New leader named: Funding, staff woes continue at Department of Human Services

New leader named: Funding, staff woes continue at Department of Human Services

Can a new commissioner right the ship at the Minnesota Department of Human Services (DHS)? That is the question many are raising as the state agency deals with turmoil including resignations and firings, allegations of wrongdoing and $73 million owed to the Centers for Medicare and Medicaid Services as a result of improper payments.

The parade of problems has state lawmakers calling for more scrutiny of DHS and even some demands that the massive state agency be split.

In early August Gov. Tim Walz named a new commissioner for DHS, which has responsibilities including services to Minnesotans with disabilities. Lutheran Social Service of Minnesota President Jodi Harpstead was tapped to take over as of September 3.

She succeeds acting Commissioner Pamela Wheelock, who in turn took over DHS after Commissioner Tony Lourey resigned. While little has been said publicly about the resignations of Lourey and other DHS leaders, some have described events as a power struggle among leaders.

Harpstead served in various posts at Lutheran Social Services since 2004 and put in 23 years at medical device maker Medtronic before that.

At a news conference, Walz praised Harpstead, noting she was considered for the DHS job before he chose Lourey. “She understands the need to be nimble and mindful of cost savings while never losing sight of the mission of delivering services and promoting healthy communities. Above all else what drew me to Jodi Harpstead was she’s clearly a leader.”

“I am particularly proud to join the dedicated people of the department who I know to be the same caring and competent people that I have worked with at Lutheran Social Services,” said Harpstead.

House Minority Leader Kurt Daudt, R-Crown, said in a statement that he hopes Harpstead will address problems within the agency and will also join lawmakers in efforts to eliminate fraud and abuse in public programs.

“I’m pleased a permanent leader has been put in place at the Department of Human Services who can dig in and work on fixing the culture and problems that have come to light over the past few months,” Daudt said.

But Harpstead inherits many challenges, including skeptical members of the Minnesota Legislature. Wheelock was grilled at a hearing just after the hiring announcement.

An overview of problems
Minnesotans with disabilities rely on DHS for a myriad of programs. Community leaders have been reluctant to speak out about the recent problems, although some cite good working relationships, capable staff and programs that they see as running smoothly. But others say they have become frustrated in dealing with a large bureaucracy and in trying to get information about program rules and clarify about funding.

DHS has garnered several unwelcome headlines over the summer, including a $25.3 million substance abuse program overpayment to two of the state’s American Indian tribes, another $48 million in improper payments and a series of high-profile resignations and staff ousters.

That history drew heated comments from state lawmakers at an August 12 hearing. The hearing lasted for more than three hours and drew pointed criticism from lawmakers at times. Some lawmakers said they were frustrated at the lack of direct answers.

Sen. Michelle Benson, R-Ham Lake, at one point said, “There have been problems at the Department of Human Services as long as I’ve been at the legislature. Program integrity, eligibility, project management, transparency, accountability. These problems result in legislative whack-a-mole.”

The overpayments drew much scrutiny, which at the hearing focused in the tribal issues. Wheelock said the tribes are obligated to pay back the funds. Tribal leaders said that doing so would have potentially dire consequences for the tribes’ financial health and other program.

The money owed by the tribes doesn’t include an estimated $48 million owed to the federal government because DHS improperly distributed funds to certain state chemical dependency treatment providers.

It was reported in August that 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 federal agency ordered DHS to return the money.

The improper payments were made to up to 100 providers since 2014. DHS uses money from a consolidated fund to pay for substance abuse treatment in these institutions, according to the department. The agency pulled federal money from the fund when it should have used state dollars instead.

DHS officials say they told state lawmakers about the payment problem as early as 2016. But the agency didn’t update its computer systems to fix the issue until May.

The staffing turnover and the concerns outlined by staff also raised red flags for state lawmakers.


High-profile resignations
DHS Deputy Commissioner Claire Wilson announced her resignation in late August. It is her second resignation this summer. She and Deputy Commissioner Chuck Johnson resigned in early July. They rescinded those resignations after Lourey and his chief of staff stepped down.

Wilson’s responsibilities included behavioral health, which involves the two sets of programs where payment problems have been revealed. But she also worked with programs for people with disabilities and was a panel moderator this summer at the state’s annual Americans with Disabilities Act celebration at Hamline University.

