'Dysfunction' at DHS led to $29M overpayments to two tribal groups

The results of an audit investigation were released on Tuesday.
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MN Department of Human Services (DHS)

A newly released audit report into the Minnesota Department of Human Services (DHS) blames "troubling dysfunction" that resulted in $29 million in overpayments to two tribal groups for opioid treatment programs.

The results from the Office of the Legislative Auditor probe concluded that the dysfunction within the DHS was so serious that it is unable to blame any single person or team for the mess.

"The department did not have legal authority to make the payments; it did not document why, when, and who decided it was appropriate to make the payments; no one at DHS takes responsibility for the decision; and no one at DHS can provide a rationale for the payments," the report concludes.

"The overpayments continued over several years and did not stop until an outside inquiry brought them to light. The dysfunction we found at DHS has created serious financial and legal problems for the state, the White Earth Nation, and the Leech Lake Band of Ojibwe; those problems will be difficult to resolve."

The trouble started more than a decade ago, with DHS officials deciding, "without authority" that it would pay opioid treatment providers when their clients took their medication at home.

A few years later, DHS officials then decided it would pay opioid treatment providers the Indian Health Service (IHS) "encounter rate" when their clients took medication at home.

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The issue with this is, there needs to be a face-to-face encounter between patients and healthcare providers in order to pay the "encounter rate," which at $455 per encounter is significantly higher than the amount paid out for those taking medication at home.

As a result, these encounters were classed as overspending, which the DHS has to pay back to the federal government as it was paid out using Medicaid funds.

Since it was discovered, the DHS has been attempting to recoup that amount from White Earth and Leech Lake, arguing that state law requires repayment even though the erroneous payments were the result of DHS mistakes.

"Who made the decisions, why, and when is not clear because DHS officials never documented their decisions," the audit report says. "Even during the interviews we conducted, DHS officials could not recall who was responsible. In addition, none of the DHS officials we interviewed could offer a credible rationale for paying health care providers for their clients taking medications at home.

"While some DHS officials took actions that led to the overpayments, there were other DHS officials who could have stopped the payments but did not. In interviews with OLA, some officials said they were unaware of the payments, while others said they were aware but it was not their responsibility to question an established payment practices."

The DHS has been the subject of multiple controversies that have been uncovered since Gov. Tim Walz took office, with the department's child care fraud program currently being revamped after an earlier audit investigation found weaknesses and internal strife.

Then in July, the DHS Commissioner Tony Lourey resigned abruptly. He has since been replaced by Jodi Harpstead.

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