Governor’s anti‑fraud package centralizes investigations, proposes new theft statute and pilot use of AI to flag Medicaid anomalies

State officials described a broad anti‑fraud package to the Senate Committee on State and Local Government on Feb. 18 that would centralize criminal investigations of financial crimes, expand administrative and criminal tools to stop alleged fraud, and pilot new data‑analysis technology for earlier detection.

“Fraud against these public programs is unacceptable. It is not a victimless crime and it harms the same people we're trying to help with these services,” Minnesota Management and Budget Commissioner Erin Campbell said in the committee hearing introducing the package.

The plan would: consolidate the Department of Commerce Fraud Bureau into a new Financial Crimes and Fraud section at the Minnesota Bureau of Criminal Apprehension (BCA); add investigative and prosecutorial capacity to pursue Medicaid and other program fraud; create a new theft‑of‑public‑funds criminal statute with stiffer penalties (the presentation said penalties would be increased by about 20% in the top dollar categories); and expand administrative authorities for agencies to stop payments, debar entities from state contracts and suspend grantees or potential grantees.

BCA Superintendent Drew Evans summarized the criminal enforcement changes, saying the reorganization “aligns all of the resources for criminal investigations of state program fraud and then those other areas that I referenced together into 1 singular unit to maximize our resources and have an immediate impact.” The BCA told the committee the budget would support one forensic accountant to assist complex financial investigations and funding to contract two assistant attorney generals to provide prosecutorial support and feedback to agencies.

Department of Human Services Commissioner Shereen Gandhi told the committee DHS already refers the majority of fraud prosecutions to law enforcement and that the department’s Office of Inspector General conducts thousands of investigations a year. Gandhi said DHS recovers about $18,000,000 per year on average and that existing program‑integrity work yields roughly $1.89 in return for every dollar spent. The DHS proposals include expanding authority for data‑sharing and earlier action when providers are under investigation, provisional licensure for Early Intensive Developmental and Behavioral Intervention (EIDBI) providers to increase oversight, and funding for pre‑payment reviews of selected claims. Gandhi said those pre‑payment reviews would let DHS intervene before a claim is paid.

Minnesota IT Services Commissioner Tarek Tomes described a technology pilot to use artificial intelligence and machine‑learning tools to flag anomalous Medicaid billing in near real time. Tomes said the pilot would be a first step toward a proactive, enterprise‑level capability to detect suspicious activity, while retaining humans in the loop to review flagged items.

The Department of Education requested additional investigators and legal staff for its Office of Inspector General and proposed clearer charter‑school procurement and reporting requirements, including annual audits and online publication of meeting minutes.

The Department of Administration asked the committee to broaden debarment authority to cover potential grantees, enabling the Office of Grants Management to bar entities with disqualifying convictions or conduct from receiving grants even if they had not previously been state grantees.

No formal votes were recorded in the transcript. The agencies said draft bill language would be circulated and that the executive branch presenters would return for subsequent hearings.

Ending: Officials described the package as a cross‑agency effort to protect public funds and said some elements — such as the BCA reorganization — have already been implemented administratively pending legislative action on statutory changes.