State Auditors: DHS Had Authority to Investigate Autism Program Kickbacks for Years, Didn’t Use It

(KNSI) — The Minnesota Department of Human Services had legal tools to investigate kickbacks in a fast-growing autism services program for years, but failed to use them, according to a special review released Monday by the Office of the Legislative Auditor.

The review focused on the Early Intensive Developmental and Behavioral Intervention (EIDBI) program, which provides Medicaid-funded services for children and young people under 21 with autism spectrum disorder. The program grew dramatically, from about 1,400 recipients and $38 million in costs in 2020 to more than 5,600 recipients and $325 million in 2024.

The office reviewed complaints filed against EIDBI providers between 2017 and 2024. Among them were three complaints alleging kickbacks, providers allegedly offering money or items of value to families to bring their children in for services. The DHS Office of Inspector General closed all three without investigation, citing a belief that it lacked authority to act on kickback allegations alone. Auditors found that position to be incorrect. A 1997 state statute authorizes DHS to impose sanctions for conduct that could result in federal Medicare exclusion, including violations of the federal anti-kickback law.

Auditors also identified a separate problem, a decades-old typo in DHS administrative rules that has effectively prevented the agency from freezing payments to providers during a kickback investigation. A 1995 rule amendment intended to define fraud to include kickback violations instead cited the wrong paragraph of federal law, one that lists exceptions to the anti-kickback prohibition, not the prohibition itself. That error has gone uncorrected for more than 30 years, through multiple amendments to other parts of the same rule. OLA says DHS could have fixed the citation at any time through the normal rulemaking process, without legislative action.

The 2025 Legislature took steps to address kickback enforcement, explicitly adding kickbacks to DHS’s sanction authority and criminalizing them under state law. But auditors say it remains unclear whether DHS can suspend payments to a provider during a kickback investigation, because that authority requires a credible allegation of fraud, and fraud in administrative rules still does not clearly include kickbacks.

OLA recommended that DHS amend its administrative rules to fix the citation. If DHS does not act, the Legislature should step in.

In its response, DHS said it agrees fraud should be more clearly defined to include kickbacks and is pursuing a legislative proposal this session. If that fails, the department says it will pursue rulemaking, a process that could take one to two years.

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