In an email to DHS colleagues, Wilson said it would be difficult to leave the state agency behind but that a fresh start is needed under a new commissioner.

Wilson joined DHS in 2016, and was a finalist when Lourey was selected as commissioner earlier this year. Along with disability services and behavioral health, Wilson also oversaw health care, children and family services.

Wilson is being followed out the door by Marie Zimmerman, the assistant commissioner for health care. Zimmerman is leaving in early September. She has worked at DHS since 2011 and will continue to be a consultant.

Ex-employees air concerns
In the past few months, more DHS employees have aired concerns about agency operations. One of them is Mohamed Mourssi-Alfash. He contends that he was wrongfully discharged from DHS after raising concerns about whether the agency was unfairly targeting minorities with licensing and enforcement actions.

Mourssi-Alfash is a disability advocate and former equity coordinator at DHS’s Office of the Inspector General. He is claiming retaliation and that he was pushed out after citing issues of racial bias within the DHS enforcement division.

He has filed discrimination and wrongful-termination charges with the U.S. Equal Employment Opportunity Commission.

The Inspector General’s Office investigates financial fraud and abuse in state-licensed programs and facilities, including child-care centers and group homes for adults with disabilities. The office’s top official, Carolyn Ham, was put on investigative leave earlier this year. That happened after the Legislative Auditor found fraud in the child-care assistance program. It was also found that there was a history of distrust between anti-fraud investigators and Ham.

(In the interest of full disclosure, Mohamed Mourssi-Alfash is on the Access Press Board of Directors but had no involvement in this article.)

But retaliation may be nothing new. This summer Compliance Officer Faye Bernstein raised red flags about legality of contracts and was then escorted out of DHS offices. Dr. Jeffrey Schiff lost his job as Medicaid’s medical director after he and DHS officials disagreed over his medical input.

Both Schiff and Bernstein testified at the hearing in August. Bernstein said she was told she could lose her job for testifying.


State cancels contracting process
Yet another issue is health programs and how they are affected by a lawsuit. DHS August 30 told health plans it is cancelling its request for proposals for health coverage for families and children in 80 Greater Minnesota counties and seniors across the state.

Instead, DHS will enter into negotiations to renew the current contracts for next year. The contracts cover an estimated 400,000 Minnesotans.

For more than a decade, DHS competitively bid health care contracts, which involves review by counties and the Minnesota Department of Health. Competitive bidding and other reforms saved the state more than $1 billion. In 2015, the Office of the Legislative Auditor reviewed the process and found it to be sound.

A court decision issued on August 30 involving the state’s contracting for health care coverage made it impossible to complete contracts in time to avoid disruption for enrollees and to meet timelines required by law. This action ensures continuity of care and keeps DHS in compliance with federal law, according to Minnesota Human Services Commissioner Jodi Harpstead.

“DHS puts the care of Minnesotans first,” Harpstead said. “This option is the least disruptive to enrollees and ensures we remain in compliance with federal law. It also gives us an opportunity to work with the Legislature to clarify aspects of the contracting process before we issue an RFP again.”

Harpstead in the hot seat
Harpstead appeared before a Minnesota Senate panel September 4, telling the panel that she intends to restore credibility to her state department. She announced a 90-day plan to restore trust.

Citing the recent string of problems, lawmakers said there are many places where Harpstead must work. Sen. Jim Abeler, R-Anoka, said at the hearing that more DHS employees wish to tell state lawmakers of problems, but that they fear retribution.

What could be next?
As state lawmakers continue to hold hearings on DHS, they are hearing and making calls for change. Schiff has called for an independent oversight board to look into the problems at DHS.

Legislators are increasingly worried about the agency’s culture of conflict and in some divisions, a lack of accountability. The handling of federal funds is especially concerning as Minnesota could be on the hook to pay those back.

Several lawmakers, current and former DHS employees recommended that DHS, which is the state’s largest department, be split up. How that would happen isn’t clear. One idea Wheelock raised is to split off the program that handles sex offenders. Another is to look at related divisions and see which could be split to function on their own.

Another proposal is for the DHS Inspector General office to be split off. It investigates fraud and mismanagement, and some lawmakers contend it is in the position of DHS investigating itself.