Minnesota just cut ties — at least temporarily — with nearly two-thirds of the Medicaid service providers the state was reviewing in its quest to protect programs against fraud and keep federal funds flowing after the Trump administration threatened to hold back money.
The decision to disenroll 3,411 businesses and nonprofits from those programs set off an uproar last week among providers, who said the state bungled its process to revalidate organizations and will interrupt clients’ treatment and lives. Only a small number of those were referred for further fraud investigations, and all can appeal.
State workers had spent the past four months sprinting toward a May 31 deadline to check the validity of 5,583 providers enrolled to offer services through state programs designated as susceptible to fraud. Thousands of Minnesotans rely on those programs that include autism therapy, mental health care and a range of services that allow people with disabilities to live more independently.
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Federal officials, who have zeroed in on fraud in Minnesota’s social service programs, said they will withhold up to $2 billion a year if the state doesn’t complete a corrective action plan around fraud, waste and abuse. The revalidation push is the largest piece of that plan, and the Minnesota Department of Human Services (DHS) pulled staff from other state agencies to help make it happen.
“The most important goal for us is that Minnesotans deserve to have confidence in the providers that are enrolled in Medicaid,” DHS Deputy Commissioner Shireen Gandhi said, adding they have been feeling “tremendous pressure” from the federal government.
State officials feared if they requested an extension to the end of May deadline the Trump administration would use that as a reason to withhold the $2 billion, she said, which would be a “big, big hit” for Minnesota.
Of the thousands of organizations the DHS disenrolled, 59 were referred to the department’s Office of Inspector General for further investigation.
Reasons for the referrals included concerning connections between providers and failures to disclose people with ownership interests in a business, which were discovered during site visits, Gandhi said. In other cases, she said a business listed certain licensed professionals as staff, but when state workers followed up, the people said they did not work there.
However, the vast majority of organizations — nearly 2,500 — were terminated because of “incomplete or inaccurate administrative data,” according to the DHS.
Owners of organizations that wanted to continue billing the state had to submit paperwork, complete a background study and pay a fee. State employees rushed to check the documentation and do site visits to all of those providers by the end of May.
Some leaders in the industry said they were disenrolled through no fault of their own, but because state employees never got around to visiting them. Others said they were cut off without a clear explanation of what was missing from their paperwork.
However, if a provider appeals their termination and submits any missing information, the DHS could opt to immediately resume their Medicaid payments ahead of the site visit process, Gandhi said.
“That should be the bridge to help them sort of weather this unprecedented, quick revalidation,” she said.
As of last Wednesday afternoon, the DHS officials said more than 800 providers had appealed their termination.
Several providers said based on past experiences with the DHS, they were doubtful this process would go smoothly. The agency has been inundated with requests, they said, with one provider noting he made roughly 20 calls about his appeal and couldn’t get through.
One provider was preparing to furlough staff. Another sold the company’s van to ensure they could make payroll. A third, who provides adult foster care services, said he halted his child’s music lessons and was “breaking up” with his therapist and chiropractor in anticipation of lost income.
“In the name of finding a small percentage of dishonest providers, they are disrupting a major portion of the system for the individuals who can least afford their system to be disrupted,” said Sen. Jim Abeler, R-Anoka.
Organizations that serve vulnerable people were already in “rickety” financial territory, Abeler said.
Many providers dipped into their savings earlier this year when the Walz administration instituted a review process to more closely scrutinize billing before dollars went out the door. Organizations said the resulting payment delays forced some legitimate businesses to shutter and left others on the brink of closure.
Providers are looking into whether they can take legal action to push back against the Department of Human Services, said Sue Schettle, CEO of the Association of Residential Resources in Minnesota, a provider trade group.
“It’s another debacle,” Schettle said. “This is just another example of them not doing a good job and providers left holding the bag. And at some point it’s got to stop.”
More work is needed to ensure service recipients — some of whom have serious mental illnesses — are aware of what’s going on and have a clear place to go and precise guidance on what to do if the person providing their services is terminated, said Marcus Schmit, who leads the Minnesota chapter of the National Alliance on Mental Illness.
The DHS doesn’t have systems to ensure vulnerable Minnesotans continue to get services with minimal disruption in that situation, Schmit said, so it will take a “collaborative community effort.”
Gandhi said the DHS is having weekly meetings with counties, tribes and managed care organizations — organizations that handle benefits for about 80% of Minnesotans enrolled in Medicaid — to try to prevent gaps in care. She said they are closely tracking appeals and if a provider is not going to continue doing the work, they have a county case manager or DHS employee reach out to their clients.
The agency also added a webpage for people who may lose services. It tells people to contact their county case manager, if they have one, or use directories to find other providers in their area.
Lawmakers passed legislation this year aimed at better preventing people who need help from falling through the cracks in care amid fraud investigations. But it is not yet in effect.
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