DHS says provider under investigation; preparing contingency if NuWay closes

The Minnesota Department of Human Services told the Senate Human Services Committee on March 5 that it is preparing for a potential service disruption by NuWay, a large substance use disorder (SUD) treatment provider, after the agency issued a payment withhold more than a year ago and the Minnesota attorney general filed court documents alleging billing and documentation problems.

For the record, Christy Grom, a Department of Human Services representative, told the committee that some details are confidential under the Minnesota Government Data Practices Act and that DHS “can’t confirm definitely that there is an investigation ongoing regarding NuWay.” She said the agency has issued a payment withhold for the provider and extended the implementation deadline several times over the past year in an effort to avoid service disruptions.

Grom said the attorney general’s Feb. 15 court filing cites “credible allegations of fraud,” and lists those allegations as billing for services not provided, inducement of services through purported legal kickbacks, failure to return overpayments, submission of claims for which NuWay was not entitled to reimbursement, and failures of required documentation. “Substance use disorder treatment is a critical need in the state,” Grom told the committee, and DHS has been working with counties and other state offices to coordinate a response if NuWay were to close.

Why it matters: NuWay provides services in both rural and metropolitan parts of Minnesota and, according to DHS, “still does have an active license” and is serving about 715 individuals. A closure could affect clients’ access to treatment and associated housing.

What DHS has done and plans to do: Grom said DHS has maintained a complex project team for contingency planning that includes staff from housing, behavioral health, licensing and the Office of Inspector General. The agency held individual meetings in February with counties that host NuWay programs — Ramsey, Hennepin, Blue Earth, Stearns, Anoka and St. Louis — and plans to convene housing and SUD providers in the coming week to share information and coordinate transitions if needed. She noted that some program staff, such as corrections case managers, can help clients transition more quickly to other services.

Grom also outlined policy proposals DHS is pursuing in the 2025 legislative session related to recovery housing and billing: prohibiting duplicative billing (an issue cited in court filings), expanding access to certified recovery housing regardless of treatment status, changing billable units for outpatient services from 1 hour to 15 minutes to increase transparency and customization, and requiring certification for recovery residences that use public dollars.

Committee questions and agency follow‑up: Senators pressed DHS on whether it has authority to recover overpayments. Senator Aki asked whether DHS can “claw back” payments, and Grom replied that DHS does have monetary recovery authority for Medicaid funds through a monetary recovery statute, but said she would follow up with specifics and, if necessary, refer members to court documents for particulars. Chair Hoffman and others asked DHS to report back with more detail on recovery options and contingency planning.

Current status: As of the committee hearing, DHS said NuWay had not provided the statutorily required 25 days’ notice that would be triggered by an actual closure, and the provider remained licensed and operating. DHS emphasized the work to avoid service disruption but stopped short of confirming an active closure.

Next steps: DHS will continue coordination with counties and providers and expects to convene housing and SUD providers. The committee requested additional information from DHS about recovery options and the legal/financial tools the agency can use to recover funds or manage transitions if services end.