Audit finds Minnesota DHS could have done more to investigate kickback allegations in autism program vulnerable to fraud
The Minnesota Department of Human Services didn't leverage its existing authority to investigate reports of kickbacks in the autism treatment program vulnerable to fraud, a new watchdog report determined.
The kickbacks — financial incentives by providers to get people signed up for services — are a fixture in some of the fraud schemes plaguing state programs. Last year, a new law approved by the Legislature made kickbacks a crime and said the Department of Human Services could investigate and sanction providers for allegations of kickbacks alone, which the agency said it couldn't do without the changes.
But an Office of the Legislative Auditor review released Tuesday is at odds with that, finding the agency already had that authority to investigate and that if it had corrected a 30-year-old problem, DHS could have stopped payments to providers facing kickback allegations much sooner.
"DHS's administrative rules have — for decades — contained an error in the definition of 'fraud,'" the report said. "While DHS could have acted at any time to revise its rules, it has permitted the error to stand since 1995, limiting its authority to address kickbacks."
The OLA recommends the DHS, on its own, clean up that language through its rulemaking process or that the Legislature should take steps to explicitly define fraud to include kickbacks.
The probe stemmed from an individual who was concerned that the DHS Office of Inspector General did not properly investigate complaints it received about the Early Intensive Behavioral Intervention program, which aims to provide care for children under 21 with autism spectrum disorder.
In 2020, the total cost of the EIDBI benefit was $38.1 million, but by 2024, the total cost of the program was $324.9 million. Two people have pleaded guilty to stealing millions in taxpayer money and authorities said they offered kickbacks
Of the cases OLA reviewed, the nonpartisan watchdog agreed with most of DHS's reasoning for closing most of the complaints and not investigating further. But when analyzing three complaints about kickbacks, DHS said it did not have the authority to investigate such allegations in the EIDBI program unless they also "included non-kickback conduct that met the definitions of fraud, theft, abuse, or error."
"We disagree that DHS did not have the ability to act upon allegations of kickbacks without legislative changes. Instead, we identified several ways DHS could have utilized its existing authority to address allegations of kickbacks," the report said, citing provisions in state and federal law. "Further, we believe additional action is needed to ensure DHS has authority to withhold or reduce payments to providers on the basis of credible allegations of kickbacks alone."
DHS Commissioner Shireen Gandhi told reporters Tuesday that while her agency and OLA disagree about what authority DHS had prior to last year when the law changed, her agency agrees that what constitutes "fraud" needs to be more clear.
She said if DHS went through the rulemaking process for the fix, it would take much longer than the Legislature taking action.
"Legislation is the faster path. And the other thing you have to keep in mind is why the OLA believes we have that authority, all of the actions we take — many of the actions we take — by providers are challenged in court, and so it will be much better and much more successful for us to uphold our actions, if this is actually clearly in state statute," Gandhi said.
Republicans at the Capitol criticized the Walz administration for the OLA findings, characterizing its inaction on kickbacks as an "excuse."
"This is more than incompetence, it's a clear pattern of prioritizing spending taxpayer dollars over accountability and compliance," GOP House Speaker Lisa Demuth said in a statement.
Both the GOP and DFL lawmakers say fighting fraud is a top priority this year. They'll have to find compromise on any solutions in order for any measure to clear the politically divided Capitol.