Why DHS is going after the counties

DHS wants the money from counties because the federal government—after determining DHS wrongfully spent federal assistance monies—wants their money back. 

via Adobe Stock

Minnesota’s Department of Human Services (DHS) is seeking $9 million from counties due to overpayments or improper payments made by DHS. DHS wants the money from counties because the federal government—after determining DHS wrongfully spent federal assistance monies—wants their money back. 

But the Association of Minnesota Counties is advising counties to tell DHS to back off. The latest county to do just that is Clay County. The Clay County Commission voted unanimously to tell the state that the county was not going to pay the roughly $118,000 that DHS was demanding.

The problem stems from DHS using federal Medicaid funds to pay for substance abuse treatments when the law stipulates that the general Medicaid funds cannot be used for this purpose. Beltrami and St. Louis counties, which DHS says owe a combined $700,000, also do not intend on paying.

Overall, DHS has made about $75 million in wrongful billings over the last few years, and is on the hook to the feds for all of it.

One problem is that because of the Affordable Care Act, states are being asked to do much more—to cover able-bodied and childless adults with Medicaid. And the funding formula from the federal government provides states with unhelpful incentives, one of which is to be less careful about the Medicaid-expansion money, because so little of it comes out of the state’s pocket.

But the Trump administration is auditing the books, and making sure states are complying with the law. That’s one reason why Minnesota is in the trouble that it is in.

The counties come in the mix because Minnesota is one of only a handful of states where welfare and other assistance programs are administered by the counties, and only supervised by the state. Generally, the federal government provides grants for these programs to states, and the states supplement the funding for the programs as they see fit. Sometimes the states have the counties be at the front line, running the program, but often states administer the entirety of the program.

The other problem is that it is likely the former administration of Democrat Mark Dayton was highly complacent about the problems at DHS. The new administration of Democrat Governor Tim Walz may be marginally more competent, but it is unwilling to do a full house-cleaning at DHS because doing so would implicate fellow Democrats, and damage the DFL brand in Minnesota.