As fraud remains in focus in the Minnesota Legislature, the House on Monday unanimously approved a bill to repeal from state law a problematic program that prosecutors said was the target of a massive fraud scheme.
Federal regulators at the Centers for Medicare and Medicaid Services terminated Minnesota’s Housing Stabilization Services program last October after an investigation found it was “riddled with fraud.” That led to several criminal indictments of accused fraudsters, including two Philadelphia men who pleaded guilty to starting businesses in the state and enrolling in the program because it seemed like a “good opportunity to make money.”
When HSS launched in 2020, the estimated cost was about $2.5 million a year. But by 2024, it ballooned to over $100 million. The Medicaid program was intended to help seniors, people with disabilities, and those with substance use disorder find and maintain housing.
The proposal that advanced out of the Minnesota House would formalize the end of the HSS Medicaid benefit.
“We are attempting to have this program removed from statute so that when it’s time for this program to come back, it can be done so with the Legislature as the driving force behind that,” said Rep. Joe Schomacker, the Republican co-chair of the chamber’s human services committee.
The measure still needs to clear the Senate, where lawmakers are advancing a similar bill.
Republicans and Democrats at the Capitol alike say fraud prevention is a top priority this year in the wake of scandals like the one that plagued housing stabilization services, so this is just one bill related to this topic this session.
Gov. Tim Walz last week pitched an overhaul of the Minnesota Department of Human Services, which is the state agency that oversees Medicaid programs.
