Shelli Marthaler’s job is to connect people on Medicaid with the healthcare they need. 

Marthaler said that she has worked for Kandiyohi County for 26 years because her clients are often her neighbors. She feels good when they can access services like having a nurse come to their home, or finding the right counselor to address their mental health. 

But during the first week of June, these clients told Marthaler they were scared. In a move to show the Trump administration they are taking action on fraud, the Minnesota Department of Human Services disenrolled an astonishing 3,411 healthcare providers from the ability to bill Medicaid. 

“Families of patients were asking me, ‘What are we going to do?’ The level of concern was high,” Marthaler said. 

On June 11th, the Department of Human Services, or DHS, flicked the light switch back on. Providers who appeal their disenrollment can still get reimbursed for treating Medicaid patients.

Related: State says that Medicaid providers can get funding as they appeal disenrollment

As of June 24, there are 2,600 providers who have appealed, according to DHS, with 2,100 of these healthcare outfits having had their ability to bill reinstated.

Marthaler is no longer getting emails from healthcare CEOs, “basically saying they can no longer provide services if they are not able to bill.”

But this appeals period might be the calm before the Category 5 hurricane. 

DHS has 60 days to review each appeal. Through June 24, the agency had revalidated just 200 of the 2,600 appellant providers. DHS probably has no shot to get to every appeal in time. 

“They are not known for doing anything timely,” said state Sen. Jim Abeler, R-Anoka, who has beseeched DHS to keep paying providers. 

If the appeals are not reviewed in time, they go to the Court of Administrative Hearings, an arm of the state’s executive branch whose normal caseload ranges from worker’s compensation claims to reviewing veterinary licenses. So, an outcome is still possible of myriad providers getting cut off from Medicaid, which nearly a quarter of Minnesotans rely upon for health coverage. 

“Patients will flood our emergency rooms,” decried Marcus Schmitt, executive director for the National Alliance on Mental Illness’s Minnesota chapter.

But at least the Trump administration is finally happy with Minnesota after months of taunting Gov. Tim Walz, right?

Actually, we’re not sure. Dr. Mehmet Oz, director for the Centers for Medicare and Medicaid Services, has not addressed Minnesota’s now three-week-old moves of disenrolling providers and then letting them appeal. 

The Centers for Medicare and Medicaid Services declined to comment for this story, citing its pending litigation with the state of Minnesota.

Related: Threatened Medicaid funding for addiction treatment throws moms, kids and a town into limbo

More worrying than the Trump administration not communicating with MinnPost is the Trump administration not talking with DHS. 

According to a DHS spokesperson, state officials met once with Centers for Medicare and Medicaid Services staff since the disenrollment announcement, on June 8th. 

“There were no specific outcomes out of the meeting,” the spokesperson said, and no subsequent meetings are scheduled. 

Publicly, Oz and other Trump appointees have moved on to discussing criminal charges against Medicaid providers in other states, allegations that dwarf the combined sum of less than $100 million in purported fraudulent billing done by Minnesota healthcare outfits. 

Here is how the Trump administration’s crackdown on Medicaid fraud morphed into a paperwork purgatory for civil servants and providers with perhaps more dire consequences on the way.

I am beyond confused. Why did this mass disenrollment and appeal of disenrollment happen again?

In January, Walz administration officials rang the alarm that the Trump administration would withhold $2 billion in Medicaid payments to Minnesota over the course of the next year. Then in March, Walz administration officials un-rang the alarm, stating that they had hammered out a “corrective action plan.” 

(Medicaid stories have big numbers in them. Numbers last year from KFF, a San Francisco-based nonprofit that studies health policy, show that Minnesota spends $18.5 billion a year on Medicaid with $11.4 billion coming from the federal government.)

This plan focused on 13 Medicaid programs that federal and state officials agreed were cesspools for potential fraud committed by shady providers. 

(Another program, Housing Supportive Services, is where the majority of criminal charges brought by federal prosecutors allegedly happened, and why you have heard so much about Medicaid fraud in the last year. That program ended.)

A couple of these 13 programs, early autism services for children and home-care services for the developmentally disabled, enrolled a few providers who now face criminal charges. Other programs, like adult mental health rehabilitative services, have so far not been publicly associated with fraudulent providers. 

The corrective action plan consisted of DHS revalidating the business or organization information of every single provider in these 13 programs by May 31. That came out to 5,583 providers, which were also subject to unannounced DHS site visits.

States not named Minnesota have not months but two years to complete this revalidation process, per a Centers for Medicare and Medicaid Services directive. 

According to Andy Schneider, a research professor at Georgetown University who has compiled a timeline on Trump administration actions against Medicaid in Minnesota, no state in Medicaid’s six-decade history has ever had to move as fast in reviewing the legitimacy of its providers. 

 “I’ve never seen anything like it,” Schneider said. 

DHS announced June 4 that its review was “complete” even though just 2,061, or 37% of the providers, had been revalidated. Fifty-nine of the providers were referred to the DHS Office of Inspector General for further review, which might mean there was something fishy. 

Most of the other providers had incomplete paperwork and have since been allowed to appeal. 

Who has been the most miserable and panic stricken in trying to comply with this revalidation process: DHS workers, county workers, providers or patients?

I’ll lay out the case for each. 

Seeing rapid provider revalidation as the best way to quell threats from the Trump administration, DHS, under the slightly fluctuating leadership of Shireen Gandhi and John Connolly, hired workers from 10 other state agencies and reassigned existing staff to vet all these providers.

