I’ve talked about the nonmedical social determinants of health in the past. That is a fancy way of saying some conditions lend themselves to better health, while some contribute to worsening health. Being homeless is not terribly conducive to good health and the stress of being housing strained can detrimentally worsen mental health. Numerous states are diverting Medicaid funding to housing assistance. The following is what I wrote last year:
At last count nearly 40% of states – 19 so far – are diverting funds from Medicaid into housing assistance. The Biden Administration is encouraging others to follow. Including those in the pipeline, nearly half of states are experimenting with using Medicaid funds for housing assistance to some degree.
There is little agreement – perhaps the word delusions is a better description – about whether this will provide a long-term fix, or even a temporary one. Is housing synonymous with health care? Does housing even directly affect health status? If Medicaid is to remain a health entitlement for the poor these are important questions.
Minnesota was the first state to seek approval for using some Medicaid funds for housing. The program is called Housing Stabilization Services (HSS). Minnesota has a long history of maximizing federal funding for Medicaid and growing the program as large as possible. Starting in 2020, HSS had an anticipated budget of $2.5 million. By 2021 the cost was nearly 10 times the original budget. Four years later it is costing Minnesota (and federal) taxpayers $104 million. The reason for the growth in spending is not homelessness; it is massive fraud.
“Since Minnesota became the first state to offer Medicaid coverage for Housing Stabilization Services, dozens of new companies have been created and enrolled in the program,” the search warrant reads. “These companies, and the individuals that run them have taken advantage of the housing crisis and the drug addiction crisis in Minnesota to prey on individuals who need help getting on their feet as they recover from drug addiction.”
This is not the first time Minnesota welfare has encountered fraud on a massive scale.
Some say the case parallels problems the state has seen before, including the Feeding Our Future scheme, which federal prosecutors called the biggest pandemic-era fraud in the country, and a new investigation into Medicaid fraud at Minnesota autism centers.
The Minnesota Department of Human Service (DHS) has asked the US Department of Health and Human Services for permission to pull the plug on the program. Indeed, the legislature in Minnesota had to pass a law authorizing DHS to freeze payments to 50 HSS providers. Perhaps that is the problem. The department that administers housing assistance is not even allowed to police it without asking permission. The state is now moving to shut down the program:
Earlier this week, Gov. Tim Walz said he’d stopped payments to 50 program recipients. DHS said it has since issued 11 payment withholds to HSS providers.
Officials familiar with the program are not suggesting it is just a few bad apples ruining it for everyone else. It is the vast majority of vendors:
Earlier this month, the FBI raided five Minnesota businesses that have received millions in Medicaid money for services they didn’t provide, according to unsealed search warrants. The Housing Stabilization Services program is intended to help older adults and people with disabilities find and maintain housing.
Acting U.S. Attorney Joe Thompson told KSTP recently that the “vast majority” of the Housing Stabilization Services program is fraudulent.
Many of the people whose names were used to apply for funds claimed they had not received any services. They had never even heard of the companies billing on their behalf. There are around 700 different companies billing HSS for housing services, most of which were never provided. Some of the companies used the same business address.
State shuts down $107 million housing stabilization program, citing fraud • Minnesota Reformer