Leech Lake Band says Minnesota officials approved millions of dollars in wrongful Medicaid payments

Rejecting charges that it overbilled the state for addiction treatment programs, a Minnesota Indian band said Wednesday that the state's largest agency condoned a now-prohibited billing practice that led to tens of millions of dollars in unnecessary Medicaid payments.

In a letter Wednesday, the Leech Lake Band of Ojibwe said it has documents showing that officials at the Minnesota Department of Human Services (DHS) expressly permitted the band to bill the state's Medicaid insurance program a rate for in-clinic treatment, even though the patients were allowed to administer the anti-addiction medications at home.

DHS alleges that the unorthodox billing practice led Leech Lake and another Indian band, White Earth Nation, to overbill the Medicaid program by approximately $25 million. The Leech Lake Band's share of the alleged overpayments is $13.3 million, DHS claims.

"Based on initial review of our documentation, it is clear that DHS provided direct guidance to the Band that states our treatment program is allowed to bill" at the higher rate, according to a letter from Faron Jackson Sr., chairman of the Leech Lake Band, to acting Human Services Commissioner Pamela Wheelock.

The billing dispute has created a rift between Minnesota's tribal governments and the administration of Gov. Tim Walz, while fueling fears of painful cuts on the Leech Lake and White Earth reservations, which had used the Medicaid payments to subsidize a range of social programs designed to prevent addiction. The dispute has also become an embarrassment for DHS, which is reeling from recent disarray in its leadership ranks. Legislative Auditor James Nobles has launched an investigation.

In a written statement, Wheelock said the issue of the overpayments warrants further exploration, which is why the agency requested that Nobles investigate. "There is much more to learn about what contributed to this situation," she said.

At issue is whether the bands must repay the state for payments the bands say the agency approved for treating opioid dependency. For years, the bands were allowed to bill the state for Suboxone, a medication that can ease withdrawal symptoms and suppress cravings, without a face-to-face visit with a medical professional. The Leech Lake Band said that, at multiple points, the band sought guidance from DHS and was assured that the higher rate was allowable.

In a 2017 e-mail exchange, for instance, an employee with the band's Opioid Treatment Program asked DHS if it was permitted to bill Medicaid for a month's worth of Suboxone at the higher rate, even though the patient would take the medication at home. The DHS representative said, "the short answer is yes," according to e-mails uncovered by the band.

Jackson argued DHS lacks the authority to seek repayment. "We simply will not pay because we are not at fault," he wrote.

Medicaid payments for opioid treatment were a substantial source of revenue for the Leech Lake Band, one of the state's poorest, with 9,500 members. Band officials said a number of programs have been affected by the change in billing practices, which took effect in May, including a homeless shelter, a program for elders and recreation programs for reservation youth.

In a statement last week, White Earth Nation also alleged that state officials were involved in designing its billing arrangements.

Chris Serres • 612-673-4308 Twitter: @chrisserres