HF4566 (Legislative Session 94 (2025-2026))
Suspension of medical assistance payments during investigation of kickback fraud permitted, and rulemaking required to include kickbacks in the definition of fraud.
AI Generated Summary
Purpose
- Strengthen program integrity for Minnesota’s Medical Assistance (MA) program by giving the commissioner authority to suspend or withhold MA payments during fraud investigations, expand the definition of fraud to cover kickbacks (illegal remuneration), and require expedited rulemaking to align state rules with anti-kickback concepts.
Key Provisions (What the bill does)
- Amends Minnesota Statutes 2024 §256B.064, subdivision 2, to specify how monetary recoveries and sanctions are determined and when payments can be suspended or reduced.
- Allows the commissioner to suspend or reduce MA payments to an individual or entity after notice and before a hearing if necessary to protect public welfare and the integrity of the program (with certain exceptions for nursing homes or convalescent facilities).
- Allows withholding or reduction of MA payments without advance notice if:
- The individual or entity is convicted of a crime related to fraud or misconduct in provision, management, or administration of health services; or
- There is a credible allegation of fraud (including illegal remuneration) for which an investigation is pending.
- Defines “credible allegation of fraud” as allegations that have indicia of reliability and have been reviewed carefully, with actions taken on a case-by-case basis. Credible allegations can come from sources such as fraud hotlines, data mining, provider audits, civil false claims cases, and law enforcement investigations.
- Requires notice within five days of withholding or reducing payments, describing general allegations, the types of claims affected, and the right to submit written evidence; notice can be limited in ongoing investigations when appropriate.
- Provides that withholding or reduction ends if there is insufficient evidence of fraud or after legal proceedings conclude, unless a notice of intention to impose monetary recovery or sanctions has been issued.
- If convicted of a crime related to the provision, management, or administration of MA services, any held payment is forfeited to the commissioner or the managed care organization (MCO) regardless of the amount charged or restitution ordered.
- Allows suspension or termination of participation in MA without advance notice when the individual or entity is excluded from Medicare; requires five-day notice of such action, including the reason and effective date, and the need to be reinstated to Medicare before reapplying for MA participation.
- Establishes a right to appeal: individuals or entities can request a contested case under the state’s rules, filed within 30 days, specifying disputed items, computations, statutory/rule authorities, and contact information.
- Provides for fines for failing to fully document services according to program standards or for missing required documentation; fines are generally 20% of the paid claims or up to $5,000, whichever is less. For repeated violations, fines can be up to $5,000 or 20% of the value of the claims, whichever is greater. Failure to pay fines can result in withholding or reduction of payments, with a timely appeal staying payment until a final order is issued.
Significant Changes to Law
- Expands the fraud framework to explicitly include kickbacks (illegal remuneration) within the MA fraud context.
- Requires expedited rulemaking to:
- Correct or clarify references to the federal anti-kickback statute, or
- Add references to illegal remuneration in Minnesota law, ensuring state rules align with federal standards.
- Reconfigures enforcement tools (suspension, withholding, monetary recoveries, sanctions, fines) and due process (notice, hearing, and appeal rights) for MA providers and participants.
Process and Protections for Providers and Recipients
- Notice and hearing: prior notice and an opportunity for a hearing are generally required before monetary recovery or sanctions, with some expedited actions allowed to protect public welfare.
- Public welfare: actions may be taken to protect the integrity of the MA program and public health, balancing prompt action with due process.
- Medicare exclusion linkage: actions can occur without advance notice when tied to Medicare exclusions, but with prompt notification.
How the Rulemaking Would Work
- The Department of Human Services would use expedited rulemaking (Minnesota Statutes §14.389) to implement the changes, specifically to:
- Include kickbacks in the fraud definition, and
- Correct or clarify citations to the federal anti-kickback statute and related references.
Implementation Scope
- Applies to MA program providers, managed care organizations under MA, and entities involved in MA administration and reimbursement.
- Aligns Minnesota law with broader anti-fraud efforts, including cooperation with federal fraud statutes and Medicare rules.
Relevant Terms kickbacks, kickback, illegal remuneration, fraud, fraudulent, Medical Assistance (MA), Minnesota Medical Assistance, withhold, withholding, suspend, suspension, monetary recovery, sanctions, notice, hearing, credible allegation of fraud, indicia of reliability, data mining, provider audits, civil false claims, law enforcement investigations, five days, Medicare exclusion, Medicare, managed care organization (MCO), restoration/reinstatement, contest/contestant, contested case, 42 CFR 455.23e, 42 CFR 455.23f, Code of Federal Regulations, federal anti-kickback statute, 42 U.S.C. 1320a-7bb, illegal remuneration, Minnesota Statutes 256B.064, subdivision 2, Minnesota Rules chapter 9505, expedited rulemaking, rulemaking, unlawful remuneration, overpayment, underpayment.
