State leaders are fighting to save $2 billion in Medicaid funding amid a federal fraud crackdown.
The Minnesota Department of Human Services is launching an effort to physically inspect 5,800 high-risk Medicaid providers to try to stop the federal government from withholding funding.
State officials are deploying 168 additional staff to conduct unannounced site visits and have appealed the federal penalty.
"Training for this work will begin in February, and inspections will start soon afterward," State Medicaid Director John Connolly says. "Providers in all 87 Minnesota counties will get unannounced visits as a part of this. This is an unprecedented effort. We've never done anything on this scale before with provider revalidations, but the people of Minnesota deserve this level of effort."
Federal authorities have paused the funding cuts during the appeal period.
The Centers for Medicare and Medicaid Services told Minnesota in January that it intends to withhold $515 million every three months from 14 Medicaid programs that were deemed high risk after rejecting a corrective action plan the federal government demanded because of fraud allegations.
The programs identified as high risk include adult companion services, residential treatment services and nonemergency medical transportation.
The amount to be withheld is equivalent to one-fourth of the federal money for those programs.
State leaders argue that the penalty is a "punitive" measure that overlooks Minnesota’s recent aggressive steps to modernize its fraud detection.
"That is a broad withholding," says Connolly. "They just said we're going to withhold 25% of the value of the 14 high risk services. That was really what they based it on, although we think it was an overstatement in our estimation."
James Clark, Inspector General for the Department of Human Services, says the investigation has been further hampered by the mass resignation of federal prosecutors following disputes with the Department of Justice and investigations into shootings of Renee Good and Alex Pretti by federal immigration authorities.
According to Clark, those departures have left the Minnesota Department of Human Services with no ongoing communication regarding active criminal cases.
"I haven't received any communications from the U.S. Attorney's Office about ongoing investigations or prosecutions or collaboration since the resignations have been announced," Clark explains.
A decision on the appeal is set to come in March.
“Minnesota cannot absorb the loss of more than $2 billion in annual funding for these programs without catastrophic consequences for the people we serve,” Temporary Human Services Commissioner Shireen Gandhi said, adding that the state can’t find other examples of similar federal decisions.
“It's not corrective action,” she said. “It's a punitive action.”