Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tribal Imd Funding Error topic
No spam. Unsubscribe anytime.
DHS corrects decade‑long funding error for seven tribal residential SUD providers; forecast adds $113M state charge
Summary
DHS told the House committee that seven tribal residential substance‑use disorder providers had been reimbursed with federal funds since 2015 despite being institutions for mental disease (IMDs) and therefore ineligible for federal reimbursement; the February forecast shifts $113 million to state funds to correct the error.
Department of Human Services officials told the House Human Services Finance and Policy Committee that a decade‑long funding error led to federal funds being used to reimburse services provided by seven tribal residential substance‑use disorder (SUD) providers that DHS now classifies as institutions for mental disease (IMDs), which are not eligible for federal reimbursement in most cases.
DHS staff said the issue was discovered in December 2024 and that the providers — all operated by tribal governments — had been submitting legitimate claims that were paid at the correct encounter rates. The department said the mistake was an internal classification and funding‑source error, not a dispute about the services themselves.
Greenman told the committee the February forecast reflects a $113 million state expenditure from the behavioral health fund and a corresponding reduction in federal spending for fiscal 2025 to retroactively correct the source of funding for those providers going back to 2015. DHS also projected additional state spending to cover these providers going forward until enrolment decisions are made: roughly $12 million in fiscal 2025 and $19 million in 2026–27.
Greenman added that the department immediately notified the legislative auditor, the Centers for Medicare & Medicaid Services and the Minnesota Management and Budget office and has been meeting with tribal leadership to explain the situation and discuss next steps. He said tribal IMDs may voluntarily enroll in a federal SUD waiver; for forecasting purposes DHS assumed tribal providers would enroll within roughly two and a half years, but told lawmakers it would adjust the forecast if tribes choose not to enroll.
DHS described process changes and financial controls it is instituting to reduce the risk of similar classification errors. Greenman called the error “a pretty significant error” and told the committee, “This is what keeps me up at night,” while stressing staff had acted quickly after discovery.
Committee members asked about county fiscal impacts. DHS said statute excludes a county share for state‑funded SUD services provided by tribal providers; the department said it has communicated with counties about the correction.
DHS said it will continue tribal outreach and offered support should tribes decide to enroll in the SUD waiver. The agency also told the committee it would provide additional information on the cause and the corrective controls it plans to implement.
