The Minnesota Department of Human Services (“DHS”) quietly communicated on December 1, 2025, its intent to issue a temporary licensing moratorium for 245D-licensed Home and Community Based Services (“HCBS”), effective January 1, 2026. The licensing moratorium is the latest step in DHS’s heightened efforts to tamp down widespread fraud, waste and abuse uncovered in the Medical Assistance (“Medicaid”) program over the last several months.  Our team’s prior coverage of these actions can be found here.

In a December 1, 2025, letter to the chairs of the House Human Services Finance and Policy Committee and the Senate Health and Human Services Committee, Temporary Commissioner Shireen Gandhi wrote that the decision to implement a moratorium was based on several factors, including (i) growth in the number of HCBS licensed providers has outpaced the needs of enrolled waiver participants; (ii) the number of existing active 245D licenses is nearly equal to the number of pending applications, further supporting the position that license capacity has grown faster than the number of waiver participants over the last five years; and (iii) DHS is not sufficiently funded to process the growing backlog of licensing applications while also meeting federal waiver plan commitments to review every 245D licensed provider at least once every three years.

The moratorium, which DHS states is authorized by Minnesota Statutes section 245A.03, subd. 7a and Executive Order 25-10, will go into effect on January 1, 2026 and last for an anticipated 24 months, ending December 31, 2027.

Under the moratorium, DHS will:

  • Stop issuing new 245D licenses;
  • Stop accepting new 245D license applications;
  • Stop adding new services to existing 245D licenses; and
  • Cancel existing 245D license applications, and make licensing application fee refunds available until December 31, 2026, to all affected applicants.

An exception process will be available based on requests from counties, Tribal Nations or managed care organizations responsible for a person’s waiver case management.  DHS states that before January 1, 2026, it will finalize and publicly share the processes and criteria for granting exceptions requested by lead agencies.

Existing licensees should be prepared for DHS compliance reviews and should begin preparing for records requests and on-site visits, including reviewing policies and procedures, ensuring documentation of appropriate staff training and qualifications, and assuring that recipient records are complete and up-to-date. It is also unclear how changes of ownership of existing 245D licensees will be handled since those transactions typically require a new license application.

If you are an affected provider and have questions regarding the new licensing moratorium, or are facing adverse DHS action, reach out to the health care regulatory attorneys at Winthrop & Weinstine, P.A.

December 4, 2025