Pursuant to an October 29, 2025, press release, Governor Tim Walz has directed the Minnesota Department of Human Services (“DHS”) to audit fourteen Medical Assistance (“Medicaid”) services identified as high-risk for billing irregularities or potential fraud. According to reports, during the audit period, payments for these services will be paused for up to 90 days while claims undergo a third-party prepayment review process.

This pre-payment audit follows heightened scrutiny of DHS’ oversight of Medicaid billing and program integrity. In an October 27, 2025, letter to the Centers for Medicare and Medicaid and CHIP Services, Interim Commissioner Shireen Gandhi acknowledged that “existing claims edits and ‘pay and chase’ post-payment review processes alone have not sufficiently addressed inappropriate and fraudulent billing in our programs.” In response, Governor Walz has directed this aggressive pre-payment audit that, while intended to rebuild public trust in the Medicaid program, represents a significant and arguably overbroad shift in policy that will penalize compliant providers and disrupt the delivery of care for essential services.

Using funding authorized during the 2025 legislative session, DHS has contracted with Optum to conduct data analytics on Medicaid fee-for-service claims. Optum’s review is intended to identify anomalies such as incomplete documentation, unusually high billing volumes, or inconsistencies that may indicate a claim does not meet program requirements.

DHS will review and verify claims flagged through Optum’s analytics and refer any suspected improper billing to the DHS Office of Inspector General for investigation or the Medicaid Fraud Control Unit of the Minnesota Attorney General’s Office. DHS suggests it will not hold all submitted claims for 90 days, but that providers can expect some submitted fee-for-service claims to be suspended for up to that full time period. DHS states that this practice complies with law, as Minnesota Health Care Programs has 30 days to pay or deny clean claims and 90 days to pay or deny complex claims. Despite acknowledging that this program will delay payments for providers, DHS expects providers to continue to provide services to members as normal.

DHS states that the prepayment review will become a permanent, new business process for the following fourteen Medicaid services, which DHS has designated as high-risk:

  • Adult Companion Services
  • Adult Day Treatment
  • Adult Rehabilitative Mental Health Services
  • Assertive Community Treatment
  • Community First Services and Supports
  • Early Intensive Developmental and Behavioral Intervention
  • Housing Stabilization Services
  • Individualized Home Supports
  • Integrated Community Supports
  • Intensive Residential Treatment Services
  • Night Supervision Services
  • Nonemergency Medical Transportation Services
  • Recovery Peer Support
  • Recuperative Care

Given the heightened scrutiny of claims by a third-party, providers of these “high-risk” services should ensure their internal documentation and billing procedures are compliant with DHS requirements. In addition, providers should prepare for reimbursement delays and increased payment denials, as well as stricter oversight requirements, including, among other things, initial screening visits and unannounced site visits.

If you are an affected provider and have questions regarding the new pre-payment audit process, or are facing wrongful payment denials, reach out to the health care regulatory attorneys at Winthrop & Weinstine, P.A.

October 30, 2025