ST. PAUL —ST. PAUL — Taxpayers will be on the hook for at least $23 million as a result of three separate mistakes by the Minnesota Department of Human Services, the agency disclosed Monday, Nov. 18.
The errors include cash payments to people on public assistance, criminal background checks for foster care centers, and improper billing for drug treatment. All are new disclosures and add to the list of missteps and otherwise bad press for the state’s largest agency, which serves the state’s most vulnerable and is already under scrutiny on a number of fronts.
The agency’s announcement Monday amounted to a bundling of bad news in three parts and will likely be seized on by critics, some of whom want to break up the $18 billion agency.
Here’s a breakdown of each, according to DHS documents and statements, as well as officials who were briefed on the matters:
The problem: As a result of faulty DHS instructions, counties and Indian tribes have reclaimed mistaken cash overpayments to poor people when they should have just let the people keep the money.
How it happened: In 2016, changes to laws meant that when a county, state, or tribe made a mistake and paid someone too much, the person wasn’t responsible for paying back the extra money unless a “reasonable person” would have noticed the mistake.
But state officials suspect that, based on DHS instructions, counties and tribes have clawed back overpayments that recipients couldn’t have been expected to notice.
The solution: Counties and tribes that clawed back that money, now need to repay the funds to recipients — even though they weren’t supposed to have that money to begin with. In addition, DHS will require two approval signatures on such payments, and will hire an outside consultant to examine how to make fewer mistakes.
How much will this cost? As of Monday, DHS said a preliminary tally suggests $727,000 will need to be repaid. It’s unclear how much extra labor costs, both in the collection and the repayment.
The upshot: Politically, this could grab the attention of critics of social welfare programs.
The problem: Many foster care centers haven’t properly vetted all employees via enhanced criminal background checks, including fingerprints. DHS was late to tell countries and tribes they wouldn’t be reimbursed federal foster care funds for services in these facilities; counties and tribes could have then made payments to the centers.
How it happened: This relates to changes to the federal Family First Prevention Services Act that took effect in 2018. The changes expanded criminal background check requirements for children’s residential facilities, where foster children live until an in-home placement, such as a family, can be found.
State law didn’t change to reflect the federal law until July 2019, and federal authorities gave the state some leeway as a result. However, DHS misunderstood that leeway, erroneously thinking they could still pay out federal reimbursements before the facilities had complied with the new law. In addition, DHS was late in notifying facilities and local officials, only sending out a bulletin last month.
“We regret that our guidance in this matter, meant to clarify state and federal statutes, was delayed,” according to a DHS statement Monday.
The solution: Counties and tribes won’t get reimbursed for funds they might already have paid out and have been expecting to be reimbursed.
How much will this cost? So far, the tally is about $624,000. The impact on the facilities wasn’t immediately clear Monday.
The upshot: Expect critics, especially Republicans, to add this to the list of DHS mistakes that have come to light in recent months, and it could further strain relations with counties, tribes and facilities that are forced to work with DHS.
The problem: DHS billed improperly the federal government for certain drug abuse treatment provided by facilities that weren’t actually eligible for federal funds. We already knew this -- but the dollar figure grew significantly Monday in two ways.
How it happened: The Centers for Medicare and Medicaid Services told DHS in May that it must “immediately cease” payments to a group of substance abuse treatment providers formally known as “institutions for mental diseases.” These institutions include hospitals, nursing homes or other facilities that have more than 16 beds and treat people with mental illness or chemical dependency. Federal Medicaid money generally cannot be used to cover treatment in these facilities.
The Centers ordered DHS to return the money it improperly dealt out. That was $48 million. On Monday, DHS revealed that figure has now increased to $61 million. Additionally, the agency announced how much the counties’ portion of that funding will be: $8.8 million.
How much will this cost? DHS will be on the hook for an additional $13 million. Counties will be on the hook for a total of $8.8 million, distributed across all the state’s counties depending on how much they leveraged the funds. For Ramsey County, the amount is $630,000. Dakota County will be on the hook for $424,000. Washington: $148,000. Hennepin: nearly $2.2 million.
The upshot: This is just the latest example of improper payments of federal substance abuse dollars, bringing the total to roughly $61 million. This is a different, but a similar-sounding problem to another recent issue involved substance abuse. Last month, a report by the nonpartisan Office of Legislative Auditor found that a “troubling dysfunction” at DHS led to an estimated $29 million in overpayments of federal Medicaid funds to two tribes for opioid addiction services.
In announcing the three issues, DHS Commissioner Jodi Harpstead sent a letter to county and tribal officials, and held conference calls with select state lawmakers, suggesting officials uncovered the problems as part of an agency self-scrutiny she ordered when she was appointed by Gov. Tim Walz in August.
“The plan for my first 90 days as commissioner includes rooting out billing and payment problems in the Department of Human Services, being transparent about them, and using what we learn to build a new system of process controls that prevents them from happening in the future,” Harpstead said in a statement. “Today’s communication with county and tribal leaders is a perfect example of my commitment to identifying problems, owning them, sharing the information broadly, and making significant changes to how DHS does business moving forward.”
State Sen. Michelle Benson, R-Ham Lake, has been following DHS’ recent troubles and was briefed by Harpstead earlier Monday.
“As these errors emerge, the commissioner is taking reasonable steps to respond, so I will remain watchful,” Benson said in an interview. “I will add that I’m hearing more and more from people who think it needs to be broken up.”
The idea of breaking up DHS into multiple agencies has been around for years but has seen renewed interest — from outside and inside the agency — as problems have surfaced