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Minn. audit faults Human Services Dept.

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Legislative Auditor
Legislative Auditor James Nobles appears in a file photo. An audit released Tuesday shows Minnesota's Department of Human Services has not been adequately verifying the eligibility of participants in some of its public assistance programs.
MPR photo/Tom Weber

An audit released Tuesday shows Minnesota's Department of Human Services has not been adequately verifying the eligibility of participants in some of its public assistance programs.

Such verifications are a requirement of state and federal law, and the Legislative Auditor says his office first alerted the department to some of the problems more than a decade ago.

The state requires anyone who applies for medical, cash, or food benefits to provide social security numbers and report income. Those government programs are limited to recipients with lower incomes. In addition, federal regulations require DHS to verify that information is accurate and have a process for cross-checking social security numbers and income.

The Legislative Auditor's report finds DHS did not adequately verify that information provided by participants in its MinnesotaCare insurance program. The auditor also found DHS did not adequately monitor how county workers resolved discrepancies when income amounts reported by participants did not match government data in other programs such as Medical Assistance; Temporary Assistance for Needy Families, and Supplemental Nutrition Assistance programs.

"The concern I guess could be summed up in two words: errors and fraud," said Legislative Auditor James Nobles.

Nobles said with poor verification comes errors, even those that are unintended. DHS could have deemed people eligible for government programs who were not eligible, and denied coverage to those who were eligible. In addition, he said lack of adequate verification invites cheating.

"If it is widely known that the department does not verify income, you really open the door to fraud and that's a very serious concern," Nobles said.

"The concern I guess could be summed up in two words: errors and fraud."

During fiscal year 2012, the state paid more than $290 million in medical benefits on behalf about 129,000 participants; the federal government share was about $234 million.  By 2016, the Dayton administration expects federal funds will cover nearly 95 percent of MinnesotaCare's cost. The auditor's report looked at fiscal years 2012 and through February 2013.

In a letter to Nobles, DHS Commissioner Lucinda Jesson said the department agrees with and supports the report's findings.

The chief financial officer for DHS, Chuck Johnson, called the problems outlined in the auditor's report "a couple of weaknesses" in the way DHS verifies who's eligible for some of its programs. Johnson said DHS does verify income for MinnesotaCare using other methods.

"The income eligibility verification system is just one verification tool that we have.  We also have cross matches with the quarterly wage information. We get tax information from participants that we use to verify their income," Johnson said. "So it isn't a complete lack of verification in MinnesotaCare."

But according to the auditor's report, state statute requires the department to use electronic file matches as the primary method of verifying eligibility.  

The verification problem for MinnesotaCare has existed for more than a decade.  The auditor's report says in 2003, when first alerted to it, DHS said it was developing a Web-based computer system called HealthMatch as a solution.  Plagued by delays, missteps and after spending about $40 million, the department abandoned the project in 2008.

Now, DHS is hoping that the new IT platform it is building as a part of the federal health care law will help. Just last week, Dayton signed into law Minnesota's new online marketplace -- MNSURE -- where more than a million Minnesotans are expected to obtain health care coverage, including government health programs such as MinnesotaCare. 

House Majority Leader Erin Murphy,DFL-St Paul, said she is disappointed that there are problems again over the state's ability to verify income for public programs such as MinnesotaCare.   She said building MNSURE will give the state the opportunity to modernize what she calls the backroom technology that needs to happen.

"And so while I think it is the right answer, it would be simple to say it's a quick fix," Murphy said.

She said the work the state has to do between now and October with MNSURE is challenging. The Legislative Auditor's report did not look into whether errors or fraud resulted from the lack of income verification.  But Nobles said his office may go back and do that. He says his office felt urgency to get the problem in front of legislators and DHS so the problem will be addressed.

Read the legislative auditor's report online.