Minn. DHS suspends payments to 115 providers, seeks CMS termination of housing-stabilization Medicaid benefit amid fraud probes

The Minnesota Department of Human Services has suspended payments to 115 providers, has 120 open investigations into its housing stabilization services (HSS) program and has asked the Centers for Medicare & Medicaid Services to terminate the Medicaid HSS benefit, temporary DHS Commissioner Shereen Gandhi told the House State Agency and Fraud Oversight Committee in an oversight hearing.

Gandhi and Inspector General James Clark described a pattern of coordinated and increasingly sophisticated fraud across parts of the state’s Medicaid home- and community‑based services, including both housing stabilization services and integrated community supports (ICS). "Payments will be shut off immediately at the first signs of fraud," Inspector General James Clark said. "All credible allegations of fraud will be referred to law enforcement."

Why it matters: DHS officials and public testifiers said the schemes have affected people trying to get housing and other supports, and that fraud has diverted taxpayer dollars from people with disabilities and Minnesotans experiencing homelessness. Agency leaders said they have moved to stop payments faster, expand data analytics and pursue both administrative and criminal referrals, while warning there are tradeoffs between rapid payment suspension and protecting criminal investigations.

What DHS reported

Shereen Gandhi, identified herself as the temporary commissioner of the Minnesota Department of Human Services and said DHS is treating fraud as a top priority. She told the committee HSS is a Medicaid service distinct from state‑funded rent assistance and estimated the program serves roughly 21,000 individuals with about 1,800 enrolled providers. For ICS, she said there are about 260 ICS providers, 487 approved ICS settings and roughly 2,800 ICS units.

Gandhi said DHS designated HSS and the…