Pervasive Medicaid fraud met with milquetoast response by Walz regulators

Rep. Kristin Robbins, Chair of the Minnesota House Fraud Prevention and State Agency Oversight Committee held, a hearing on Tuesday, July 8, to hear from the Department of Human Services (DHS) regarding program integrity, fraud prevention for Medicaid.

The opportunity provided more questions than answers as committee members asked DHS Inspector General James Clark about his 400-person department’s efforts to prevent, detect and prosecute fraud. Only 40 of those employees look for fraud, and according to the IG, they only find a hundred cases each year. This does not include the State Auditor’s office. It doesn’t include The Attorney General’s office, the FBI, or local law enforcement. Yet the 400-person department finds only 100 cases of fraud in a year. What exactly are they doing?

DHS oversees over $18.5 billion in Medicaid payments, of which the IG estimates 2.2% represent “improper payments” including fraud. That works out to be $407 million. The actual number is much higher.

According to 2024 numbers from the General Accounting Office (GAO) the feds put this number at about $905 million. But does that even begin to get close to the real number? Minnesota is one of the most generous states in the country when it comes to Medicaid, spending twice as much as the average state. In 2019, Minnesota was fined $150 million by the feds for enrolling ineligible people on Medicaid. Our own Legislative Auditor found up to 108,000 Minnesotans who were enrolled who should not have been; costing up to $271 million for just a five month period. This represented up to a 38% error rate.

Mr. Clark’s predecessor, Carolyn Ham was investigated because several OIG employees complained that she undermined their ability to do their jobs in finding fraud. His review found that Ham “did not trust” her own investigators despite “pervasive fraud.” Ham was reassigned but the investigators generally cleared her of wrongdoing.

Rep Robbins pushed for a new office of Inspector General to find fraud and just do that. It seems that although the state, together with local and federal law enforcement, currently has thousands of people whose job it is to prevent and find fraud, they lack the will or the ability to do so.

Robbins should hold more hearings this summer and fall.