AG Ellison seeks more staff, tougher penalties to fight Medicaid fraud

State lawmakers are proposing an expansion of Minnesota’s Medicaid fraud control unit and tougher penalties for health- and elder-care providers who bilk taxpayer money.

Minnesota Attorney General Keith Ellison said the expansion, from 32 to 41 people, would allow the investigative unit in his office to recover more money from providers who cheat Medicaid, the health program for the poor and disabled that is funded by federal and state tax dollars.

Rooting out corrupt providers is especially critical right now, Ellison said, because President Donald Trump has highlighted fraud and waste as reasons to make steep federal cuts to Medicaid. The attorney general said Minnesota needs to preserve the growing program, which has expanded to provide benefits for more than 1.4 million residents.

“If we don’t protect the integrity of the program, I fear that the program will lose support,” Ellison said. “This is an effort to signal to the public that this program is worth your support because we are policing how these dollars are used.”

The $390,000-per-year expansion is included in Gov. Tim Walz’s budget proposal, and was detailed Monday in legislation filed by Sen. Ann Johnson Stewart, DFL-Minnetonka, and Rep. Matt Norris, DFL-Blaine.

The lawmakers said they are gaining bipartisan support, including two House Republican coauthors. The legislation makes financial sense, Johnson Stewart said, because the fraud unit has cost the state around $6 million over the last six years but gained $53 million in civil penalties and criminal restitution in that timeframe.

“In addition to just fighting for justice, they’re also achieving a very significant financial payback,” she said.

The legislation would toughen penalties for Medicaid fraud, including fines of up to $100,000 for thefts of more than $35,000 and up to 20 years in prison. The current maximum penalty is 2.5 years.

The bill also would give the Attorney General’s Office authority to subpoena billing and financial records from providers. Under current Minnesota law, only county attorneys have that authority, Ellison said.

Ellison’s office has announced several high-profile fraud cases in recent years against providers, largely agencies that provide home care services. Owners of one agency were charged in summer 2023 for allegedly billing for home care that lacked required nursing supervision, or for 25,000 hours of care that were never provided.

“When people steal from Medicaid, they’re stealing from all of us,” Ellison said Monday.

The unit costs about $5 million per year, but three-fourths of its budget is covered by federal tax dollars. A recent review by the inspector general for the U.S. Department of Health and Human Services recommended an expansion of the unit to keep pace with the state’s growing Medicaid program, Ellison said.