Healthcare providers in Minnesota owe DHS over USD 40M

Health care providers in Minnesota owe the Department of Human Services more than $40 million — but the agency has only made sporadic efforts to collect the debt over the past 10 years, according to a report released Tuesday by the Office of the Legislative Auditor.

The auditors “conservatively estimated” that DHS made $40 million in overpayments to health care providers — many of them nursing homes — and found that DHS staff didn’t realize they were responsible for collecting the outstanding debt.

DHS Commissioner Jodi Harpstead wrote in response to the audit that most of the debt is from organizations no longer doing business, and that the agency’s contractor in charge of recovering the debt has only brought in around $200,000 since 2018, providing a low rate of return for taxpayers.

DHS administers federal and state health care programs, including Medical Assistance, which is Minnesota’s Medicaid program. When a Medical Assistance recipient seeks care, their provider delivers services, then files a claim for reimbursement with DHS.

Sometimes, after the claim has been filed, the provider or DHS adjusts the claim — for example, after discovering a billing error, or to retroactively apply a change in reimbursement rates. Those after-the-fact adjustments can mean the provider owes DHS money — but the agency failed to notify the providers of the outstanding debt, the auditors found.

The last time DHS staff sent a letter requesting payment of a Medical Assistance debt was in 2019, when it sent a collection notice to one provider, according to the audit. The last time the agency documented sending out collection letters in bulk was in February 2015.

Harpstead disputed some of the audit’s findings. The department routinely recovers overpayments from providers as part of its standard claims processing procedure, she wrote.

She said the agency had already started recovering the subset of debt identified by the auditors.

In a letter attached to the top of the report, Legislative Auditor Judy Randall noted that those efforts began only after the auditors started their investigation. Minnesota Reformer