Gov. Tim Walz announced Wednesday, Oct. 29, that his administration is pausing all payments for 14 Medicaid services for up to 90 days until a third-party audit is complete.
Walz’s move comes after fraud schemes in Minnesota public programs have gamed state government — and federal programs administered by Minnesota — out of hundreds of millions of dollars in recent years. Walz is seeking a third, four-year term as Minnesota’s Democratic-Farmer-Labor Party governor, and Republicans are already hammering Walz’s record on stopping fraud.
The Department of Human Services identified 14 Medicaid service types as “high-risk” because of “vulnerabilities, evidence of fraudulent activity, or data analytics that revealed potentially suspicious patterns, claim anomalies, or outliers,” DHS Temporary Commissioner Shireen Gandhi wrote to the federal government.
Payments for these programs will be paused for up to 90 days “in order to detect suspicious billing activity and scrutinize the use of public funds,” the governor’s office said Wednesday.
“We cannot effectively deliver programs and services if they don’t have the backing of the public’s trust. In order to restore that trust we are pumping the brakes on 14 programs that were created to help the most disadvantaged among us, yet have become the target of criminal activity,” Walz said in a statement.
Minnesota’s Medicaid autism treatment program is among the 14. Last month, federal prosecutors charged the first person in what is believed to be a wide-ranging fraud investigation.
The now defunct Housing Stabilization Services program is also among the 14; the state moved to shut down the program in August, citing fraud, and the Justice Department has charged eight people in that probe, with one pleading guilty this month.
The governor’s office said the state has outsourced the audit to Optum, which will analyze Medicaid billing and flag issues for the Department of Human Services to review.
(Optum is a division of Minnesota-based UnitedHealth Group. Earlier this year, The Wall Street Journal reported that the Department of Justice’s health care fraud unit is investigating the health care giant’s Medicare Advantage billing practices. Also, citing “people familiar with the matter,” Bloomberg reported in August that the Justice Department’s criminal division is “digging into UnitedHealth Group Inc.’s prescription management services as well as how it reimburses its own doctors under an ongoing probe into the firm’s operations.”)
The billing audit means providers may have to wait longer to receive their payments, but the state will still meet federal rules requiring payments within 90 days, the governor’s office said.
The Association of Residential Resources in Minnesota, which represents 200 organizations that provide disability services, said pausing payments for the Medicaid programs could “destabilize an already fragile care network.”
“Pausing payments to legitimate providers for up to 90 days is not an accountability measure, it’s an existential threat to the care infrastructure that keeps Minnesotans with disabilities safe, housed and supported in their community,” ARRM CEO Sue Schettle said in a statement.
Among the 14 affected programs: Integrated Community Supports, Nonemergency Medical Transportation, Peer Recovery Services, Adult Rehabilitative Mental Health Services, Adult Day Services, Personal Care Assistance/Community First Services and Supports, Recuperative Care, Individualized Home Supports, Adult Companion Services, Night Supervision, Assertive Community Treatment and Intensive Residential Treatment Services.
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