MINNEAPOLIS — Susan Blass spent nearly two months waiting to hear if her life would be upended, trying not to dwell on the what-ifs.
What if the organization that has served her 38-year-old daughter, Alex, for more than a dozen years is forced to close?
What if Alex, who has cerebral palsy and developmental disabilities, needs to come live with her again? Full-time caregiving was exhausting when Blass was in her 40s. It wouldn’t be any easier in her 60s.
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“The emotional roller coaster has been hell,” Blass said.
She is one of thousands of Minnesotans whose lives could be affected by the Department of Human Services’ (DHS) massive review and disenrollment of social service providers in response to immense federal pressure to root out fraud.
Many people may not even know they or their loved one’s care is in jeopardy. Some business owners who were cut off from certain Medicaid programs are avoiding telling clients as they wait for an appeals process to play out. The deadline for service providers to appeal is this week.
The revalidation effort aims to find bad actors in some Medicaid programs. But executives providing the services said the state’s poor communication and planning has damaged their morale and finances, caused undue anxiety for clients and employees and, in some cases, resulted in gaps in care.
On May 31, the state cut roughly two-thirds of the approximately 5,500 organizations providing services in Medicaid programs deemed high risk for fraud. There was an outcry and widespread fears that vulnerable people would lose critical supports, like day services for adults with disabilities, night supervision or medical transport.
So DHS allowed organizations to keep billing for services to clients if they appealed their termination. That alleviated some concerns, but issues have continued to emerge.
More than 2,730 organizations have appealed and the state has approved about 750 of them, according to DHS data from last week.
Providers and service recipients acknowledge the state, hoping to prevent the federal government from withholding $2 billion in Medicaid funds, faced a herculean task: workers had to review paperwork and do site visits for thousands of providers in less than five months. That would typically take years.
But Carrie Guida, executive director of Pine River Group Home, Inc. — which provides most of Alex’s care — said she wishes Minnesota leaders had been up front with the federal government about their inability to revalidate so many providers by the end of May. She said her nonprofit submitted required revalidation paperwork in February but state staff never got around to processing it or doing a site visit, so they were disenrolled.
“I did everything they said well within the timeline and then they sat on my application for months,” said Guida, who said the chaotic process has shattered her trust in state leadership. “Every step of the way they were building this plane as they were flying it.”
After a process Guida called “horrible and unnecessary,” she and Blass received good news last week. Pine River Group Home, Inc. was revalidated.
The Trump administration has zeroed in on fraud in Minnesota’s social services, with the Centers for Medicare & Medicaid Services (CMS) threatening to withhold $2 billion in annual reimbursements to the state if didn’t implement a corrective action plan. The revalidation effort has been the centerpiece of that plan, temporary DHS Commissioner John Connolly said.
“We did not feel comfortable — given the tremendous amount of risk that the state was facing and the program was facing — adjusting the timeline that CMS had really pushed us on from the beginning,” he said.
State workers, including employees from 10 agencies outside of human services and some temporary hires, raced to verify organizations’ validity before the end of May. They worked nights, weekends and holidays, Connolly said, and tried to communicate proactively, including doing weekly roundtables, sending newsletters and making thousands of calls to providers.
“We anticipated that there would be concern, there would be uncertainty, there would be lack of clarity given that this has never happened on this scale before,” Connolly said.
Despite that effort, CMS Administrator Dr. Mehmet Oz and Health and Human Services Secretary Robert F. Kennedy Jr. announced last week they were withholding $199 million in payments to Minnesota.
State officials are trying to get details on how the federal government came up with that figure so they can respond to it, Connolly said. But he said the bulk of that appears to be tied to the providers who were disenrolled a couple months ago, hundreds of whom have since been reinstated.
About 550 Medicaid service providers have either not appealed their disenrollment or were terminated for other reasons, according to DHS.
The state does not have a clear count of just how many individuals relied on those providers’ services, or how many more are getting help from the organizations currently under appeal.
They would use claims data to get that count and sometimes providers don’t submit claims for a client until a year later, Connolly said. And with Minnesota’s social services system, the state oversees programs but counties and tribes administer them and work with providers.
So there’s no comprehensive, statewide approach to prevent people who lose care from falling through the cracks.
And over the past couple months, county workers thought new clients couldn’t start services with an organization that was in the appeals process, providers said. That turned out not to be the case, but led to delays for some people who needed help.
Meanwhile, the state has extended a halt on the enrollment of new Medicaid providers for services with high fraud risk. That moratorium will remain through Jan. 27, 2027. Particularly in rural communities, people fear that disenrolling some providers and preventing new ones from entering the workforce could lead to gaps in care.
“The chipmunks and the raccoons and the rabbits and the deer — lovely neighbors, but they’re not very capable caregivers,” said Blass, who lives about a half hour north of Brainerd.
Even in the metro area where there are more providers, it can be difficult and damaging for a client who has built relationships and trust with a provider to shift to another organization, people in the disability services and mental health fields said.
Petronellah Bensen’s Brooklyn Center-based company, Kesma Flame Lily LLC, provides adult rehabilitative mental health assistance and other services. She said she is going through the appeals process but hasn’t been paid by the state for months. She sold her wedding ring to pay employees and had her car repossessed Friday, Bensen said.
Nonetheless, she said she has continued to see some clients who are particularly at-risk and called the lack of contingency planning for such people “negligence.”
“We know that wrong was done, money was stolen. Nobody can run away from that. But for all of us to be punished for what other people did, and then the clients also to be punished, that is wrong,” Bensen said. “You don’t solve a problem by creating another problem.”
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