The Feds Want Their Missing Money Back From Minnesota DHS

Since 2014, at least 100 of these facilities received improper payments


Ongoing reporting at Alpha News has covered the problems and scandals at Minnesota’s Department of Human Services (DHS), the largest state agency with a $17.5 billion budget—about a third of the overall state budget. 

One such scandal has been the ongoing and largely uninvestigated fraud in Minnesota’s childcare benefit program, a welfare program that provides daycare to (usually) single mothers. 

Another scandal has been the resignation of high ranking DHS officials, including Democrat Governor Tim Walz’s pick to be DHS Commissioner, Tony Lourey. Walz still won’t explain why Lourey and several other top DHS officials have left, and it is unclear whether the mismanagement at DHS is even close to being addressed.  

Yet another DHS scandal involves the department overpaying two Native American tribes $25 million over a period of five years, during the administration of former Democrat Governor Mark Dayton. Specifically, the state’s Medicaid program—a healthcare program for lower-income persons and children—was being billed for more-expensive in-person administration of medicine to treat opioid addiction, when the medicine was really being self-administered at home, a less-expensive billing. 

The tribes involved say that they had no idea they were being overpaid by DHS, and correctly note how complicated Medicaid billing is. They say that they assumed the billing was correct, or it would have been caught by DHS bureaucrats, who specialize in Medicaid billing.

DHS runs the state Medicaid program, but the program is heavily funded by the federal government. And the federal government wants its $25 million back. 

Now, as Ryan Faircloth at the Pioneer Press reports, a large sum will be added to the $25 million that Minnesota owes the Feds. 

Similar to the incorrect billing with the Indian tribes, Minnesota’s DHS was improperly using federal Medicaid dollars to pay mental institutions and facilities for chemical dependency—usually, federal Medicaid funds are not allowed to pay for these services. 

Since 2014, at least 100 of these facilities received improper payments, through no fault of their own. And because the mistake was entirely due to DHS, only the state of Minnesota is responsible for correcting those incorrect payments. 

The amount of the improper payments is yet to be determined, and is being worked out now by DHS and the Feds. It is very possible that this tab could dwarf the $25 million already owed. 

The Walz administration owes the public more transparency, but its also clear that the Dayton administration was probably the most mismanaged in Minnesota history. 


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Willis Krumholz
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Willis L. Krumholz is a fellow at Defense Priorities. He holds a JD and MBA degree from the University of St. Thomas, and works in the financial services industry. The views expressed are those of the author only. You can follow Willis on Twitter @WillKrumholz.