Reform is underway at the Minnesota Department of Human Services (DHS), which is stepping up efforts to address oversight problems, including one that led to $29 million in overpayments for treatment of substance abuse disorders. New DHS Commissioner Jodi Harpstead told state lawmakers October 30 that her department is acting swiftly to put in new controls and address problems. 

The fear in the disability community, and among groups served by DHS, is that the ongoing problems could make it more difficult to get additional funding for needed services of all kinds during the 2020 legislative session. 

Some state lawmakers have expressed unhappiness with how DHS operates. One idea that is emerging is that of splitting the state department, which has been roiled for months over claims of retaliation against whistleblower employees and clashes among leadership. Harpstead is the third person to lead the agency during the past year. 

Harpstead spoke before a Senate committee October 30, during a lengthy hearing. The hearing came just after the Minnesota Office of the Legislative Auditor issued a very critical report on DHS overpayment of Medicaid and of the opioid treatment funds to the Native American bands of the White Earth Nation and the Leech Lake Band of Ojibwe. 

Legislative Auditor James Nobles told state lawmakers that the lack of documentation is “disturbing.” 

“The dysfunction we found at DHS has created serious financial and legal problems for the state, the White Earth Nation, and the Leech Lake Band of Ojibwe; those problems will be difficult to resolve,” the legislative auditor’s report said. Tribal leaders have objected to the idea of repaying the funds. 

The overpayments now could force the tribes to make difficult cuts to their social services offerings. 

“Even during the interviews we conducted, DHS officials could not recall who was responsible. In addition, none of the DHS officials we interviewed could offer a credible rationale for paying health care providers for their clients taking medications at home,” the report stated. “While some DHS officials took actions that led to the overpayments, there were other DHS officials who could have stopped the payments but did not.” 

Harpstead and her staff have started work on a plan for new internal controls at DHS. “I am as tired as all of you about reading about problems with the Department of Human Services,” Harpstead said. She added that the agency has in the past relied too much on institutional memory. A thorough review of practices is planned, as are tighter controls. 

Senators worry that more revelations are to come. “I am concerned that this is just the tip of the iceberg,” said Sen. Jerry Relph (R-St. Cloud). 

Lack of paper trails is a troublesome issue raised by the legislative auditor’s report. The auditor found that no one at the state could identify who was responsible for the overpayment to the tribes. The billing method that caused the problem was also held up for criticism. Yet another problem raised in the report is placed on DHS’s decentralized management stem, and how health care payment rates weren’t consistent from division to division. 

Medicaid serves the health care needs of more than 1.1 million people in Minnesota. The report indicated that review and approval has not been needed of how DHS staff decides to spend Medicaid funds. Another red flag raised is that no policy is in place requiring approvals from federal officials before spending decisions tied to Medicaid are made. 

The opioid overpayment issue is complex. For several years the bands were allowed to bill Medicaid for $455 per day for the medication Suboxone, which is used to combat opioid addiction. DHS decided to reimburse opioid treatment providers the same price for medications taken at home as they did for treatments provided in a clinic. But those needing medication were allowed to take it home without consulting medical staff. The report found that the decision to allow that practice was never documented. That in turn is a violation of the state’s Official Records Act. 

Harpstead has pledged a new system with multiple approvals before Medicaid funds are allocated. She has called for a “triple-checked, permanently documented, accountable process.”