Minnesota families struggle as thousands of providers no longer able to bill Medicaid amid fraud crackdown

Colin McGuire is trying to learn to walk with a special device. Born with cerebral palsy, he's required to undergo different kinds of occupational and physical therapy weekly in order to improve his quality of life. 

For the past month, he hasn't gotten any of that. His mother, Caroline McGuire, said it's thanks to complications brought on by the state's effort to revalidate providers and rid the system of fraud. 

"I just feel like it's affecting the most vulnerable of us," McGuire said. 

It's a common sentiment among Medicaid recipients and providers in Minnesota who feel unfairly punished by the revalidation process. In response to what state leaders describe as threats from the federal government, the Minnesota Department of Human Services began the major task of revalidating 5,472 providers across various service programs deemed at high risk for fraud. 

At the end of May, the Minnesota Department of Human Services informed 3,411 — 62% of the providers screened — that they were disenrolled and could not bill Medicaid. On Wednesday, Department of Human Services Deputy Commissioner John Connolly came to the state capitol to take questions from members of the Senate's Human Services Committee. 

"This was not the plan. We had hoped that the vast majority of providers would be revalidated within the timeline," Connolly said. 

He testified that the Minnesota Department of Human Services felt pressured to complete revalidation in as short a time frame as they felt possible. 

In December and January, Connolly described receiving separate letters from the federal Centers for Medicare and Medicaid Services agency, making it clear that Minnesota needed to submit a corrective action plan in response to fraud or lose $2 billion in Medicaid funding. Connolly said that revalidation was seen as the "cornerstone" to any corrective action plan, ultimately telling CMS that they could do it in five months. 

It's far less than the two years that CMS has given other states to complete a similar undertaking. 

"This was extraordinary. This was incredibly challenging for the providers," Connolly said. "It was extraordinary also for the people of DHS to execute. Days, nights, weekends, holidays. They really gave it their all." 

Connolly said that in most cases, providers had been unable to give them the vital information required to give them a passing grade. He also stressed that most of the issues leading to disenrollment were not criminal in nature; in fact, out of the thousands of cases at hand, just 59 were referred to the inspector general for further review.

Of the 3,411 sites disenrolled, 2,472 have appealed. Those in the appeal process will be allowed to once again bill for services as the Department of Human Services reviews their claims; as of June 29, about 321 appeals had been completed. 

Multiple providers spoke at the meeting, criticizing the Minnesota Department of Human Services for implementing a process that they believed was confusing and unfair. Members of the Autism Treatment Association of Minnesota penned a letter to the committee describing grave consequences. 

"Minnesota can address fraud without dismantling essential autism services," Dr. Eric Larsson, executive director of clinical services at Lovaas Institute Midwest, said. "But allowing disenrollments of this magnitude will result in provider closures, longer waitlists, and children losing services through no fault of their own."

Dr. Joshua Straub, a man with cerebral palsy who has received services in Minnesota for 18 years, says he's seen DHS's operation as a "ticking time bomb." He said it became clear to him in talking to social service workers years ago that the state was ill-equipped to support legitimate providers and identify criminals. During the revalidation process, Straub said that he and his family had to act quickly to find a new provider when his previous one was disenrolled. 

"The disability community is a very easy community for politicians to claim to serve and then what happens is there's no oversight on either side," Straub said. 

In Wednesday's hearing, DHS said that a law established this year helped create a team that would provide resources to patients who experience disruptions in care.