A new audit in Minnesota, prompted by Governor Tim Walz, has unveiled significant issues within the state’s Department of Human Services (DHS). For years, DHS has inaccurately asserted that it lacked the authority to properly investigate allegations of Medicaid kickbacks.
The audit from the Auditor’s Office, titled “Department of Human Services Investigation into Alleged Kickbacks in Early Intensive Developmental and Behavioral Intervention Programs,” clearly indicates that the DHS Office of Inspector General (OIG) had the legal power to pursue such cases independently—something the agency has denied. It seems, however, that officials were under the impression that they could only look into kickbacks related to other types of fraud, like fraudulent claims or theft, a point the report calls into question.
“We disagree with DHS’s assertion,” the report states. “DHS has had the authority to investigate alleged kickbacks in Massachusetts since the late 1990s.” This legal oversight has left the agency vulnerable to criticism.
The audit reveals that DHS missed investigating three specific kickback allegations between 2021 and 2023. Deputy Legislative Auditor Katherine Theisen noted that no reports were made to law enforcement or other agencies regarding these incidents, and DHS opted not to pursue them for further investigation.
Additionally, the report indicated long-standing errors within DHS’s administrative rules that may have hindered its ability to suspend payments tied to kickback probes. This is particularly concerning in light of the Early Intensive Developmental and Behavioral Intervention (EIDBI) program—which has surged in budget from $3 million in 2018 to nearly $400 million in 2023—drawing heightened scrutiny over potential fraud.
Kickbacks have been central to a fraud scheme uncovered in Minnesota’s autism services, where providers reportedly offered financial incentives to attract families, boosting Medicaid billings. For instance, one autism center operator allegedly charged millions fraudulently by providing enrollment fees and stipends, demonstrating a blatant misuse of funds intended for children with autism.
The audit advises that DHS should amend its regulations to explicitly include kickbacks in fraud definitions, warning that congressional intervention may be necessary if it does not take action. There seems to be agreement from DHS on the recommendation to clarify its definition of fraud.
Rep. Kristin Robbins, chair of the House Anti-Fraud Committee, expressed deep concern, stating that the ongoing lack of accountability regarding fraud is shocking. She criticized DHS for not adequately investigating credible allegations of fraud in multiple programs. Robbins believes that if DHS had amended its regulations sooner, it might have been able to suspend payments during kickback investigations.
Reactions to the audit findings have been intense, particularly among conservatives. Calls for federal intervention have been made, highlighting the widespread frustration with what is perceived as inaction from the Walz administration. Critics argue that the administration always had the legal authority to tackle the kickback issue but chose not to, raising questions about the impact on Minnesota residents.
