Minnesota lawmakers, governor vow action next session in wake of allegations of Medicaid fraud at autism centers
ST. PAUL, Minn. — Fighting fraud in state programs will likely take center stage at the state capitol next year, after federal investigators accused two autism centers of swindling state Medicaid money and raided their offices on Thursday.
Soon after the FBI executed those search warrants, DFL Gov. Tim Walz told the Minnesota told the Minnesota Star Tribune in an interview that there should be boosted penalties for those crimes. He promised a "pretty significant package" of fraud prevention measures.
A spokesperson for his office said he'll unveil details of the plan before the legislative session begins January 14.
The federal investigation into the autism centers stemmed from the probe into the $240 million Feeding Our Future scandal, a scheme to defraud a federal nutrition program, according to a federal search warrant. At least a dozen of the defendants charged for their role in that case "received money from, or were associated with autism clinics and other health care companies that received state funds" for providing services to support children with autism, the warrant said.
Medicaid reimbursement claims for those services ballooned from $1.7 million in 2017 to $52 million in 2019 and then $400 million total in 2023 and 2024.
House Republicans, who at this point will share equal power with Democrats in a tied chamber, want the state to block payments to providers linked to known or potential fraud in other programs. GOP Speaker-designate Lisa Demuth said her caucus will push for answers and accountability next year when they co-chair committees.
She highlighted the nonpartisan Office of Legislative Auditor's work (OLA) reviewing several agencies and state programs, which has found a pattern of insufficient oversight to safeguarding taxpayer money—from Feeding Our Future to one-time pandemic "hero pay" to first responders.
"OLA makes recommendations. We need to hear from the agencies whether or not they were following those recommendations, and if they're doing anything to combat fraud. We cannot afford more fraud in the state," Demuth said.
Lawmakers will return for the 2025 session on January 14. They must pass the next two-year budget amid projections of a looming $5.1 billion deficit.
The Legislature approved a new inspector general at the Department of Education following the Feeding our Future scandal. A proposal likely put forward next year would do something similar across state agencies: Sen. Heather Gustafson, DFL-Vadnais Heights, wants to create an independent Office of Inspector General to crack down on fraud and ensure good stewardship of taxpayer money.
Demuth said Minnesota does not need to add another department to curtail the problem and believes agencies should be held accountable for fraud under their watch.
"There should be bipartisan support to stopping the fraud in Minnesota, and it doesn't include growing government," she said.
In 2023, lawmakers directed the Department of Human Services to review the autism programs which are now at the center of the federal investigation and make recommendations for regulatory changes. That report is still forthcoming.
Sen. John Hoffman, DFL-Champlin, who chairs the Senate Human Services committee, in a statement highlighted that provision and promised additional steps.
"Stealing from our most vulnerable is inexcusable and illegal, and the people who committed this fraud must be punished to the fullest extent of the law. We must explore how the state can prevent this fraud in the future and catch and punish bad actors," he said.
