How have Minnesota state auditors measured improper payments in Medicaid and TANF in recent years?
Executive summary
Minnesota’s auditors have measured improper payments in Medicaid primarily through program evaluations, post-payment recovery audits, and by tracking federal improper-payment rates reported by CMS, while measurement for TANF remains limited by federal data gaps and statutory constraints; state auditors have praised Minnesota’s controls but also urged stronger, coordinated detection and prevention [1] [2] [3] [4]. Recent federal releases show Minnesota’s Medicaid improper-payment rate well below the national rolling average, even as federal agencies and prosecutors publicly allege large-scale fraud that state audits treat as a separate issue from routine improper-payment measurement [5] [6] [7] [8].
1. How state auditors define and scope “improper payments”
The Office of the Legislative Auditor (OLA) and related state audit products treat improper payments broadly to include fraud, abuse, and unintentional errors in the Medical Assistance (Medicaid) program and emphasize that an “improper payment” is not synonymous with intentional criminal fraud, a distinction CMS also has maintained in recent reporting [2] [1] [6].
2. What methods auditors and the state use to estimate Medicaid improper payments
Minnesota’s measurement combines program evaluations from the OLA, post-payment Recovery Audit Contractor (RAC) activity that identifies and recovers erroneous payments on a contingency basis, and compliance with federal improper-payment reporting frameworks that feed into CMS state rates; RACs in Minnesota operate on contingency and recover funds after payment, which is one concrete tool the state uses to quantify and correct improper Medicaid payments [2] [3] [1].
3. The role of federal improper-payment rates and how Minnesota compares
CMS began publishing state-specific Medicaid improper-payment rates in recent cycles, and the 2025 data show Minnesota’s overall improper-payment rate at about 2.2%, substantially below the national rolling rate of roughly 6.12%, a comparison cited by both state officials and independent observers to argue Minnesota’s measured error rate is low [5] [6].
4. Auditors’ evaluations: strengths identified and recommended fixes
The OLA found Minnesota’s payment-control system generally meets federal requirements and includes elements recommended by national fraud-control studies, but the OLA and its 2003/2004-era comprehensive report urged more focus, coordination, proactive detection of emerging schemes, attention to managed care, consistent review risk for claims, and periodic reassessment—recommendations that remain the blueprint for strengthening measurement and control [1] [2].
5. TANF measurement: a different problem — limited federal authority and data
Unlike Medicaid, TANF lacks a reported federal error rate in recent years because HHS says it lacks statutory authority to compel states to submit the granular data needed to estimate improper payments; Congress and analysts have repeatedly flagged the absence of a TANF error rate as a longstanding transparency and fiscal-risk gap [4].
6. How auditors’ measurement interacts with recent enforcement and political claims
State audit metrics and CMS rates have been invoked both to defend Minnesota’s controls and to criticize them: advocates and academic centers highlight Minnesota’s low measured Medicaid error rate to question sweeping federal actions, while CMS and federal prosecutors have publicly alleged extensive fraud in certain services and cited deficiencies in proactive detection—illustrating that measurement (what auditors count) and enforcement narratives (what prosecutors allege) can point in different directions and serve divergent agendas [5] [7] [8].
7. Practical responses tied to measurement: audits, pauses, and front-end checks
Responding to auditors’ recommendations and to federal scrutiny, state executives have ordered third-party audits and temporary payment pauses for dozens of high-risk Medicaid services to add front-end verification before payment and to triage anomalous billing, actions reported by the governor’s office and state media as efforts to reduce improper payments beyond existing post-payment RAC recoveries [9] [10] [11].
Conclusion: measured progress, persistent blind spots
Minnesota’s auditors and program controls produce measurable, federally comparable Medicaid improper-payment rates and use recovery audits and program reviews to correct errors, yet OLA recommendations, the limited federal dataset for TANF, and competing federal enforcement claims show measurement is partial, evolving, and sometimes politicized—meaning the numbers are informative but not definitive on the scale or intent of all improper activity [1] [2] [3] [4] [5] [7].