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Using a new state law and executive order meant to fight fraud in state aid programs, the Minnesota Department of Human Services has ordered a two-year ban on new licenses for programs designed to help people with disabilities live in their communities.

The department will stop issuing new Home and Community-Based Services licenses, stop accepting new license applications, cancel existing license applications and prevent any licensed providers from adding new services. The order is set to take effect next month.

Shireen Gandhi, temporary DHS commissioner, told lawmakers in a

 that the number of licenses approved for such services is far outstripping demand.

Over the past five years, the average number of Minnesotans using those services each year rose by nearly 25 percent compared to the five years before that, but the average number of businesses licensed to serve those people grew by 50 percent, Gandhi wrote. 

Without the moratorium, she added, the number of licensed businesses would be on track to nearly double “surpassing what is needed now or in the next two years.”

The looming moratorium comes roughly a month after Gov. Tim Walz announced he was bringing in a contractor 

to audit 14 Medicaid programs in Minnesota

 the department deemed at high-risk of fraud. The goal: to ensure money is being spent as intended.

Minnesota has struggled the past few years with massive fraud in federally funded programs administered by the state, including Feeding Our Future, an operation prosecutors say stole some $250 million in federal funds meant to feed hungry children. 

Home and Community-Based Services licensing covers a variety of in-home and out-of-home programs for people with disabilities, including community residential settings, commonly referred to as group homes. Similar programs licensed by the Minnesota Department of Health are not affected by the moratorium.

While state officials maintain the two-year ban on new licenses is needed, disability services providers and those who use the programs say they were blindsided by the decision.

“We found out about this right before the general public did, or at the same time the general public found out about it,” said Sue Schettle, who runs the Association of Residential Resources in Minnesota, a trade group.

“This is not a partnership,” Schettle added. “This appears to be decisions being made behind closed doors, without consultation.”

While the licensing ban won’t directly affect people who currently use Home and Community-Based Services, advocates say Minnesotans with disabilities are increasingly concerned that services they rely on could be suspended. 

Zach Johnson uses Integrated Community Supports, a program licensed under the Home and Community-Based Services umbrella. The program was 

“When you compare the money, you have to compare it to what will happen to me if these services don’t exist,” Johnson said. “My cerebral palsy isn’t going anywhere.”

The Department of Human Services says an exception process will be available based on requests from counties, tribal nations and case managers. 

The department also said that during the two-year moratorium, the agency will evaluate whether additional reforms are needed to improve licensing oversight.

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Minnesota Human Services Department officials ordered the moratorium using a new state law and executive order aimed at fighting fraud in state programs. Disability services advocates say they were blindsided by the decision.

Using anti-fraud powers, Minnesota DHS sets 2-year ban on new group home licenses

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