Minnesota has terminated the billing privileges of thousands of Medicaid providers flagged as “high risk” for fraud after the Trump administration threatened to withhold $2 billion in Medicaid payments flowing to the state over mismanagement concerns.
In order to release the funds, the cleanup of Minnesota’s Medicaid enrollment records was required by the U.S. Centers for Medicare and Medicaid Services as part of a corrective action plan meant to restore federal confidence in the state’s oversight of the safety net system. According to federal and state investigations, Minnesota allowed fraudsters to steal billions of dollars from its Medicaid-funded healthcare programs for years through sophisticated billing schemes.
State oversight officials had until the end of May to examine nearly 5,600 service providers identified as susceptible to fraud, and the Minnesota Department of Human Services released the results of its review late last week.
Of the high-risk providers audited, such as adult daycare facilities and autism therapy centers, Minnesota DHS only revalidated about 2,000 enrollees (37%), allowing them to continue receiving reimbursements without interruption.
But more than three-fifths, or 61%, of the providers were disenrolled due to inaccurate or incomplete administrative paperwork, failed site visits, or owners of these businesses failing their background checks. Minnesota DHS removed an additional 111 providers because they had already stopped providing Medicaid services by the time of the review.
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Minnesota state Rep. Kristin Robbins called the findings “astonishing” in an interview with the Washington Examiner.
“We don’t know if they’d gone out of business or simply stopped providing Medicaid services, but they were still listed as enrolled providers in the system,” Robbins said of the 111 now-disenrolled providers. “So why, if someone is no longer providing services, they’re still listed as an enrolled provider and still have the ability to bill? That’s pretty shocking lack of oversight.”
Robbins, the Republican chairwoman of the state’s House Fraud Prevention and State Agency Oversight Policy Committee, further questioned what Minnesota DHS meant in its brief two-page press release summarizing the results of the audit beneath a handful of bullet points.
“It’s unclear. It says in the release that ‘111 were removed from review at this time because they are no longer providing a high-risk service.’ Well, does that mean they didn’t exist?” Robbins said, referring to whether state investigators discovered, when they appeared unannounced at a provider’s listed address, that the business either did not physically exist or operated out of a mailbox.
Out of the 916 providers that failed their site verification visits, Robbins similarly wondered whether those agencies actually had a location and how many were truly operational. As for the failed background checks on the business owners, she said the phrasing was vaguely worded as well and did not indicate an exact reason for their disenrollment.
“Does that mean they’d committed a felony? That’s usually why you’re disqualified,” Robbins continued. “So, were they already indicted for some other fraud? Could they have been Feeding Our Future fraudsters that were also trying to run a Medicaid scam?”
Robbins said she reached out to Minnesota DHS officials for clarification on the revalidation data and received out-of-office messages stating they won’t be back until July.
“They think it’s a good time to take a vacation right after they put out that announcement,” Robbins said. “Unbelievable.”
Robbins said she tried to directly contact John Connolly, the new commissioner of Minnesota DHS, but he is still on medical leave. Connolly, appointed by Gov. Tim Walz (D-MN) in May to shake up DHS leadership, immediately took a monthlong leave of absence and was expected to return in early June.
Former commissioner Shireen Gandhi, another Walz appointee who was demoted to deputy head of the department on the eve of her confirmation hearing, is essentially serving as acting chief in Connolly’s stead.
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“It’s rearranging the deck chairs on the Titanic,” said Robbins. “Nobody’s been fired. Shireen didn’t get the title of commissioner, but because the guy who did is out on medical leave, she’s still acting as commissioner.”
Robbins said she accordingly emailed Gandhi, who made press statements about the revalidation efforts, and has not heard back either.
The revalidation process involved Minnesota-based Medicaid providers submitting basic documentation on ownership, licensing, and staffing. Providers who feel that they were wrongly disenrolled can appeal the decision, and over the coming months, Minnesota DHS said it will help eligible entities come into compliance with the heightened screening requirements.
Robbins said she believes some legitimate providers might have made a clerical mistake on their forms and may have then been flagged during the department’s expedited audit, a five-month endeavor that raced to meet the federal May 31 deadline.
“DHS was under the gun to get the revalidation done because of CMS,” Robbins told the Washington Examiner. “Otherwise, they would have never even gone through this process.”
Robbins acknowledged the financial hardship placed on honest providers who cannot bill Medicaid while their appeal is pending. “But for the fraudulent providers, it shuts off the gravy train, which is what we needed to happen,” she said.