A federal judge in Minnesota denied the state’s motion challenging the federal government’s deferral of Medicaid funds, according to an April 6 opinion and order.
The state filed a complaint against CMS, HHS and their respective leaders March 2. Earlier this year, CMS froze $259 million in Medicaid funds to Minnesota, with roughly $243 million linked to high-risk services. The agency also warned of an additional $2 billion that could be withheld annually.
Since then, CMS has approved Minnesota’s corrective action plan for boosting program integrity. An assistant state attorney general told the case’s judge that CMS Administrator Mehmet Oz, MD, would release the withheld funds once the state pitches and works toward a corrective action plan.
Minnesota Deputy Human Services Commissioner John Connolly, PhD, confirmed, “CMS already approved Minnesota’s corrective action plan for addressing fraud, waste and abuse without changes or edits.” He expressed concern over the possibility of quarterly deferrals.
“It could take several quarters to resolve the current deferral, and CMS has threatened additional deferrals, potentially costing Minnesota over $1 billion per year in Medicaid funding,” Dr. Connolly continued in a statement shared with Becker’s April 7. “The state needs to be prepared for increasing funding freezes through the end of the current federal administration.”
The judge denied Minnesota’s motion for a temporary restraining order and an expedited preliminary injunction because the federal agency’s proceedings were not deemed “final in the sense the law requires.” Other reasons include “novel” legal theories asserted by the state, the deferral’s likely compliance with federal regulations and how the preliminary injunction request relies on certain assumptions, as outlined in the opinion.
But the judge did not entirely close the door on Minnesota.
“All of this is not to say that Minnesota cannot prevail. Minnesota has identified reasonable legal concerns regarding the deferral’s nature and scope and the federal government’s motivations for initiating it,” the opinion said. “It is possible the record may support these concerns in the future. Today it does not.”
A spokesperson for the Minnesota attorney general’s office said the team “is disappointed in this ruling.”
“The office is reviewing the decision and working with the Department of Human Services to determine our next steps,” they added.
Dr. Connolly also described the ruling as “disappointing.”
“It allows CMS to move forward with their unprecedented action to defer $259 million for services to Minnesotans who rely on Medicaid programs,” he said. “Deferring $259 million will have catastrophic impacts across our state’s healthcare infrastructure.”
Becker’s contacted CMS and HHS and will update this story if more information becomes available.
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