The bills respond to serious gaps revealed since the last session to improve oversight, technology, and accountability.
Today Senate Republicans rolled out several new bills as part of an action plan to stop the fraud that has plagued the state’s support programs. The bills give the legislature stricter oversight of taxpayer’s dollars and the administration of these programs, support the use of technology to streamline delivery and verification of services, and provide better accountability within state government.
“Minnesotans are tired of the fraud. A shuttered housing program where the fraud was so bad, the program couldn’t be saved. Reports of disabled and vulnerable adults being left for hours or days at a time, even when fraudulent providers were billing for a full day’s work. Some of those people passed away and families are left questioning if the care they didn’t receive was why,” Senate Republican Leader Mark Johnson (R- East Grand Forks) said.
“Senate Republicans know we need comprehensive reform of how our social services, including built in accountability measures, new technology to assist with verification and delivery of services, and strict oversight of the taxpayer’s dollars. That’s the action plan to stop the fraud that state needs, and that’s what these bills do,” he concluded.
Stricter legislative oversight
In 2023, Democrats used their control of state government to eliminate the requirement for Senate confirmation of the governor’s appointed commissioners. Previously, commissioners underwent extensive vetting during the confirmation process before receiving Senate approval. Effective in 2027, commissioners would be automatically confirmed if the Senate does not hold a confirmation vote within 60 days.
A bill by Sen. Michael Kreun (R-Blaine) would repeal that change and require a Senate to take a confirmation vote within 60 days; otherwise, the appointee would not be confirmed. “Agencies also need guaranteed stability; that is how we alter course for the better, Kreun said. “DHS has had a ‘temporary’ commissioner for a year. That’s unacceptable if we’re serious about being responsible with Minnesotans’ money. This is a commonsense change to improve transparency and promote accountability where hard-earned taxpayer dollars are concerned.”
The U.S. Attorney’s Office has led much of the fraud investigation in Minnesota. One U.S. attorney pointed to explosive growth in human services programs as a red flag warranting scrutiny. The state’s Housing Stabilization Services program grew more than 200% over two years before it was shut down entirely because it was riddled with fraud.
To increase accountability and oversight, Sen. Jordan Rasmusson (R-Fergus Falls) is proposing legislation aimed at strengthening transparency in human services spending. Under the bill, any service that exceeds its projected spending by 5% would automatically trigger an audit by the Office of Legislative Auditor (OLA). Services that exceed projections by 10% would require additional review and involvement by the Minnesota Legislature. “When services run on autopilot and without oversight, it’s an invitation for mismanagement and fraud,” Sen. Rasmusson said. “My legislation provides transparency, keeps services accountable, and ensures the Legislature can respond when spending surpasses expectations.”
Technology to streamline verification and delivery of services
Sen. Rasmusson has a second bill that would increase electronic verification when a provider visits a client, along with a requirement for the recipient to confirm receipt of services. The measure helps to ensure that clients actually receive the services they are billed for. Media reports have highlighted cases where clients received less care than documented, underscoring the urgent need for stronger oversight.
Legislation drafted by Sen. Steve Drazkowski adds strict verification of eligibility by requiring managed care organizations (MCO) to confirm client eligibility before full reimbursement. The bill would withhold 5% of payment to the MCO until all eligibility checks are complete. Sen. Drazkowski is also pushing again for his “do not pay” list, modeled after a similar federal measure that creates a shared database of individuals and entities ineligible for government payments.
“Year after year, the data all point in the same direction: we are paying out hundreds of millions of dollars for people who do not qualify,” Sen. Drazkowski said. "Over a billion dollars a biennium is being sent out the door. My ‘I’m Not a Robot’ bill puts the responsibility on MCOs to make sure enrollees are alive, live here, and are eligible before we send full payment, and the ‘Do Not Pay’ list will stop government from cutting checks to individuals and entities who have no business receiving taxpayer dollars. This is our fiduciary responsibility, and more importantly, simple common sense.”
While Minnesota’s generous systems have been unusually pilfered by bad actors, other states use simple and accessible software to assist with verification. Sen. Mark Koran (R-North Branch) discussed the need for the state to engage third-party vendors to routinely check providers and recipients for eligibility, as well as to flag suspicious activity.
Accountability in state government
Sen. Koran also proposed a bill to address egregious behavior by state employees who falsified paperwork during an audit. The nonpartisan Office of the Legislative Auditor documented this issue, which was revealed in a hearing earlier this year. At the time of the press conference, no confirmation existed that any employee had been disciplined. Koran’s bill would make falsifying records by a state employee a crime. “It’s hard to believe we would need to tell employees not to falsify records,” Koran said, “but past behavior suggests that this is a problem. Adding criminal penalties tells our workforce that we are serious about holding everyone accountable to stop fraud.”
The Department of Human Services Office of Inspector General previously issued annual reports detailing fraud efforts, including cases under investigation and funds recovered. Those reports stopped in 2018 with no explanation. Since the reports were not required by law, Sen. Glenn Gruenhagen (R-Glencoe) proposed a bill to reinstate that level of accountability and transparency.
“The only reason the agency stopped issuing this report is because Gov. Walz didn’t want the public to know how bad fraud is,” Gruenhagen said. “The public deserves to know our agencies are doing their best to stop fraud, and as legislators, we need to this information to hold them accountable.”
Perhaps the most covered fraud story last year involved investigative reporter Nick Shirley’s shocking video exposing several daycare sites that received millions in taxpayer funding but were closed during posted hours with no visible activity.
Sen. Michael Holmstrom discussed legislation to mandate unannounced in-person visits to every business receiving taxpayer funding through the Department of Human Services or the Department of Children, Youth, and Families. Current regulations require varying degrees of visits, so this bill would simplify and standardize the site visit requirements and process. “The lack of unannounced site visits has let illegitimate providers bill for services they’re barely providing or sometimes never providing,” said Sen. Holmstrom. “We have a duty to protect those tax dollars, but even more importantly, protect the people these providers claim to be helping. Those are the real victims.”
Bill List
Stricter legislative oversight
Kreun: Re-establishing and requiring legislative confirmation of commissioners
Rasmusson: Automatic audits and/or potential pause in social services have a large growth in spending
Technology to streamline verification and delivery of services
Rasmusson: Electronic visit verification and recipient sign off for services provided
Drazkowski: Do not pay list database of people ineligible to receive state payments
Drazkowski: MCO verification of eligibility requirement
Koran: Technology advancements on eligibility and verification
Accountability in state government
Koran: Criminal penalties for falsifying paperwork for audits
Gruenhagen: DHS and DCYF OIG Annual Reporting Requirements
Holmstrom: Mandate unannounced in-person site visit for every DHS and DCYF program