DHS halts payments in another disability services program over fraud allegations

Minnesota officials have suspended payments to providers of another Medicaid-funded program, citing “credible allegations of fraud” as they attempt to crack down on schemes to swindle state and federal funds.

Shireen Gandhi, temporary commissioner of the Department of Human Services (DHS), told state lawmakers that the department’s inspector general has found instances where providers billed for services under Minnesota’s Integrated Community Supports (ICS) program, but clients never received them.

The ICS program is intended to help adults with disabilities live independently.

In a letter to lawmakers Friday, Gandhi said the DHS has suspended payments to 11 program providers and 17 affiliated providers in different Medicaid-funded programs.

“There’s no place in our system for providers who are taking money and not assisting clients,” Gandhi said.

“We will work with counties and providers to minimize the impacts on clients, but the truth is that these providers are already failing the clients they claim to serve.”

Gandhi’s announcement comes as the DHS faces scrutiny over its response to allegations of fraud in several Medicaid programs. Her predecessor, Jodi Harpstead, resigned in January as concerns over fraud mounted following FBI searches of autism services providers’ offices. A new inspector general joined the department this spring.

And on Wednesday, a provider of Early Intensive Developmental and Behavioral Intervention services, which serves young people with autism spectrum disorder, was indicted on one count of wire fraud.

The provider, Asha Farhan Hassan, 28, was also associated with the sprawling Feeding Our Future fraud scandal, according to the indictment.

In that scandal, the Feeding Our Future nonprofit swindled $250 million in federal funds meant to feed hungry children during the COVID-19 pandemic.

In her letter, Gandhi said the DHS is seeing businesses “working together to game the system, as opposed to single bad actors or rogue employees.”

The department’s Office of Inspector General, she said, is using data to identify indicators of fraud.

“We are also acting faster and more aggressively when we see fraud,” she added.

According to Debbie Ackerman, an area manager for Hennepin County Human Services, the ICS program gives adults with disabilities the opportunity to live independently in communities — instead of in nursing facilities or group homes.

That could mean learning how to read street signs, send emails, cook and clean house or navigate public transit, she said.

As of early Friday afternoon, Hennepin County case managers had not been told that any of their providers were among those having funds withheld.

The county has contracts with 29 agencies to provide case management, Ackerman said.

Minnesota lawmakers welcomed the news of the stopped payments but lamented the alleged persistent fraud.

Rep. Kristin Robbins, R-Maple Grove, who chairs the House Fraud Prevention and State Agency Oversight Committee, said she had received reports of alleged fraud in the ICS program and was glad to see the DHS was cutting off potentially fraudulent providers.

“It’s so disingenuous and awful,” said Robbins, who is running for governor. “People actually in need are being signed up for services that they could benefit from, and they don’t even know they’re in the system.

“It’s just totally making money on the backs of vulnerable Minnesotans.”

Rep. Dave Pinto, DFL-St. Paul, said the fraud committee had discussed possible malfeasance in the ICS program in a hearing last week. He said he was glad the DHS was halting payments where fraud is suspected.

Sen. Jordan Rasmusson, R-Fergus Falls, said Minnesotans with disabilities “deserve integrity, accountability and service, not being exploited to fund a criminal enterprise.”