DHS details Office of Inspector General work, new provider checks and licensing changes

Shereen Gandhi, the temporary commissioner of the Minnesota Department of Human Services, and James Clark, the agency's newly appointed inspector general, told a June 24 interim legislative hearing that DHS has expanded front-end vetting, licensing and investigative steps to reduce fraud and protect Medicaid enrollees.

Gandhi said Minnesota Medicaid serves more than 1,000,000 people and that the administration and legislature worked this past session to add program-integrity tools. She described enacted changes that give DHS new authorities to share claims data with state and federal agencies, withhold payments, suspend licensure while investigations proceed and require pre-enrollment provider training.

The department also singled out reforms targeted to specific services. Gandhi said the session created a provisional license for early intensive developmental and behavioral intervention (EIDBI) providers, shortened revalidation cycles for those providers from five years to three, tightened background-study requirements and expanded DHS's ability to investigate maltreatment allegations connected with EIDBI. For the housing stabilization services program, she said the law imposes a 100-hour annual cap per client, limits remote supports to no more than 20% of services and requires pre-enrollment training and increased site visits, including unannounced inspections.

Inspector General James Clark described three core OIG functions: conducting background studies, licensing oversight and provider investigations. Clark said the Background Studies Division carries out roughly a half-million background checks annually to prevent individuals with disqualifying criminal conduct from accessing vulnerable recipients or Medicaid dollars. He said the Licensing Division conducts site visits, reviews records and interviews recipients to ensure programs follow statutes and rules, and that the OIG currently oversees about 300,000 Medicaid providers.

Clark told the committee his office opens investigations when complaints or data analytics identify providers who are actively billing and where the allegations merit a full review. Investigations can include document reviews, on-site visits, interviews and financial record reviews; outcomes range from administrative actions and repayment demands to referrals to prosecutors or federal law enforcement. "The fact that people decide to steal from taxpayer funded programs that are designed to help people in need is reprehensible. Personally, I find it disgusting," Clark said.

Both Clark and Gandhi emphasized the role of data analytics and outside partners. Clark described an in-house analytics team that monitors billing data and said DHS contracts with federal and private contractors, including CMS-mandated contractors (UPIC) and private auditors, to flag billing outliers and conduct provider audits. Gandhi highlighted Minnesota's reliance on managed care organizations, noting the state is about 90% managed care and that MCOs run special investigative units that also detect potential fraud.

Gandhi and Clark described a multi-step complaint intake process: intake staff screen tips, request clarification when needed, run preliminary checks to see if a provider is actively billing, and escalate to a full investigation when appropriate. Clark said OIG currently has nearly 1,000 open provider investigations but that not all investigations allege criminal fraud; many reflect administrative errors or documentation issues.

Gandhi acknowledged the office recently implemented a pre-enrollment risk-assessment process (PERA) effective July 1 and now requires additional documentation from providers, including proof of surety bonds in some cases. She said DHS has added staff to handle increased eligibility and compliance checks, increasing capacity for on-site screenings and background studies.

The witnesses said the OIG collaborates closely with DHS policy teams to translate investigative findings into statutory and administrative changes intended to strengthen compliance and enforcement.

Gandhi and Clark were asked repeatedly about staffing and recovery rates. Clark said roughly 30 investigators handle provider investigations; Gandhi said DHS handles many administrative recoveries and can suspend payments during investigations. Both officials said they would provide committee members with more detailed staffing and recovery figures after the hearing.

Ending: Clark and Gandhi said DHS plans to continue expanding risk-based vetting, data analytics and interagency referrals to hold bad actors accountable while preserving access to benefits for eligible Minnesotans.