The federal government gave DHS no additional resources to complete this unprecedented process, the state agency said. 

“We are under tremendous pressure from [the Centers for Medicare and Medicaid Services] to meet the deadlines in the corrective action plan and protect $2 billion in federal funding,” a DHS spokesperson said.

Said pressure was compounded when providers did not respond to repeated written notices sent out by DHS requesting information.

“Some providers responded too late in the process for us to be able to finish the review and site visit all before May 31,” the DHS spokesperson said. 

But if providers were blasé at the start, many of them recently moved to “panic mode,” said one DHS employee tasked with managing a team working on revalidation. 

Take DreamLife Destiny, a Maple Grove company that specializes in helping disabled adults with short-term care. 

Per the state agency, on Jan. 27 DHS sent out its first letter to DreamLife detailing the revalidation effort and requesting information. DreamLife never responded. On Feb. 25, DHS sent out a reminder letter. 

Related: Can the U.S. Attorney’s office be trusted to fight fraud?

Eventually, DreamLife replied. But DHS asked twice for clarifying documents before, on May 21, sending a letter to the company stating they are terminated from Minnesota’s Medicaid program.

But according to Russell Peterson, CEO for DreamLife, the termination happened because DHS personnel did not explain what was wrong. 

“Their help team and the revalidation team were often unavailable and unwilling to answer necessary questions,” Peterson said. “Also, their documents exist in various Word or PDF forms. It is a mess to track their documents and manage the entire process.”

Frustrated, Peterson let his staff and patients know about the termination. Amanda McDowell, an Anoka resident and DreamLife patient, said that she began to suffer panic attacks. 

McDowell, who said that she struggles with suicidal ideation, relies on DreamLife staff to drive her to the doctor’s and the grocery store as well as provide job counseling. 

“These people don’t just help in crisis situations,” McDowell said. “Their support keeps a crisis from happening.”

The DreamLife story has a happy-ish ending. They are one of the 200 providers who successfully appealed termination. 

After finally receiving the right paperwork, DHS officials completed a site visit on June 18, and, one day later, reenrolled DreamLife, according to the agency. 

The paperwork problem in the first place? Apparently the middle name of Tyler Segraves, Peterson’s business partner, was misspelled.

“Our best surmise is that they had my partner Tyler’s middle name spelled Connor when it actually should be spelled Conner,” Peterson said. 

And what about county workers like Shelli Marthaler?

Minnesota is in the minority of states that have counties review eligibility for Medicaid and have workers like Marthaler in Kandiyohi who essentially act as case managers. 

So when DHS announced that 3,411 providers were disenrolled, it was on the counties to answer patient questions. But counties also found themselves on the phone with providers, who are licensed by the state, because the line was busy at DHS. 

“Everyone was surprised by how many providers got the disenrollment notice,” said Julie Ring, executive director of the Association of Minnesota Counties.

Ring said that counties hands are tied in helping these providers, besides shepherding them into the DHS appeals process. She wonders if the panicked callers will return in greater force in August when the 60-day appeals window for most providers ends.

Provider revalidation comes as counties must change Medicaid eligibility to make recipients enroll twice as often and instill work or education requirements on childless adults. Caroline Chan, health and human services director at Kandiyohi County, said that the federally imposed changes stress her employees, but are most worrisome to Medicaid recipients. 

“To see the most vulnerable population encounter something like this and have it shift so quickly and rapidly is quite concerning,” Chan said.

Can history be any guide for whether Minnesota Medicaid returns to normal?

No.

It was not until the 2010 Affordable Care Act that national standards were set to vet healthcare providers. Schneider at Georgetown said that no previous presidential administration (including the first Trump administration) used this federal power to make demands of states.

“There will be some lessons learned, though I’m not sure what they are yet,” Schneider said about the mass revetting process. “We are still in the middle of it.”

A relatively more tested use of federal power is the Centers for Medicare and Medicaid Services deferral of money to states. 

A day after the State of the Union address where President Trump said that Somalis “pillaged” $18 billion in social service funds from Minnesota, Oz and vice president JD Vance announced that they would pause a $259 million payment to Minnesota Medicaid. Oz later announced another $91 million deferral.

Trump administration officials are within their statutory rights to make a deferral. However, the Centers for Medicare and Medicaid Services must give a specific reason for it, such as citing an Inspector General’s report that uncovered phony billing, Schneider said. 

Because the Trump administration arguably did not give a reason beyond telling and not showing “serious red flags,” the state of Minnesota sued. The lawsuit is paused until September in the hopes federal and state officials resolve it outside of court. 

Between the revalidation and deferrals, the Trump administration has “proactively shifted the burden of proof to states to obtain funds,” according to a KFF report from this month. 

Before, deferrals were made when fraud was clearly identified, the report stated. But “the new approach defers” or withholds “federal Medicaid spending when fraud is suspected.”

The revalidation process and deferrals could end amicably and anticlimactically, because the Trump administration is losing interest in Minnesota, where Walz is retiring. Last month, California joined Minnesota on the Medicaid deferral list.

“The deferral of $1.3 billion in federal matching funds for California announced by the vice president was pretty clearly targeted at Gov. [Gavin] Newsom,” Schneider said.

But for now most Medicaid stakeholders are not breathing easy.

“It is a totally political fight and it is horrible,” said Kenneth Bence, director of research analysis and policy at the Association of Residential Resources in Minnesota, which represents disability service providers. “The system is teetering on the edge.”

Ana Radelat contributed reporting.

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