Human services budget law tackles fraud

A human services budget law will adjust many aspects of program oversight to mitigate fraud while also addressing continuity of care.

Sponsored by Rep. Joe Schomacker (R-Luverne) and Sen. John Hoffman (DFL-Champlin), the law is expected to save about $150 million in Fiscal Year 2027 and $150 million in the 2028-2029 biennium.

The law modifies provisions relating to continuity of care, long-term care facilities, health care, Department of Human Services policy, background studies, uniform services standards, aging and disability services and electronic visit verification.

It also authorizes rulemaking to the Department of Human Services, provides for civil penalties and requires reports.

The law takes effect July 1, 2026, unless otherwise noted.

HF4338/SF4476*/CH121

Continuity of care, complex transitions

In the case of action undertaken by the department to sanction a provider or obtain monetary recovery, suspend or revoke a provider's license or initiate a payment withhold, the law addresses "complex transitions" for individuals receiving services.

This transition is required in cases when a recipient, without intensive transition planning and coordination, is likely to experience or has experienced an avoidable hospitalization, institutionalization, serious clinical deterioration or loss of housing because of an administrative action or serious operational event.

Complex transitions could be required for individuals receiving residential services, family residential services, customized living, 24-hour customized living, integrated community supports, residential substance use disorder treatment services or residential mental health treatment services under medical assistance.

The Department of Human Services, according to the law, must develop policies and procedures lead agencies must follow when developing, implementing and monitoring a complex transition plan. These must include timelines, checklists and mandatory follow-up with all parties involved and must include documentation requirements demonstrating that the planning process and implementation was person-centered and prioritized the needs and informed choice of the service recipient.

Housing Support Capacity-Building Grants will be established for housing support providers assisting recipients of medical assistance home and community-based services, including but not limited to integrated community supports, to prevent homelessness and institutionalization. (Art. 1, Secs. 1, 2, 4-6)

Healthcare provider enrollment, suspensions, terminations

The Department of Human Services must establish and maintain a home and community-based services provider support and technical assistance team to deliver proactive and coordinated support to home and community-based services providers. It must also create a Medical Assistance education program.

Before enrolling a provider or agency, the department may complete a pre-enrollment risk assessment.

The commissioner must designate provider types as "limited-risk," "moderate-risk" or "high-risk" based on the criteria and standards used to designate Medicare providers in the Code of Federal Regulations. The law also requires background studies, onsite inspections and surety bonds. Compliance programs may also be required.

If a provider fails to comply with any participation requirement or condition, the department may suspend the provider's ability to bill until the provider comes into compliance. Lack of documentation may lead to revocation of enrollment.

The department must terminate or deny the enrollment of a provider when an individual with a 5% or greater direct or indirect ownership interest if the provider:

• does not submit timely and accurate information and cooperate with the screening methods;

• has been convicted of a criminal offense related to involvement in Medicare, Medicaid or the Children's Health Insurance Program in the last 10 years, unless the department determines that denial or termination of enrollment is not in the best interests of the medical assistance program;

• was terminated from participation in Medicare on or after Jan. 1, 2011, or under a Medicaid program or Children's Health Insurance Program of any other state, and is currently included in the termination database under Code of Federal Regulations;

• fails to submit sets of fingerprints within 30 days of a request from the Centers for Medicare and Medicaid Services;

• fails to permit access to provider locations for any site visits; or

• the Centers for Medicare and Medicaid Services or the department determine whether the provider has falsified any information provided on the application or cannot verify the identity of any provider applicant. (Art. 3, Secs. 13, 16, 18, 20)

Enrollment moratorium for high-risk providers

If the department or the Centers for Medicare and Medicaid Services (CMS) designate a provider type as high-risk, the department may issue a statewide or regional enrollment moratorium and stop accepting and processing applications from providers within that category within 30 days. (Art. 3, Sec. 22)

Enhanced payment, post-payment review, fines

Beginning April 1, 2027, the department must conduct enhanced prepayment review of submitted fee-for-service medical assistance claims.

The department may also conduct post-payment review of claims, encounters, cost reports, rate submissions and other billings submitted for payment or reimbursement to identify improper payments and recover payments made in violation of state or federal law or program requirements.

If an individual or entity fails to fully document services according to standards, the department may order fines. The fine for incomplete documentation equals 20% of the amount paid on the claims for reimbursement submitted by the individual or entity, or up to $5,000, whichever is less. (Art. 3, Secs. 25-26, 34)

Clarifying the definition of “fraud”

The law expands the definition of fraud to mean: “An intentional deception or misrepresentation made by a person with the knowledge that the deception could result in an unauthorized benefit to the person or another person or an act, promise to act, or omission made with the intent to obtain a benefit in a manner that is prohibited.” (Art. 4, Sec. 25)

Background studies

The department must conduct background studies on providers of adult rehabilitation mental health services, peer recovery support services and adult assertive community treatment services. (Art. 5, Secs. 4-6)

Waiver case management work group

A waiver case management advisory working group will be established to evaluate and make recommendations regarding the quality, workforce sustainability, accountability and long-term stability of home and community-based waiver case management services. (Art. 9, Sec. 53)

Evaluation of DHS structure and processes

An external consultant must be consulted to make legislative recommendations to improve the Department of Human Services' performance as the state's Medicaid agency. (Art. 11, Sec. 5)

Funding cancelations, reductions

The bill eliminates MnCHOICES modification grants, day training and habilitation facility grants, innovation grants, preadmission screening grants, the long-term services and supports loan program, motion analysis advancements clinical study and patient care grant, aging and disability services for immigrant and refugee communities grant, the health awareness hub pilot project, license transition support for small disability waiver providers grant, parent-to-parent programs grant, the Dakota County disability services workforce shortage pilot project, the disability services person-centered engagement and navigation study, the reimbursement for community-first services and supports workers report, youth peer recovery support services pilot project, psychiatric residential treatment facility start-up grant, mental health innovation grant program, housing and support services grants and recovery community organization grants.

It reduces funding for own home services provider capacity-building grant, the aging and disability services administration, the aging and disability services administration carryforward, aging and adult services and child mental health. (Art. 12, Sec. 21)

SF4476* / HF4338 / CH121