Minnesota DHS to pause licensing adult day care centers as agency investigates "kickbacks"
The Minnesota Department of Human Services is implementing a two-year moratorium on new licenses for adult day care centers in response to an uptick in providers that exceeds the number of people who need services.
Shireen Gandhi, temporary commissioner of the agency, said Tuesday over the last five years there has been a 7% increase in the recipients adult day services, which support older Minnesotans and people with disabilities. That is much lower than the 43% increase in capacity growth over the same time period.
She said the pause on licensure — which will begin Feb. 1 and last through Jan. 31, 2028 — will "allow DHS to focus on program integrity and regulation compliance with the currently licensed providers."
The move comes as the agency is under scrutiny for its response to fraud in state Medicaid programs. Federal prosecutors filed criminal charges against providers of both autism treatment services and housing stabilization services, a program that was recently shut down.
Officials also said that they are also investigating "kickbacks" or financial incentives to get individuals to switch from one business to another.
"It's my understanding from talking to investigators and licensers that they've been approached by good or quality providers that are saying, 'hey, my business is being tampered with, and I suspect that my competitors are paying my recipients or people receiving my services to come to their business,'" said James Clark, the inspector general within the agency. "Kickbacks are a sign that there's an oversaturation of providers when there is not a way to drum up legitimate business, providers try to drum up illegitimate business by potentially paying recipients to come do business with them."
Adult day services are in focus at the Wednesday meeting of the Minnesota House Fraud and State Oversight Committee, where Gandhi and Clark are testifying about the investigations.
The Medicaid program is on a list with 14 others deemed "high-risk" for fraud. The governor's office hired a third-party to conduct audits of provider billing.
This story will be updated