Bill to formally end housing stabilization services program gets panel OK

Legislators have started the process to codify into law the termination of the state’s housing stabilization services program.

The Department of Human Services formally shut down the program Oct. 31 on the guidance of its Office of Inspector General after a data analysis exposed large-scale fraud in the program. HF3379, sponsored by Rep. Joe Schomacker (R-Luverne), would formally repeal the program in state law.

The House Human Services Finance and Policy Committee approved the bill, as amended, on a voice vote Wednesday. Its next stop is the House Floor.

Some lawmakers took issue with the state shuttering the program during the interim without legislative approval and discussed if state departments should have the power to terminate programs without the Legislature’s OK. Some DFL committee members said decisions like this should require a special session.

DFL legislators pointed to the people who lost services after the Department of Human Services’ decision and asked for better safeguards around fraud rather than the termination of programs altogether, particularly without legislative approval.

Pointing to rampant fraud in the state, Republicans said this justified the termination of the program. An amendment was unsuccessfully offered to require the state department to receive legislative authorization to terminate a Medicaid program. 

Program history

In July 2020, Minnesota became the first state to offer Medicaid coverage for housing stabilization services. This program was designed to help people with disabilities, including seniors and people with mental illnesses and substance use disorders, find and maintain housing.

The housing stabilization program was initially predicted to cost about $2.6 million annually, according to the U.S. Attorney’s Office in Minnesota. But in 2021, it paid out more than $21 million, growing to $104 million in 2024 and reaching $61 million within the first six months of 2025.

An investigation revealed that many program providers defrauded the system by acquiring the names of eligible beneficiaries from facilities like addiction treatment centers and using them to submit inflated and fake reimbursement claims.