As Minnesota races to satisfy federal demands for tighter Medicaid oversight, some small rural providers say the state’s revalidation campaign is sweeping up legitimate agencies alongside bad actors.
The complaints come as DHS announced the completion of “Revalidate 2026,” an emergency review process launched after federal authorities warned Minnesota it could lose Medicaid funding if it failed to address rampant fraud in state-run welfare programs.
One Milaca-area home care provider, who requested anonymity for fear of retaliation from the state, told Alpha News she believes a worker temporarily reassigned from another agency for DHS’s revalidation push confused two separate businesses she owns during the review process.
“She looked like a deer in the headlights,” the provider recalled after asking which business the reviewer was there to inspect. “I kind of think she’s not 100% sure what she’s even looking for.”
According to the provider, the reviewer cited ownership and billing discrepancies that she says actually applied to a separate business she co-owns with her husband — not the business being inspected.
The provider said the review ultimately resulted in a termination that immediately cut off her ability to bill Medicaid.
“My jaw was on the floor and my heart was palpitating. I’m a legit provider. I’ve been very compliant,” she told Alpha News.
The provider said she immediately filed an appeal, but the damage was already done.
According to the provider, the business provides in-home support services for approximately 100 vulnerable clients, many struggling with serious mental health issues, anxiety and daily life management. She said staff travel directly to clients’ homes across rural communities including Onamia and areas north of Mora.
“Abruptly taking the service away is going to send someone into a tailspin,” the provider said.
Claims of biased scrutiny
The provider also raised concerns about what she sees as uneven enforcement standards inside Minnesota’s Medicaid system.
“There are different standards being applied depending upon who owns this agency,” she told Alpha News, referencing the massive Somali-linked fraud cases that have rocked Minnesota’s welfare system.
“If certain nationalities had to jump through the hoops that I had to jump through, this fraud never would have happened,” she added.
Meghann Lewis, owner of Bella Mente, an Itasca County home support company, echoed those concerns.
Lewis told Alpha News she believes enforcement standards have not been applied equally across Minnesota’s Medicaid system and said that if the same level of scrutiny had been applied uniformly, the massive fraud schemes in the Twin Cities metro would never have become so widespread.
Lewis, whose agency was revalidated June 3 after what she described as an improper termination, said her business has faced years of intense oversight and repeated audits while massive Somali-linked fraud schemes operated elsewhere in Minnesota.
“The hoops you go through, the trainings we have to have — they would have caught this fraud,” Lewis told Alpha News. “I’ve had 13 in-person audits since 2018. They’re always checking up on me.”
Lewis said she submitted all requested revalidation documents nearly a month before the deadline and later received notice that the business had passed its Community First Services and Supports and Personal Care Assistance (CFSS/PCA) revalidation review.
However, Lewis said the state then abruptly issued termination notices for both Bella Mente’s CFSS/PCA services and its 245D waiver services — despite the business having already been informed it passed revalidation for one of those same programs.
“I was told I passed and terminated from the very same service, the same day, with no clear explanation from DHS as to why,” Lewis told to Alpha News.
Lewis said DHS ultimately reinstated Bella Mente after she publicly criticized the agency’s handling of the process and prepared legal action.
“If a decision can be flipped by publicity and persistence, then it was never about the merits of my paperwork in the first place,” Lewis wrote. “This is not a system applying a consistent standard.”
North Shore provider describes similar experience
Codi Warnecke, a registered nurse who operates Heart & Hara Home Care in the Duluth and Silver Bay area, told Alpha News DHS also improperly terminated her ability to bill Medicaid during the state’s revalidation effort.
Warnecke said she is now paying caregivers out of her personal bank account while waiting for an appeal process that could take months.
“When the state knocks out a small rural provider, there’s usually nobody left to step in,” Warnecke said. “The caregivers scatter, families panic, and whole stretches of the map go without help.”
Warnecke said legitimate rural providers are now paying the price for massive Medicaid fraud schemes that flourished for years in the Twin Cities metro.
“What eats at me is the lopsidedness. The giant Medicaid fraud cases that have been all over the news happened down in the metro,” Warnecke said. “I’m a nurse who built something honest and played by the rules … the pressure is landing on small-town providers like me instead of where the big money actually vanished.”
Warnecke is appealing the termination.
More providers disenrolled than approved so far
Newly updated state figures show Minnesota’s Medicaid revalidation effort has now disenrolled more providers than it has approved.
DHS said Thursday that it has completed the revalidation process of 5,583 providers across 13 high-risk Medicaid programs, resulting in 2,061 providers being revalidated and 3,411 being disenrolled.
Alpha News contacted DHS with questions about the rural providers’ allegations and the revalidation process but did not receive a response before publication.
Jenna Gloeb
Jenna Gloeb is an Edward R. Murrow Award-winning journalist, media producer, public speaker, and screenwriter. Most recently, she worked as a reporter and on-air host for CCX Media. Jenna is a Minnesota native and resides in the Twin Cities with her husband, son, daughter, and two dogs.
