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Report: Minnesota agency overpaid 2 tribes more than $25M

August 1, 2019

ST. PAUL, Minn. (AP) — The Minnesota Department of Human Services overpaid two American Indian tribes more than $25 million for substance abuse treatments covered by Medicaid, bringing more scrutiny to the embattled agency, a newspaper reported Thursday.

The St. Paul Pioneer Press reported department officials learned this spring they had overpaid the Leech Lake Band of Ojibwe and the White Earth Nation by $25.3 million, according to internal memos obtained by the newspaper.

The social services agency, which has a budget of nearly $18 billion and serves 1.2 million people, reimbursed the tribes for in-person visits with health care providers when the patients actually were taking the medication at home.

The $25.3 million in overpayments is a preliminary estimate. The internal state memo does not explain how it happened. Medicaid payments to tribal providers are fully funded by the federal government, with the state agency acting as an intermediary.

Acting Human Services Commissioner Pam Wheelock said in a statement Thursday her department is trying to determine how the overpayments happened “and how to prevent them from happening again.”

Democratic Gov. Tim Walz said the overpayments occurred over the past five years, before he took office in January, and that the payment structure was corrected in May.

“We are now taking a deeper dive to figure out the root of this issue and help ensure nothing like it happens again,” Walz said in a statement.

But the two tribes either disputed the alleged overpayments or said the state shares blame.

The Leech Lake band said it “steadfastly refutes these allegations that it was overpaid” about $13 million and asserts that all billing it submitted to Human Services was done in accordance with the band’s billing agreement.

“If the technical assistance DHS provided to us regarding our billing practices was incorrect, we hope and trust they will step up to the plate and admit that this is their error, not Leech Lake’s. We will not accept responsibility or admit to culpability where we were not in the wrong,” Leech Lake chairman Faron Jackson said in a statement.

White Earth vice chairman Eugene “Umsy” Tibbetts said in a statement to the St. Paul Pioneer Press that his tribe will honor the state’s claim for $11 million in overbilled funds “so long as it is proven.” But Tibbetts says the state shares responsibility.

“Because DHS and the State were the architects of the billing structure that is being recalled, and specific Tribal employees that designed the billing for the Tribe have since resigned amid the audits the Tribe authorized in 2018 and 2019, the situation calls for shared responsibility,” Tibbetts said.

Legislative Auditor James Nobles said he is launching an investigation into the overpayments.

“This is serious,” Nobles told the Minneapolis Star Tribune. Nobles’ office is an independent, nonpartisan arm of the state Legislature.

The Human Services Department has been hit by turmoil, with Commissioner Tony Lourey and his chief of staff abruptly resigning last month. Two veteran deputy commissioners also resigned but rescinded their decision.

Minnesota Republicans criticized the overpayments and renewed their call for reorganizing the Human Services Department.

“This is an agency that seems to have a blatant disregard for taxpayer dollars, and is simply not doing enough to stop activity that is costing taxpayers tens of millions each year,” said Republican Rep. Nick Zerwas of Elk River.

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