Gov. Tim Walz’s announcement of a pause in payments for 14 Medicaid programs in Minnesota caused widespread confusion and anxiety among the people who provide services to the elderly and disabled.
The Walz administration announced Wednesday that the governor ordered a “pause on all payments for 14 DHS Medicaid services until (an) audit is complete.”
Providers and Democratic legislators reacted with alarm given the prospect of unpaid caregivers and vulnerable Minnesotans shut out of lifesaving services. DHS clarified that each payment will undergo a review and only be paused — for up to 90 days — “if an anomaly is detected and needs to be reviewed further. If the review determines the bill is fraudulent, it will not be paid.” It’s not clear how long the review will take.
DHS told providers hours after the governor’s announcement via email that “DHS is not holding all submitted claims for these 14 Medicaid services for 90 days.” (In bold.) The snafu comes as Walz seeks to get ahead of the fraudsters who have bilked state and federal programs out of hundreds of millions of dollars in recent years — as well as Republican attacks on the fraud issue, which are already incoming as he begins a race for a third, four-year term.
Rep. Tina Liebling, DFL-Rochester, said lawmakers encouraged the administration to clear up any confusion. “We were very clear with (the administration) that they needed to correct that misinformation” about the payment pause, she said. “I know they didn’t intend that, but it scared a lot of people. A lot of us when we saw that were startled, and providers were too.”
State Rep. Mohamud Noor, DFL-Minneapolis, the top Democrat on the House Human Services Finance and Policy Committee, said that he’s been receiving calls from providers who are concerned their payments will be paused, but he expects payments will be timely: “Most of the claims — any clean claims — should be paid on time,” he said.
A DHS statement to providers on Wednesday stated that there still may be “payment processing delays as we roll out this new prepayment review process,” but the payments pause is not as all-encompassing as providers feared from the press release.
Optum, the third-party auditor contracted by DHS, did not immediately respond to questions regarding the auditing process and how long payments will be delayed for claims that are not flagged. The health care company, a subsidiary of UnitedHealth Group, is familiar with investigations — along with UnitedHealth’s insurance arm, Optum’s pharmacy benefit manager is being investigated by the U.S. Department of Justice for possibly illegal business practices, according to Bloomberg.
The Association of Residential Resources in Minnesota, which represents disability service providers, said in an earlier release that a pause in all payments could cause people with disabilities to lose their housing and critical services, care workers to go without paychecks and providers to shutter.
Sue Schettle, the CEO of ARRM, said on Thursday that she was previously under the false impression, from Walz’s press release, that the pause would be “sweeping; that all providers that were providing those services would be affected by it.”
Now, after a day of fielding questions from worried providers, Schettle has questions of her own.
“The words that were put in the press release really did cause a lot of confusion, concern and aches for providers,” Schettle said. “What was the intent behind putting it out so poorly?”
Providers also said that they got no heads up about the new review process prior to the public press release.
Had the governor’s office consulted their organization or any other provider, Schettle said, “We would have been able to give them five questions to say, ‘Hey, you’re missing this or that.’”
The governor’s office defended the language of the press release.
“The press release accurately conveys that all providers will be subject to an audit before payments are made,” said Claire Lancaster, a spokesperson for Walz’s office.
In the meantime, nonprofits that provide critical support for Minnesota’s elderly and disabled residents are worried about the consequences of what they thought was a more sweeping pause in payments.
John Estrem, CEO of Hammer, a nonprofit that provides housing and support services to people with disabilities, said a 90-day pause on payments from the integrated community supports program could impact around $2.2 million in funding. The vast majority of that money goes towards salaries for the workers who help their clients live independently, Estrem said.
But Hammer operates on thin margins, and even smaller disruptions in payments could force the nonprofit to borrow money to cover workers’ paychecks, Estrem said.
Shannon Bock, the executive director of CCRI, another support services nonprofit, also said that it was her understanding that all payments for the 14 programs will be paused for up to 90 days, which would mean “shutting down lines of support for so many people in our state.”
Social service providers are already confronting a hostile budget environment at both the state and federal level. This year, Walz and lawmakers were tasked with making budget cuts to account for a projected deficit in coming years. Walz’s budget proposal suggested cutting payment rates for disability service providers. (The final budget bill passed by lawmakers cuts nursing home funding instead.)
That move also blindsided disability service providers, Estrem said.
“So this seems to be a pattern,” he said. “And it really is hard to do, to run a service organization, when things are coming at you out of the blue.”
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