funding from the state.
Temporary Human Services Commissioner Shireen Gandhi said fraud enforcement depends on documented evidence rather than speculation, adding that investigations by the department’s Office of Inspector General can lead to payment suspensions and referrals for criminal prosecution.
Department officials said misleading claims about fraud risk is confusing the public about Medicaid, known in Minnesota as Medical Assistance, which provides health coverage to about 1.2 million residents, including children, people with disabilities, and older adults.
The fact-check page is housed within the state’s Medicaid program integrity website at https://mn.gov/dhs/program-integrity/ and is intended to serve as a centralized source for information about fraud-related claims as debate continues over oversight and funding of the program.