Gov. Tim Walz introduced his anti-fraud legislation package on Thursday, a day after the federal government announced it would pause millions of dollars in Medicaid funds.

“We’re kind of at a crossroads on the fraud fight,” Walz said, calling the Medicaid pause “an incredibly damaging continuation of the reckoning and retribution campaign by the Trump administration,” and “totally illegal and unprecedented.”

On Wednesday, the federal government announced it would pause $259 million in Medicaid payments to Minnesota, citing fraud concerns.

John Connolly, who serves as deputy commissioner and state Medicaid director, said Thursday that he understands the intention of the federal government is to “defer payment” until a review of 14 high-risk Medicaid programs is complete.

“Our concern is that this could go on for several quarters, which would be catastrophic for the Medicaid program, for children, for people with disabilities, for seniors, for hospitals, for rural Minnesotans, for nursing facilities,” Connolly said. “We feel like this is no longer about fraud, because we have been acting for well over a year and a half to fight fraud.”

Walz’s proposals

Walz’s anti-fraud package has 18 proposals, including strengthening Managed Care Organization oversight; advanced technology to detect fraud earlier; prohibiting legislatively named grants; increasing funding for BCA Financial Crimes and Fraud Unit; expanding authority for on-site investigation visits; establishing a centralized Office of Inspector General and increasing penalties for theft of public funds.

Everyone is taking a swing at fraud this session. Attorney General Keith Ellison, the House DFL and Senate Republicans have all pitched anti-fraud measures. Several of Walz’s proposals match those of both Republican and Democratic lawmakers.

His campaign for a third term as governor abruptly ended in January after national scrutiny over Minnesota’s fraud issues heightened, leading Walz to say that running a campaign and effectively doing his job would be too much.

Walz has repeatedly said “the buck stops with me,” and has asserted that he wants to leave the Capitol in May having tackled fraud.

“This is it. This is my top priority,” he said. “I am free; there are no political considerations. I have the time to focus solely on making sure this happens. And … it’s personal for me, because these programs are so important.”

Challenges for governor’s priorities

But the 67-67 House tie could pose challenges for the governor to get his priorities through the Legislature.

One high-profile and bipartisan anti-fraud proposal for lawmakers this session is the bill to create a statewide Office of Inspector General. It passed the Senate 60-7 last session, and Walz has said he’d sign it, but it has already stalled in House committees twice this session.

Walz said Thursday that he’s an “eternal optimist” and is “hopeful” about passing anti-fraud measures despite the potential for more partisan gimmicks.

“If you like talking about fraud, and you think it’s an electoral issue for you, that’s gone. I’m not running. That’s gone. If you’re serious about fighting fraud, you can help us work on this package,” he said.

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