Gov. Tim Walz is well aware, thank you very much, that fraud in Minnesota’s Medicaid program has become a defining issue of his governorship.
On Friday, Walz announced what appear to be modest additions toward his strategy of combating Medicaid fraud, including the hiring of a director of program integrity at the Bureau of Criminal Apprehension, and a contract with WayPoint, a forensic accountant based in White Bear Lake.
But the governor was also philosophical at a media availability, discussing the balance between being a state known for its generous social service benefits with one that must be more careful in using taxpayer money.
“We are a state that chooses not to let people go hungry or homeless or uneducated,” Walz said. “However, that generosity has been taken advantage of by fraudsters and criminals.”
The governor compared bringing accountability to the Department of Human Services, the state agency which administers Medicaid, to turning a battleship around.
The press availability lasted nearly an hour, with Walz taking significantly more questions than other press conferences I have attended. The event featured the usual lacerations at President Donald Trump and stray Minnesota superlatives (“We’re rated the second-most retirement friendly state, which is simply amazing, since Florida was one and we’re still second on a day like today,” he said, a presumed reference to the I-want-to-stay-in-bed weather.)
Related: Tim Walz says Minnesota is auditing payments in Medicaid programs vulnerable to fraudsters. But the scope of the audit is quite limited.
But Walz also said he must do more to articulate how Minnesota is tackling fraud.
“I don’t think we’ve done a good enough job communicating the hard work that’s being done,” Walz said.
Here is a quick look at what Minnesota is doing.
What again is this fraud and what has the state already announced to combat it?
The U.S. Attorney’s Office announced in September federal indictments of providers in the since-terminated Housing Stabilization Services Medicaid program.
The first of its kind housing program cost the state over $300 million since it was launched during the Covid pandemic. It is unclear if all this money went to fraudsters or a significant portion got routed to legitimate housing and health care businesses.
The U.S. Attorney’s office has also filed criminal charges against an autism therapy provider.
In response, the Department of Human Services has hired an auditor, Optum State Government Solutions, to review the autism program and a dozen other still-operational Medicaid programs at a high-risk of fraud.
The auditor is screening all incoming Medicaid claims that are directly dealt with by the Department of Human Services, but that excludes the vast majority of payments, the majority of which are processed by independent nonprofit companies known as managed care organizations.
Third-party auditor aside, Shireen Gandhi, temporary commissioner at the Department of Human Services, said Friday that her agency had 1,300 (yes, she said 1,300) open cases being pursued by the department’s internal Inspector General.
And Walz emphasized Friday that the state is not just cooperating but volunteering information to the U.S. Attorney’s Office about possible criminal activity by Medicaid providers.
What is the actual news from Walz?
The Bureau of Criminal Apprehension has signed a $200,000 contract with WayPoint.
Josiah Lamb, a forensic accountant and owner of WayPoint, told reporters that his company will work with the Bureau of Criminal Apprehension on an “anti-fraud toolkit” that “serves as a baseline for anti-fraud policies and procedures for every agency.”
In other words, the contract is not specific to the Department of Human Services. Lamb said that he will meet with individuals at each agency. Minnesota has over 100 state agencies.
Also, Walz named Thomas O’Malley — whom the governor had just named to be an administrative law judge six months ago — to be the “director of program integrity.”
Program here means not just Medicaid but, conceivably, any state of Minnesota program. O’Malley said at the press event that “I can’t give you the specifics right now, honestly” about the nature of his job.
O’Malley noted that he worked previously at the Bureau of Criminal Apprehension and “has been working with the governor’s office for the past year on a number of other issues.”
Related: GOP’s Kristin Robbins says her Minnesota fraud prevention committee is not a political stunt. Is she right?
The lack of specifics about the director of program integrity did not stop Republicans from attacking the new post.
Speaker Lisa Demuth, R-Cold Spring, said in a statement that Walz is futilely adding a new layer of bureaucracy.
And Jordan Rasmusson, R-Fergus Falls, said in a statement, “It’s all talk and no walk. A statewide director of program integrity isn’t something you need when your commissioners are doing their jobs well in the first place.”
Meanwhile, Senate Majority Leader Erin Murphy, DFL-St. Paul, saw Walz’s announcement today as a step in the right direction toward stopping fraud.
“We’re not done yet, and we will continue to work with state and local agencies to make sure they’ve got necessary resources in this fight,” Murphy said.
