Housing program dogged with complaints of wait times, potential fraud

Minnesota’s rollout of one of the nation’s first Medicaid-funded programs to help people find and keep housing has been deeply flawed, some providers warn.

They say issues with the program have made it harder for them to house people and created conditions ripe for fraud.

In meetings across the state, housing organizations have been comparing similar stories of how difficult it has been to work with the Housing Stabilization Services program since it started four years ago. Among their complaints: the monthslong process for participants to sign up, Medicaid’s complicated billing process, homeless people left to languish in the streets.

Multiple service providers interviewed by the Minnesota Star Tribune also described predatory enrollers approaching vulnerable people around emergency shelters and promising housing. In some cases, according to a report by the housing advocacy organization Hearth Connection, these enrollers have “fraudulently” worn nametags to impersonate staff from a trusted organization.

Once enrolled, some say they get little follow-up communication and no help. Julie Quiroz, who is homeless in Minneapolis and was recently living out of her car, said she submitted paperwork to enroll in Housing Stabilization Services over a year ago.

“They have not done one thing for me, not one thing, like nothing,” she said.

It takes more than three months to enroll someone who needs help in Housing Stabilization Services, according to the state. A seven-person team at the Department of Human Services reviews about 2,000 applications a month but can’t keep up with demand.

Gov. Tim Walz proposed adding three housing stabilization employees in his recently released budget.

For providers, a funding restructuring that came with the launch of Housing Stabilization Services has been particularly unworkable. Last year, dozens of organizations sent a letter to legislators warning that the funding system “will lead to fewer housing options for Minnesotans experiencing or at-risk of homelessness, providers reducing or eliminating services altogether, and the state failing to leverage Medicaid funds to advance essential housing services.”

Some of the largest and most well-known service providers in town — including Simpson Housing and Catholic Charities — say they are finding Housing Stabilization Services too difficult to use and are reluctant to accept new clients.

Meanwhile, the number of people signed up for the new service and organizations providing it have skyrocketed. More than 14,100 people are enrolled in the benefit, nearly twice as many as the state projected. And some 1,500 providers have flooded the industry since 2020, with almost half billing for services last year. Some are run by well-known providers; others are new on the scene.

Housing Stabilization Services providers collectively billed for about $248 million from July 2020 through the end of last year, according to DHS data. For-profit companies are the biggest recipients.

“I’m kind of baffled by the fact that there could be [more than] 1,400 agencies,” said Patrick Harrington, executive director of Bemidji nonprofit Housing Matters. “If every agency worked with 10 people, we would end homelessness. Where are all these agencies?”

DHS has heard extensive complaints that Housing Stabilization Services isn’t living up to its potential. The agency surveyed recipients and providers this summer, and officials are trying to address concerns with billing and wait times.

“Housing Stabilization Services meet a vital community need, and program integrity is critical to its ability to continue to do so,” DHS Assistant Commissioner Eric Grumdahl said in a statement. “DHS takes our dual responsibilities seriously as we provide ongoing oversight of HSS providers and provide the supports, education, and technical assistance to set these providers up for success.”

Providers say there’s an established strategy for helping chronically homeless people: subsidized rent paired with individualized support with whatever it takes to keep them from getting evicted, such as applying for jobs and keeping up with the utility bills.

The state-funded Housing Support program has long provided these “wrap-around” services.

When Minnesota launched the Housing Stabilization Services Medicaid benefit in 2020 to serve low-income seniors and people with disabilities, it offered an opportunity to draw millions of dollars from the federal government. The new program reimburses providers that help people find and retain housing.

To avoid duplication of services between the state-funded program and the new Medicaid benefit — which DHS said would violate federal requirements — the Legislature cut the state’s reimbursement rates for the Housing Support wrap-around services in half.

But since then, officials with nonprofits said Housing Stabilization Services has become more of a barrier than a benefit to their work.

Simpson Housing Services Associate Director Wendy Wiegmann said they’ve had numerous experiences of moving someone into one of its supportive housing programs, only to discover that person has been signed up for Housing Stabilization Services without their knowledge.

“So now we turn people back from our housing if they’ve been signed up for Housing Stabilization [Services], because we can’t make it work,” Wiegmann said. “This whole rate cut really keeps people homeless.”

