State pauses new adult day care licenses amid fraud concerns
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State officials are pausing the licensing process for another social service program amid concerns about fraud. The Department of Human Services Tuesday said that it will stop accepting new applications for adult day care licenses, but new clients will still be able to enroll in existing programs.
The centers provide social activities and meals for people and are meant to help ease the burden on their primary caregivers.
Temporary Human Services Commissioner Shireen Gandhi said that adult day care capacity in Minnesota has grown 43 percent over the last five years while enrollment through Medicaid rose only seven percent. Gandhi says there’s not enough demand for all of the licensed providers available.
“This result of this imbalance means that the state has an available adult day care setting capacity that exceeds the number of people needing services by nearly 3,000,” said Gandhi.
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Rapid growth can be a red flag for fraud. That kind of spike prompted FBI to investigate Feeding Our Future, the nonprofit that’s at the of the child nutrition program fraud case that’s cost taxpayers hundreds of millions of dollars and led to federal charges against 78 people over the last three years.
The licensing pause for adult day care providers is set to begin Feb. 1 and run through the end of 2028. In addition to the pause on new licenses, DHS will cancel the applications of those already in the queue.
The department is setting up an exception process so facilities can get licensed if there’s a proven need in certain areas. The process will require a county or tribal government to sign off before a prospective provider can submit an application.
Speaking at the news conference Tuesday, DHS Inspector General James Clark said officials will be looking at other evidence of possible fraud beyond enrollment numbers.
“We’re investigating reports that kickbacks are being offered for recipients who switch from one business to another,” said Clark. “Offering kickbacks to drum up business is a sign that there is a provider oversaturation.”
It’s not the first licensing moratorium. Earlier this month, the federal Centers for Medicare and Medicaid Services directed the state to pause enrollment for providers deemed high risk.
MPR News reported that the department already put a two-year hold on group home licenses after spotting suspiciously rapid growth in those programs. Oct. 29 DFL Gov. Tim Walz announced an audit of 14 Medicaid programs at high risk for fraud and said payments deemed suspicious would be halted for 90 days.
Walz’s Republican opponents in the 2026 governor’s race have made fraud a key campaign issue. One of them, GOP State Representative Kristin Robbins, is leading a legislative hearing Wednesday focusing on fraud in programs including adult day care facilities.
This story was updated on Dec. 17, 2025 to clarify that new clients will still be able to enroll in existing adult day care programs while the licensing moratorium is in effect.
