Minnesota counties resist costly payments for Department of Human Services errors

Several Minnesota counties are challenging the Minnesota Department of Human Services (DHS) on its request that they repay nearly $9 million in payments the state made in error.

The list includes Hennepin, St. Louis and Dakota counties, three of the state's largest.

"We do not believe that we should pay this," said Jennifer DeCubellis, who as deputy administrator for health and human services at Hennepin County is expecting a $2.2 million bill. "I don't have that money lying around," she said, especially because next year's budget has been finalized. "If I pay it, I am going to have to shut down other services."

In a letter this week, the DHS said invoices will be sent to each county next month for their share of chemical dependency treatment services that were provided over the last five years. The agency erred when it used federal Medicaid matching funds to pay for the care at some facilities that do not qualify under federal law.

But the treatment providers did qualify for state and county reimbursement, so now the DHS is asking counties to pay for care that they did not know they were on the hook for at the time.

"It may be that they are cleaning things up, but the result is that they are really hammering the counties," said St. Louis County Commissioner Frank Jewell. "This is a mistake that you made; it is not a mistake that we made."

The DHS has known about the problem for several years and told the Legislature in February that the state needed to repay $48 million to the federal government. Even then, the DHS continued to bill the federal government after February, driving up the amount owed by the state to $61 million.

Counties didn't learn they would be held responsible until about two weeks ago. The DHS first notified the Legislature about the problem in 2016.

Stacy Twite, interim assistant commissioner at DHS, said the agency will work with counties to avoid financial hardships. "We want to work collaboratively with counties so they do not affect services," Twite said. "Our interpretation of law is that we have an obligation to collect the county share."

Twite added that technical problems made it hard to stop improperly billing the federal government.

Paul Fleissner, deputy county administrator with Olmsted County, said his board is seeking more information from the DHS before it will pay. The county received notice last month that it owes $362,000, he said; but the DHS provided no explanation for the amount or whether the bill accurately reflects services provided in the county, he said.

Other counties, Fleissner said, have expressed similar concerns about the validity of the DHS numbers, particularly in light of other financial missteps at the agency.

"I don't think counties will get their checkbooks out immediately just because they got a bill in the mail from the DHS," Fleissner said. "We're not sure we should be expected to make a payback when we haven't seen a clear accounting."

Fleissner also said counties feel they have to band together because individually they have "little leverage" with the state. In the past, the DHS has withheld payments for other programs when it has been unable to collect. "I think counties are pushing back so that the DHS gets the message that we have to be treated as true, authentic partners," he said. "They can't just dump their problems on us."

Twite said counties will receive more details later this month that will explain how DHS calculated the amounts.

Dakota County's bill is nearly $424,000 — an amount that county officials do not appear to be in a hurry to repay. "We don't know how the DHS calculated the figure and we are aligning with other counties," said a spokeswoman.

Anoka County, which owes $442,000, is not planning to pay at this point.

State Sen. Jim Abeler, an Anoka Republican and authority on state health finance, also said it's unfair to ask the counties to pay. "When government makes a mistake, government should not ask others to pay for the mistake," Abeler said.

Matt Freeman, executive director of the Minnesota Association of County Social Services Administrators, said counties and the DHS need to work toward a legislative solution that will avoid deep cuts to services. "Counties don't have this money lying around, so creating a remedy will require a partnership with the state," Freeman said.

St. Louis County will be hit with an outsize bill. It is the state's sixth-largest county in population, but will be asked to pay $693,000, the second-highest amount.

"St. Louis County is disproportionally impacted by this cost share due to the severity of substance use disorder needs in our county and the community resources available," said County Administrator Kevin Gray in a letter to the DHS this week.

In Minnesota's decentralized health and social services system, counties provide the front-line services for programs such as cash assistance, Medicaid and food stamps. County officials said relations with the DHS are worsening.

"What is going on at the moment is unique in my experience," said Jewell, a St. Louis County Board member since 2011. "There's nothing remotely like this that I can remember."

Some are also concerned that there are more shoes to drop with financial impacts to counties.

"I am not convinced that we are done seeing what might be out there," said DeCubellis.

Glenn Howatt • 612-673-7192 Chris Serres • 612-673-4308