Minnesota does not collect adequate information to monitor programs that spend more than $2 billion annually on care and services for the elderly and people with disabilities, according to a legislative auditor report released Tuesday.

The state Medical Assistance program spent about $2.4 billion in fiscal year 2015 for services designed to help about 64,000 Minnesotans live more independently in the community, rather than in institutions.

However, the Minnesota Department of Human Services (DHS) does not provide adequate financial oversight of the organizations that provide the services, nor does it adequately regulate the workers who go into people's homes, the report said.

The 84-page report provides a rare window into state spending and oversight for a wide range of community-based services, such as home health care, occupational therapy and transportation to work, which are designed to be a more cost-effective alternative to institutional care.

Among the report's chief findings is that Minnesota's relatively generous spending on such services has not translated into greater independence for people with disabilities.

"If we're going to move more people out of regulated facilities and into their own homes, then we're going to need better financial safeguards," said Jo Vos, evaluation manager at the state Office of the Legislative Auditor.

The state's top auditor found that Minnesota spends a much higher share of its Medicaid budget on home and community-based services than most other states.

Yet even with this outlay, Minnesota lags in two key areas: Integration in housing and employment. About 44 percent of people with intellectual or developmental disabilities live with their families or in their own homes in Minnesota. That is much lower than the national average of 67 percent.

And while Minnesota has a relatively high rate of employment among adults with disabilities, research suggests it has "one of the more segregated workforces for people with disabilities in the country," the report said. The state still places a far higher proportion of workers in facilities, known as "sheltered workshops," where the majority of employees earn less than minimum wage, the auditor found.

"It's clear from this report that we are not serving people in the most integrated settings possible," said Rep. Diane Loeffler, DFL-Minneapolis, a member of the House Health and Human Services Finance committee, where the report was presented Tuesday.

Appearing before the committee, Assistant DHS Commissioner Claire Wilson said the agency supported the auditor's findings and recommendations.

"It is not easy to design a flexible, responsive system," she said. "It has been years in the making and it's still being developed."

'You need proper tools'

But much about these services remains a mystery: DHS doesn't conduct regular financial investigations of home and community-based providers or require them to submit routine financial documentation. It investigates only when problems come to its attention through processing payment claims or complaints, the auditor found.

For-profit providers received the bulk of the payments, accounting for 65 percent of all spending on home and community-based services in 2015, the auditor found.

Without basic financial data, regulators are often unable to determine whether services being billed to the state Medicaid program by these organizations are actually being provided, opening the door to fraud.

Some of the concerns echo those aired in 2009, when the legislative auditor issued a report critical of the state-funded personal care assistance program. That report documented numerous instances of fraud by people who provide direct care in the home funded by Medical Assistance, including cases in which personal care attendants billed for more than 24 hours of care in a day. Since that report, DHS has implemented a number of measures to track claims data and verify that home care workers are actually providing the care.

The legislative auditor recommended extending similar requirements to other direct-care staff, such as nurses, who work in people's homes. This includes requiring home and community-based workers to enroll with DHS, limiting the number of hours they can bill the state and requiring documentation of services, the report said.

"When you send people unsupervised into people's houses, you need to have the proper financial accountability tools in place," Vos said.

The auditor also recommended that lawmakers and DHS develop a standardized menu of home and community-based services for people with disabilities and the elderly. Minnesotans now access these services through five separate "waiver" programs, each of which has its own eligibility requirements and subset of the disability population.

Chris Serres • 612-673-4308

Twitter: @chrisserres