Top officials with the Minnesota Department of Human Services (DHS) said Wednesday that they are taking steps to modernize the state's costly and antiquated system for disbursing billions of dollars in assistance to Minnesotans with physical and developmental disabilities.

In legislative testimony Wednesday morning, the agency's new director of disability services said the DHS has begun soliciting bids from the private sector to enhance its automated system for evaluating applicants; each year that system determines whether tens of thousands of people with disabilities qualify for Medicaid benefits that would enable them to live more independently.

The changes will be designed to improve the stability of the system, known as MnChoices, which has been wracked by cost overruns and computer breakdowns since its inception in 2014.

Natasha Merz, the new director of disability services, said the state also is bolstering its training of the county employees who conduct the evaluations, known as assessors, to make the interviewing process more conversational and less like an interrogation. The state is seeking to reduce the stress on applicants and families by reducing the number of questions in the in-home evaluations, officials said.

"We are beefing up our statewide training infrastructure so that assessors have the tools and supports they need to do a really good job and be successful … doing the very complicated work of meeting people in their homes and talking with them about really sensitive and private things," she said in testimony.

Last fall, a Star Tribune special report brought to light multiple problems with the MnChoices system and the state's high-stakes process for determining eligibility for a coveted form of Medicaid assistance known as a "waiver." The assistance covers the cost of essential medical and other services at home, and can be worth tens of thousands of dollars or more to recipient families.

Across the state, the investigation found, access to this assistance was often arbitrary and unpredictable — dependent on where people lived rather than on individual need. The MnChoices computer system also crashed regularly, forcing county employees to develop elaborate workarounds and disrupting the delivery of vital services, according to the Star Tribune report.

Several state lawmakers have raised concern about the system's swelling operating costs, which have surpassed $600 million since its launch six years ago. "MnChoices is clunky, expensive and it's not doing its job," said Sen. Jim Abeler, R-Anoka, chairman of the Human Services Reform Finance and Policy Committee, which held the hearing.

Sen. Karla Bigham, DFL-Cottage Grove and a former Washington County commissioner, said counties are not being adequately reimbursed by the state for the staff time needed once an assessment is completed. The problems with MnChoices are compounding costs for counties.

"If we are going to shift this to counties, it better work and it really hasn't," Bigham said at the hearing. "This is a bigger problem than I think we care to admit financially."

Early last month, the DHS put out a long-awaited request for proposals to build a new and improved version of the computer system, known as "MnChoices 2.0." Bids are due by the end of the month and the contract is expected to start in August. The redesigned system was initially scheduled to launch in July 2019 but was delayed.

At Wednesday's hearing, Abeler also expressed concern that the current system is biased in favor of placing people in congregate settings, such as group homes, instead of more independent options. "That's the gravitational pull," Abeler said of group homes. "I would really like it that the default setting is that they are going to live independently," he said. Group homes should be the option when they are needed, he added.

"The system is geared towards placing people in group homes, because it's easier," Abeler said. "It's much harder to place people in more independent settings."

State spending on group homes, for Minnesotans who receive waivers, now totals about $1.5 billion a year. That represents about two-thirds of total spending on waivers for people with disabilities — and is more than the combined state spending on agriculture, higher education and pollution control, according to the Star Tribune report. In 2018, some 44% of Minnesotans with disabilities reported living in group homes — more than twice the national average and the highest rate in the nation, according to a national survey of states.

In 2016, a number of group home residents sued the DHS, alleging that the state's heavy reliance on group homes was unconstitutional. A federal judge hearing the case ruled last fall that the agency was violating due process rights by failing to inform people that they can use Medicaid waiver funds to pay for more individualized housing options, and then failing to notify them when such services were denied.

Chris Serres • 612-673-4308

Twitter: @chrisserres

Glenn Howatt • 612-673-7192

Twitter: @GlennHowatt