Minnesota DHS Suspends Payments to 11 Disability Providers Amid Fraud Allegations

Minnesota DHS Suspends Payments to 11 Disability Providers Amid Fraud Allegations

ST. PAUL, Minn. — The Minnesota Department of Human Services (DHS) has suspended payments to 11 providers serving adults with disabilities over “credible allegations” of fraud, according to a letter from Temporary Commissioner Shireen Gandhi to state lawmakers obtained by WCCO. The payment withholds, implemented between September 4 and September 23, also affect an additional 17 affiliated providers.

The providers deliver services through the Integrated Community Supports (ICS) program, a Medicaid-funded initiative that provides training and support for adults with disabilities living in provider-controlled settings. Services may include community participation, health and wellness guidance, household management, and adaptive skills training. The program is designed as a middle ground between living independently and more restrictive settings such as group homes or assisted living facilities.

Allegations and DHS Response

According to Gandhi, the fraud allegations “primarily concern” ICS providers billing DHS for services that were not actually provided. DHS staff are reportedly contacting county waiver case managers to discuss how clients may be impacted and to assist them in choosing alternate services and providers. Waiver case managers are responsible for planning services and coordinating care with clients.

In a statement to WCCO, DHS emphasized that the agency cannot release details about the withheld payments to “protect the integrity of the investigations.” The department said it is “taking more aggressive actions to stop payments, including relying on tips and data mining that demonstrate a credible allegation of fraud.” Gandhi noted, “We are now seeing businesses working together to game the system, as opposed to single bad actors or rogue employees.”

Payment withholds are temporary, and affected providers have the right to challenge them through a reconsideration process. No criminal charges have been announced in connection with the ICS suspensions.

Broader Context

The payment suspensions come amid heightened scrutiny of Minnesota’s publicly funded programs. A federal investigation into the state’s Housing Stabilization Services program, which assists people with disabilities in finding and maintaining homes, has already resulted in federal charges against eight individuals. DHS also confirmed the departure of Eric Grumdahl, a former official overseeing the housing services program, on September 16; the reason for his resignation has not been disclosed due to state law.

Additionally, a Minneapolis woman was recently charged in connection with a $14 million autism fraud scheme and the Feeding Our Future fraud investigation.

Gandhi also noted that DHS recently communicated with all home- and community-based service providers about Minnesota’s anti-kickback law, which went into effect on August 1. The law prohibits providers from offering money to individuals to sign up for services or from financially rewarding businesses that refer clients.

Moving Forward

DHS has stressed that it is taking “significant administrative actions” to protect the integrity of services for Minnesotans with disabilities and will continue to monitor for potential fraudulent activity across the system.

MinneapoliMedia