Mille Lacs Health System CEO: 'Light at the end of the tunnel' after Medicare system billing issues cause financial strain

The CEO of the Mille Lacs Health System in Onamia said there’s “light at the end of the tunnel” after an issue with the Medicare and Medicaid billing system led to millions of dollars of withheld reimbursements since Jan. 1.

In an interview on Monday, Andy Knutson explained that in July of 2025, the Centers For Medicare and Medicaid Services (CMS) turned on an edit designed to reduce fraud in the system.

"We felt we were ready for the switch to flip in July," Knutson said. "When they turned it on, it wasn't working, so they shut it back off."

When it was turned back on in January, Knutson said MLHS dug "deeper and deeper" after noticing the health system wasn't receiving payments.

"It turns out that we found that some of our providers in the Medicare system were in fact deactivated, and we weren't exactly sure why that was happening," he said.

The provider enrollment errors caused claims to be denied, leading to a lack of timely reimbursement for care provided within the system.

"This led to three months now that Medicare pretty much hasn't paid us anything, and we're getting just shy of $3 million at that point," Knutson said.

Medicare represents about 60 percent of the health system’s business.

"It's a lot of money for us," Knutson said. "This is a slower time of year for us anyways, and when we have razor-thin margins as they are, we need every dollar we can get, especially during this time. This is just very detrimental to our everyday operations."

Knutson explained that MLHS is focusing on mitigating impact on patient care as much as possible.

The health system is holding off on cash flow for capital improvement projects, and the MLHS leadership team took on a voluntary 10% salary reduction while the issue persists.

"It speaks volumes to rural hospitals and the community that we have here," Knutson said.

According to Knutson, CMS said on Friday that the codes triggering claim denials are being reviewed. He anticipated seeing cash flow for the health system in the next two weeks.

"Which is fantastic news for us, because all the work and dedication our team has been doing to try to get this fixed over the last three months, it seems like there's a light at the end of the tunnel, finally," Knutson said.

Knutson said the news from CMS comes after the "timeline was getting shorter and shorter" for the Mille Lacs Health System's operations.

"It's better late than never, and we're glad that it's going to be here, and we're excited to see that cash flow start coming through again," he said.

Knutson stressed the importance of access to health care in rural areas, especially when an extended drive to another facility can make a difference in saving a life.

"We had a patient the other day come into one of our clinics having a heart attack," he said. "And if we weren't there to save this patient, who knows what would have happened ... That's the thing that bugged me the most about this whole thing, is it wasn't fair to our patients and it wasn't fair to our employees that this was happening. So I'm really glad that we're coming out of this, and we're getting through it."