Minnesota DHS overpaid $40M to Medicaid providers, audit finds
ST. PAUL, Minn. — The Minnesota Department of Human Services' "internal control weakness" has led to more than $40 million in overpayments to Medicaid providers, according to a report released on Tuesday by state auditors.
The Office of the Legislative Auditor's Financial Audit Division says the discovery was made in a performance audit focused on department data between October 2006 and June 2023.
In addition to the overpayments, the audit also found the department was "planning to forgo recovery of outstanding provider debt that still may be recoverable," violating Minnesota law and the department's own policy.
The audit also concluded the department hadn't "accurately reported its accounts receivable balance" to the state's Department of Management and Budget since 2019, and department officials couldn't provide sufficient documentation to confirm its balances.
The auditor's office blames "inadequate internal control" for the department's noncompliance and reluctance to recover the millions in debt, which was racked up over nearly 17 years due to adjustments in claims to medical providers that occurred after they were initially submitted.
Department Commissioner Jodi Harpstead responded to the report in a letter to the auditor's office on Friday, saying she agrees with "some" of the findings and is "already implementing improvements."
"The complexities in collecting the provider credit balances are substantial. The majority of these balances represent organizations no longer doing business and we have had a very low return on any recovery work," Harpstead said.
However, the commissioner says she disagrees with claims that her department is out of step with state law, saying the report "elides key legal issues, misconstrues the few authorities on which it relies, and faults the Department for not taking actions not authorized by the Legislature."
Minnesota House Speaker-designate Lisa Demuth, R-Cold Spring, released a statement in the wake of the report, calling the department's conduct "shocking" and promising "more scrutiny" in the next legislative session, which begins on Jan. 14, 2025.
"DHS is failing at their basic responsibilities, and once again there has been no accountability from Gov. Walz or Commissioner Jodi Harpstead," Demuth said. "Until agencies and commissioners are held accountable for their failures to follow basic accounting practices under state law, these problems will continue."
The auditor's office will present its findings in a conference set for Thursday at 10 a.m. at the State Capitol, which will be livestreamed.