Catholic Charities Twin Cities has a supportive housing complex in the Elliot Park neighborhood in Minneapolis with a county health clinic. Catholic Charities Housing Director Kristen Brown said there have been concerns with unfamiliar Housing Stabilization Services enrollers approaching homeless people in the adjacent park and bringing them into the clinic to get a medical document required for the benefit.

“It’s all people who are living on very low incomes, if any at all, and any offer of assistance is usually received positively,” she said. “Unfortunately, what we see is our population is also quite vulnerable to people who want to take advantage of that.”

Hennepin County declined to make clinic personnel available for interviews, instead providing a statement from Housing Stability Director David Hewitt.

“While many agencies are already leveraging Medicaid Housing Stabilization Services for this purpose, we are also aware of concerns about structure, implementation and oversight of the program,” Hewitt said. “We have shared those with the state Department of Human Services.”

Former employees at two of the largest Housing Stabilization Services providers told the Minnesota Star Tribune that fast growth and insufficient oversight of the program is allowing companies to overbill Medicaid and prioritize profits over people. Owners of those businesses denied breaking the rules, urging DHS to improve billing, wait times, oversight and training for providers.

Start Today Hennepin has billed more than $8 million since 2020, the most of any Housing Stabilization Services provider. Three former employees said case managers were encouraged to “bill up” to ensure they always met a quota of 105 billable hours a month.

“These are vulnerable adults, these are people that need more intensive services, that are being taken advantage of by these HSS providers,” said Fern Snedeker, a former case manager at Start Today Hennepin in Minneapolis.

Start Today CEO Jennifer Porter called the claims “one thousand percent not true.” The quota helps ensure that clients get adequate case management, she said.

Yet Porter acknowledged that gutting the state-funded Housing Support rate “really hurt us.” When Start Today enrolled clients in Housing Stabilization Services four years ago, they found that the program forces providers to laboriously document billable hours to stay afloat, contributing to employee burnout.

“It’s not to put pressure on the staff and it’s not to overbill or anything. It’s the only way that we can get paid,” she said.

Former staff at Oakdale-based Opportunity Community Services, another major recipient of Housing Stabilization Services dollars, also said case managers were encouraged to pad their hours — something CEO Rose Kukwa disputed.

Former employees Natasha Rosario Wylie and Ashley Wolf alleged that Kukwa is connected to different businesses that pass clients to each other in violation of conflict of interest rules.

“It does not seem to be ethical or legal,” Wylie wrote in a letter to DHS two years ago.

Kukwa owns Opportunity Community Services and Integrity Care Services — both companies that utilize Housing Stabilization Services — but denied wrongdoing and said she’s the “number one provider” when it comes to following procedures.

Kukwa said she gathers providers at her office monthly to discuss Housing Stabilization issues, from DHS wait times to the lack of training.

“It’s a very new program that the oversight — on the level of DHS — they have not gotten their stuff together,” Kukwa said. “If I were DHS, I would have paused on accepting new applications for providers for HSS and figured out what is going on with what we currently have.”

If there are even minor errors in the paperwork to enroll in Housing Stabilization Services, it can take longer than the usual three months.

Brian Bozeman, who spent decades working for larger human service agencies in the metro, saw Housing Stabilization Services as an opportunity to create his own business: Person Centered Housing Consultants, which helps people enroll in the program. It hasn’t been easy. Bozeman has 400 clients waiting in DHS’ queue, he said. They are constantly filling his voicemail with pleas for updates.

By the time an application is finally processed, the client might have fallen off the map.

“Folks are a bit transient. People lose their phones,” Bozeman said. “I’m assuming there’s quite a few folks who do get approved for services that aren’t able to receive services because they can’t find them.”

Walz’s recent budget proposal would add two staff to review applications and one to help with provider training and technical assistance.

Providers have been offering their own solutions to improve housing stability for Minnesotans, such as reinstating the full Housing Support reimbursement rates. Hearth Connection estimates that would take $1.5 million a year. Another intermediary organization, Corporation for Supportive Housing, suggests that DHS take on Medicaid billing responsibilities from providers who don’t have the administrative capacity to do it.

A DHS spokesman said the department is studying the rate cut issue and will report on it to the Legislature in 2026.

During a recent presentation to legislators on fraud prevention, DHS Commissioner Jodi Harpstead highlighted Housing Stabilization Services as one of several fast-growing unlicensed Medicaid programs that have “fuzzier regulation” and are harder to monitor.

“We need to work together to build the oversight structure around those services that have been growing so we have the ability to keep them well in order,” she said.