Bill text versions
- Introduction PDF PDF file
Past committee meetings
- Human Services Finance and Policy on: March 24, 2026 08:15
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| March 23, 2026 | House | Action | Introduction and first reading, referred to | Human Services Finance and Policy |
Citations
[
{
"analysis": {
"added": [
"Adds authority to suspend or reduce payments to an individual or entity before a hearing if necessary to protect public welfare or program interests (except for nursing homes or convalescent care facilities).",
"Authorizes withholding or reduction of payments without advance notice if there is: (i) a conviction for a crime related to the conduct described in subd. 1a; or (ii) a credible allegation of fraud pending an investigation, with credible defined by reliability indicators and careful review of facts.",
"Defines credible allegations of fraud to include allegations verified by the state from sources such as fraud hotline complaints, claims data mining, and patterns identified through provider audits, civil false claims cases, and law enforcement investigations.",
"Requires five days’ notice for withholding actions, with specified content to be included in the notice, and allows a right to submit written evidence for the commissioner's consideration.",
"Allows suspension or termination of participation without advance notice in cases of Medicare exclusion, with five days’ notice detailing the Medicare exclusion and reinstatement requirements.",
"Creates FINES related to documentation standards (up to 5,000 or 20% of the claim amount, or as otherwise specified) and authorizes fines for repeated violations, potentially up to 5,000 or 20% of the value of the claims, whichever is greater.",
"Provides consequences for payment withholding or sanctions, including the ability to withhold or reduce payments and to recover fines, with a timely appeal staying payment until a final order is issued.",
"Clarifies that penalties and monetary recovery actions follow a defined process including appeal procedures and potential case-by-case determinations."
],
"removed": [
"No explicit removal of existing provisions; the text primarily adds or expands authority rather than deleting existing language."
],
"summary": "This bill amends Minnesota Statutes 2024 §256B.064, subd. 2 to expand the state's ability to manage monetary recoveries and payments in the Medicaid program, including suspending or withholding payments during investigations and defining when such actions may occur.",
"modified": [
"Modifies the scope of payment discipline by adding pre-hearing suspension authority and expanding conditions under which payments can be withheld or reduced.",
"Expands definitions of fraud to include credible allegations and kickbacks by reference to federal law and specified sources.",
"Adds notice requirements, right to appeal, and specific procedural steps related to monetary recoveries and sanctions.",
"Incorporates Medicare exclusion as a basis for immediate suspension or termination of participation without prior notice."
]
},
"citation": "256B.064",
"subdivision": "2"
},
{
"analysis": {
"added": [
"Incorporates the ability under federal regulation to withhold or reduce payments without advance notice in specified fraud-related scenarios."
],
"removed": [],
"summary": "The bill references federal regulatory authority under 42 CFR 455.23(e) to withhold or reduce Medicaid payments in certain circumstances.",
"modified": [
"Links Minnesota's payment-withholding framework to federal regulation, enabling pre-notice withholding when good cause exists under the cited CFR provision."
]
},
"citation": "42 CFR 455.23",
"subdivision": "e"
},
{
"analysis": {
"added": [
"Recognizes additional grounds under the same CFR provision for withholding or reducing payments in fraud-related contexts."
],
"removed": [],
"summary": "The bill also references 42 CFR 455.23(f) as part of the authority to withhold or reduce payments.",
"modified": [
"Expands the use of federal regulatory authority to justify payment withholding in specified situations."
]
},
"citation": "42 CFR 455.23",
"subdivision": "f"
},
{
"analysis": {
"added": [
"Adds references to illegal remuneration and kickbacks as elements related to fraud, guiding rulemaking to align state definitions with federal anti-kickback standards."
],
"removed": [],
"summary": "The bill references the federal anti-kickback statute (42 U.S.C. § 1320a-7b) to address kickbacks and illegal remuneration within the fraud framework.",
"modified": [
"Proposes rulemaking to clearly include kickbacks in the definition of fraud, using the federal anti-kickback statute as a citation basis."
]
},
"citation": "42 U.S.C. § 1320a-7b",
"subdivision": "b"
},
{
"analysis": {
"added": [
"Requires expedited rulemaking to incorporate kickbacks into the definition of fraud in state rules."
],
"removed": [],
"summary": "The bill directs expedited rulemaking under Minnesota Statutes §14.389 to amend DHS rules to include kickbacks in the definition of fraud.",
"modified": [
"Establishes a procedural pathway to update definitions via expedited rulemaking rather than statutory change."
]
},
"citation": "14.389",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "The bill references Minnesota Statutes §14.02, subd. 3 (contested cases) in relation to appeals of monetary recoveries or sanctions.",
"modified": [
"Links appeal rights to a formal contested-case framework as the mechanism for challenging monetary recoveries or sanctions."
]
},
"citation": "14.02",
"subdivision": "3"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "The bill references Minnesota Statutes §256B.035 in relation to contracts with the commissioner.",
"modified": [
"Affirms existing contracting framework with the commissioner under §256B.035; no explicit statutory amendments to §256B.035 appear in this text."
]
},
"citation": "256B.035",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "The bill references Minnesota Rules Chapter 9505 in connection with documentation standards and sanctions.",
"modified": [
"Uses Minnesota Rules Chapter 9505 as the administrative framework for documentation and related penalties."
]
},
"citation": "Minnesota Rules 9505",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "The bill references Minnesota Rules 9505.2165, subpart 4, item C, in the context of anti-kickback or fraud definitions and related rule corrections.",
"modified": [
"Aims to correct or update the rule citation to the federal anti-kickback statute reference (42 U.S.C. § 1320a-7b) within the Minnesota Rules framework."
]
},
"citation": "Minnesota Rules 9505.2165",
"subdivision": "subpart 4, item C"
}
]Progress through the legislative process
In Committee