This State's Medicaid Payment Errors Are Below The National Average

Medicaid is the U.S. program that provides free or affordable health coverage to low-income Americans. The program is funded on the federal level by the Centers for Medicare and Medicaid Services (CMS) and by individual states. Many find this to be an inefficient system that results in mismanaged funds and allows states to make improper payments. Every year, millions of dollars meant to help Medicaid beneficiaries are lost to both fraud and seemingly honest mistakes made in the distribution process. Some states make more egregious errors than others, and in 2025, Minnesota recorded one of the lowest improper payment rates of anywhere in the U.S.

According to 2025 CMS data, the national average rate of improper Medicaid payments was 6.12%. In yet another example of the embarrassing ways America has wasted money over the years, this amounted to $37.39 billion in misallocated funds. However, data from Medicaid and the Children's Health Insurance Program (CHIP) about the 17 states with Medicaid programs under review for potential improper payments in 2025 found that Minnesota had an improper payment rate of just 2.2% — a difference of 3.92% compared to the national average. This low rate came despite the recent allegations of Medicaid and child care fraud made against the state, and could inform why Minnesota has been one of the best states to live in recent years.

Improper payments can occur for a multitude of reasons, but often stem from insufficient documentation in a Medicaid recipient's file or simple data entry errors that do not reflect the actual care a patient received. According to state officials, Minnesota's low payment error rate is a reflection of its efforts to combat fraud and misuse of public funding. "This review shows we have strong internal controls that we continue to improve, and we are not stopping there as we accelerate our efforts to fight fraud," said temporary Commissioner of the Minnesota Department of Human Services (DHS) Shireen Gandhi in a statement to the Minnesota DHS. Those controls included new programs to identify areas with the highest rates of mistakes and fraud and review systems to flag improper billing before claims are paid.

While a relatively low payment error rate is a good sign for the state's Medicaid program, it is also beneficial for residents. Keeping a low rate prevents the federal government from withholding funds or imposing fines, which could happen if a state's improper payment rate exceeds 3%. Properly utilizing funds can be essential for recipients, especially as recent Medicaid cuts could force over 100 hospitals to close. The low rate also helps contradict the fraud allegations leveled at the state by the Trump administration and could deter the CMS from deferring payments to various local programs.