Medicaid fraud in the spotlight
The state House of Representatives Fraud Prevention and State Agency Oversight committee met again this morning to take up the subject of Medicaid fraud in Minnesota.
It was the tenth official hearing held by the committee in 2025 after three unofficial hearings held before Democrats ended their boycott of the state House.
The committee met for nearly 2 1/2 hours for what is expected to be the final meeting of the month. Your correspondent was there!
The state Attorney General’s Medicaid Fraud Control Unit (MFCU) testified this morning on their work combating fraud in programs overseen by the state Dept. of Human Services (DHS). MFCU boasts of $53 million in recoveries over the past five years as a result of their prosecutions of Medicaid service providers.
Unfortunately, DHS declined the committee’s invitation to appear at the hearing today. The absence was an odd decision given that DHS had appeared and testified on three previous occasions. Much of the committee discussion focused on the interactions between the AG’s office and DHS, but we were able to hear only one side of the story.
There are two questions that most people want answered: (1) how much fraud is there and (2) how do we stop it?
No one seems to have an answer to No. 1. Much of the confusion arises from definitions. I use the blanket term “waste, fraud, and abuse.” Another term frequently seen is “improper payments,” a broader category that includes mere mistakes, lack of documentation, etc.
DHS distributes more than $30 billion a year, state and federal money combined. Does fraud consume 1 percent, 5 percent, 10 percent? If it’s “only” 1 percent, that’s $300 million in fraud per year. 5 percent, $1.5 billion. 10 percent, $3 billion. As they say, “a billion here, a billion there, and pretty soon you’re talking real money.”
As to stopping the fraud, MFCU Director Nick Wanka gave a succinct overview of where to look for the fraud and then what to do about it.
He points to a lethal combination — a brand-new government program, unlicensed service providers, and low barriers to entry — that seems to provide the gateway to industrial-scale fraud. Watch here (that’s me in the back):
Wanka believes that fraud is more prevalent among unlicensed providers (both corporate and individuals) than those licensed by the state.
The committee spent the final hour considering two bills offered by Chair Robbins. HF 3043 would prohibit the practice of paying kickbacks among vendors to government-funded programs. Amazingly, the practice appears to be legal, at present.
Next, the committee took up HF 2891, Rep. Robbins’ bill to add additional grants management training and centralized database tracking. Testifying in favor of the bill were the state Dept. of Administration and the Legislative Auditor herself, July Randall.
In a bizarre sequence, committee member Rep. Emma Greenman (DFL-Minneapolis) criticized the bill as being off topic and missing the mark because it did not address Medicaid fraud. Chair Robbins had to remind the committee that state agency oversight was part of its responsibility and that the provisions in the bill were largely the recommendations of the Auditor and state agencies.
KARE-11 TV did a report on the hearing. Session Daily reported on the two bills considered.
The committee is expected to resume its work later this year.