ST. PAUL 鈥� The Minnesota House Fraud Prevention and State Agency Oversight Committee held a hearing on Tuesday, July 8, where representatives grilled Department of Human Services leadership on Medicaid fraud and how the agency oversees it.
DHS currently oversees $18.5 billion in Medicaid dollars, also known as Medical Assistance in Minnesota, according to Minnesota Management and Budget. Of the $18.5 billion, there is a 2.2% rate of improper payments, DHS Inspector General James Clark said Monday. He said the improper payment rate does not equal cases of prosecuted fraud, which he said is roughly 100 annually.
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Clark said Tuesday that part of the discussion with Medicaid fraud oversight in the DHS鈥� Inspector General鈥檚 Office and the Attorney General鈥檚 Office is a lack of resources. Clark said his office has roughly 400 employees but only about 40 overseeing the 988 open investigations of Medicaid mispayment.
鈥淲hen you think about the amount of resources that would be needed 鈥� to really oversee a $20 billion program, you have to think about whether or not the Attorney General鈥檚 Office has the amount of resources it needs, and also whether DHS OIG has the amount of resources it needs,鈥� he said. 鈥�$20 billion is a lot for us to ... be in charge of and safeguard.鈥�
Rep. Isaac Schultz, R-Elmdale Township, asked DHS on Tuesday why Minnesota spends roughly $20 billion on Medicaid if larger states like Colorado spend $13 billion.
鈥淎t the end of the day here 鈥� what Republicans are championing is the idea that there鈥檚 a dignity of work, and if you鈥檙e an able-bodied adult, that you should be contributing to our economy 鈥� and the bill that just passed in Washington is all about ensuring that able-bodied adults 鈥� people who look just like me and many of us around this table 鈥� that they鈥檙e contributing to our society,鈥� Schultz said. 鈥淪o we need to take a look at Minnesota.鈥�
The hearing came days after President Donald Trump signed the 鈥淥ne Big Beautiful Bill鈥� on Friday, July 4, including changes to Medicaid eligibility, such as increased work requirements.
Clark clarified on Tuesday that counties, not the state, check individual eligibility requirements that will be affected by the passage of the bill 鈥� the state checks providers.
鈥淚 think it鈥檚 undisputed that the issue of Medicaid fraud that we are concerned about is not an individual eligibility issue, it is a provider issue,鈥� Rep. Emma Greenman, DFL-Minneapolis, said Tuesday. 鈥淲e鈥檙e all trying to figure out these new changes that are coming down the pipe.鈥�
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Matt Freeman, with the Association of Minnesota Counties, said Tuesday the federal changes to Medicaid could both increase workload for counties to verify eligibility and that counties are 鈥渆xpecting鈥� additional costs to potentially be offset by property tax increases.
Roughly could lose Medicaid as a result of the adjustments, according to the Kaiser Family Foundation. a net cost of $500 million annually to the state in lost federal funding.
DHS Temporary Commissioner Shireen Gandhi said Tuesday that a large portion of Minnesota鈥檚 roughly $20 billion Medicaid budget has to do with who is covered, which she said is 60% elderly and disabled.
鈥淥ne of the things that we have been proud of in Minnesota is the quality of life for people with disabilities that we are able to afford,鈥� she said. 鈥淲e have waivers in place that allow people to live in community and to thrive. And if you look at our rankings across the country, we are at the top by a far margin. So in terms of spending, that鈥檚 where the largest amount of dollars go.鈥�
Fraud emerged as a large focus for Republicans in the 2025 legislative session, as the state comes off the $250 million Feeding Our Future fraud scheme. Some measures proposed to combat fraud, such as a statewide Office of Inspector General, came up short, but one of the measures that passed this session was increased whistleblower protections.
Rep. Marion Rarick, R-Maple Lake, said Tuesday that she, alongside other Republican members of the fraud committee, has heard from whistleblowers who allege feeling discouraged in their efforts to come forward with suspected fraud.
鈥淚鈥檓 trying to figure out a sensitive way to address this, but we have had whistleblowers from within DHS who have approached us and have alleged that efforts to try to bring impropriety to the attention of the inspector general or the commissioner or higher-ups within DHS has resulted in to one degree or another, discouragement, even retaliation, is a word that鈥檚 been thrown around,鈥� she said.
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Gandhi said Tuesday that she has had staff come to her with concerns about fraud before, and that if there is enough 鈥渃redible evidence鈥� to formally investigate the concerns, she has done so. She added that it is of 鈥減aramount importance鈥� to her that her employees feel 鈥渟afe in reporting any concerns.鈥�
The Trust Project
