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Gov. Tim Walz brought aboard a third-party entity Wednesday to audit Medicaid programs to make sure money is being spent as intended. 

Payments will be paused for up to 90 days to assess for suspicious billing activity.

The Walz administration has been on defense over reports of fraud in state programs after multiple reports that providers billed for housing stabilization and autism services that weren’t delivered. Investigations and prosecutions are pending. 

The DFL governor said the Department of Human Services will work with 

 to analyze claims in 14 high-risk programs. The goal is to flag possible problems, pause suspect payments and head off snowballing fraud.

“We cannot effectively deliver programs and services if they don’t have the backing of the public’s trust. In order to restore that trust, we are pumping the brakes on 14 programs that were created to help the most disadvantaged among us yet have become the target of criminal activity,” Walz said in a written statement. “If you attempt to defraud our public programs and steal taxpayer dollars out from under the people who need them most — you will be stopped, and you will be held accountable.”

The programs at issue were designated for additional review because there has been evidence of misuse or they are deemed vulnerable. They will also be subject to enhanced fingerprint background studies for service providers, initial screening visits and unannounced site visits.

According to the agency, the pauses will occur when bills raise suspicion. "A payment will only be paused for up to 90 days if an anomaly is detected and needs to be reviewed further," a spokesperson for DHS said. "If the review determines the bill is fraudulent, it will not be paid." 

According to the governor’s office, the programs involved are: 

The state has taken steps to terminate the Housing Stabilization Services program.

One umbrella group for disability service providers, the Association of Residential Resources in Minnesota, said it agrees with the purpose behind the move to stop fraud but has concerns about the action destabilizing legitimate organizations helping vulnerable populations.

ARRM chief executive officer Sue Schettle warned that “pausing payments to legitimate providers for up to 90 days is not an accountability measure, it’s an existential threat to the care infrastructure that keeps Minnesotans with disabilities safe, housed, and supported in their community.”

The group said there wasn’t adequate communication with providers by the Department of Human Services or the governor’s office prior to the announcement. It urged steps to rapidly review files of providers “with clean billing histories” and better communication about how claims will be fulfilled.

“An up to 90-day payment freeze could push some to the breaking point,” Schettle said in a written statement. “We need solutions that protect both fiscal integrity and human dignity.”

Minnesota Republicans and some independent watchdogs have said the state has been too lax in combatting fraud. New laws gave state agencies more authority to pause payments.

“It is shocking to learn that the Walz administration has only now identified 14 programs as high risk for Medicaid fraud,” Republican House Speaker Lisa Demuth and Caucus Leader Harry Niska said in a news release. “Minnesotans have watched scandal after scandal unfold under Gov. Walz, but the fact that there are more than a dozen programs under suspicion proves that Walz’s fraud crisis is far worse, and far more widespread, than anyone was led to believe by the administration.”

Republican and Democratic legislative leaders called for the passage of a bill creating a new Office of the Inspector General to help curb misuse of state programs.

Democratic Senate Majority Leader Erin Murphy, of St. Paul, said the audits are a positive step.

“Fraud schemes are more sophisticated and organized than ever, and the third-party audit announced today will provide enhanced tools for Minnesota to tackle fraud,” Murphy said.

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With fraud at the forefront, the Walz administration will use a third-party entity to examine Medicaid billing in high-risk programs to spot problems before they snowball.

Federal charges filed in minnesota housing stabilization fraud case

Minnesota brings in third-party group to audit high-risk Medicaid program billings

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