WHAT HAPPENED: A new state audit revealed that Minnesota’s Department of Human Services failed to investigate Medicaid kickback allegations, despite having the legal authority to do so for decades.

WHO WAS INVOLVED: The Minnesota Department of Human Services, Governor Tim Walz (D) and his administration, and the Office of the Legislative Auditor (OLA).

WHEN & WHERE: The audit was released on Tuesday, March 17, 20226, focusing on Minnesota’s Early Intensive Developmental and Behavioral Intervention (EIDBI) program.

KEY QUOTE: “We disagree with [Minnesota’s] assertion that it did not have the authority to investigate allegations of kickbacks alone. Based on our analysis, [the Minnesota Department of Human Services] has had the authority to investigate allegations of kickbacks in MA since the late 1990s.” — OLA audit report

IMPACT: The report highlights systemic failures in oversight, costing taxpayers millions and placing public funds for autism services at risk.

Minnesota’s Department of Human Services systemically failed to investigate Medicaid kickback allegations for years, according to a newly completed state audit. The agency claimed it lacked the authority to conduct such investigations, effectively turning a blind eye to widespread social services fraud—especially among the state’s Somali immigrant community.

Released by the Office of the Legislative Auditor (OLA) on Tuesday, the audit directly contradicts Minnesota’s claims that it lacked the legal investigatory authority. “We disagree with [Minnesota’s] assertion that it did not have the authority to investigate allegations of kickbacks alone,” the OLA report states, adding, “Based on our analysis, [the Minnesota Department of Human Services] has had the authority to investigate allegations of kickbacks in MA since the late 1990s.”

The audit focused on the Early Intensive Developmental and Behavioral Intervention (EIDBI) program, which provides autism services. The program’s budget skyrocketed from $3 million in 2018 to nearly $400 million in 2023, raising concerns about fraud risks. Kickbacks were a key element in fraudulent schemes uncovered in the program, with providers using financial incentives to maximize Medicaid billing.

Deputy Legislative Auditor Katherine Theisen noted that the Minnesota Department of Human Services declined to investigate three specific kickback allegations from 2021 to 2023, failing to refer them to law enforcement or other investigative agencies. The audit also identified a decades-old administrative rule error that may have limited the agency’s ability to suspend payments during investigations.

In response, the Minnesota Department of Human Services stated in a letter included in the report, “We agree with the recommendation that fraud should be defined to more clearly include kickbacks.” However, Republican lawmakers criticized the agency’s inaction. Minnesota House Fraud Prevention Committee Chair Kristin Robbins (R) called the lack of oversight “astounding,” adding that Minnesota’s failure to address administrative errors compounded the issue.

Image by Gage Skidmore.

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