If there's one thing bringing state lawmakers together this session, it's this: Fighting fraud.

In particular, protecting the billions Minnesota spends on Medicaid, the program that serves nearly a quarter of the state's population, including many of its most vulnerable citizens, and makes up a fifth of Minnesota's budget.

From launching a statewide independent Office of Inspector General to boosting accountability for health and human services providers, beefing up the battle against waste, fraud and abuse of state tax dollars — especially in Medicaid — is a priority, leaders on both sides of the political aisle said.

However, they have different ideas of how to do it.

"I don't care who is committing the fraud; we have to stop a lot of it. Period," said state Sen. Mark Koran, R-North Branch, who wants a new, independent Office of the Inspector General to oversee all state departments.

Gov. Tim Walz's recent budget proposal included a list of changes to strengthen the integrity of human services programs, particularly involving Medicaid.

"It's clearly a moment in our history where I believe we need to take some more steps, add some more resources and add to our ability to oversee taxpayer dollars," Minnesota Department of Human Services Commissioner Jodi Harpstead told legislators Wednesday. "I'm proud of what we've done so far and it's time for more."

Federal and state governments partner to pay for Medicaid services. Minnesota's program, called Medical Assistance, is generous compared to other states.

The state had the third-highest spending per person enrolled in Medicaid, according to a recent report from the nonpartisan Medicaid and CHIP Payment and Access Commission (MACPAC) which does policy and data analysis for Congress. For enrollees with disabilities, Minnesota spent $51,215 per person in 2022, twice the national average.

Minnesota also stands out for its high number of Medicaid fraud convictions. The state's Medicaid Fraud Control Unit (MFCU) reported 43 convictions in fiscal year 2023, the sixth highest in the country and surpassing more populous states like Florida and Illinois.

As state leaders debate the best way to bolster oversight and fraud prevention, the Minnesota Star Tribune reviewed the state's existing system to fight Medicaid abuse and the changes that could be coming.

What happens when someone reports Medicaid fraud?

People who suspect fraud in public assistance programs can report it to the DHS in a number of ways, including their hotline portal or the toll-free line at 800-627-9977. Last year, the department got nearly 3,900 fraud tips.

The DHS reviews the reports but doesn't always decide to investigate. If the agency finds a credible allegation of fraud, it can withhold payments, recover overpayments and take other steps to sanction a provider. It also refers cases to law enforcement for criminal investigation.

Not all fraud reports come through the DHS. Minnesota contracts with managed care organizations, like UCare and HealthPartners, to deliver health care services to many people on Medical Assistance. Those companies have their own divisions that receive and look into reports.

Who follows up after initial investigations?

In cases of suspected fraud, the DHS can reach out to partners to follow up with prosecution, such as the MFCU in the Attorney General's Office, the Minnesota Bureau of Criminal Apprehension (BCA) and U.S. Department of Health and Human Services Office of Inspector General.

When the MFCU reviews a case from the DHS or managed care organizations, it decides whether to investigate using such factors as the dollar figure, whether witnesses are still alive and whether they can successfully prosecute the case, said Nicholas Wanka, the unit's director.

"Our role is really reactive," he said. "We get our cases after the money has already gone out the door. We have no authority to suspend payments, we can't turn off the tap. We can't tell DHS, 'Hey, don't let this company operate,' or 'don't let this person start a company.'"

The fraud control unit often partners with other agencies on investigations, including the federal HHS Office of Inspector General, the state Department of Commerce's Fraud Bureau and the FBI. For example, the unit is working with the FBI to look into fraud by autism service providers. Wanka said that investigation is "one of the bigger ones we're doing right now with them."

What more could be done to prevent bad actors?

The DHS has its own Office of Inspector General tasked with ensuring taxpayer dollars are spent efficiently and finding fraud, waste and abuse by people providing or receiving services. The office also oversees background checks on potential care providers and licensing.

Nearly 500 people work for that office, with 91 of them focused on program integrity and fraud, Harpstead told legislators Wednesday, noting that growth in Medical Assistance spending has outpaced DHS staffing.

Walz's budget plan for the next two years highlighted shortcomings in the DHS office's Program Integrity and Oversight Division. Employees are often forced to take a reactive approach, budget documents said, and Walz's proposal suggested changes to state law and additional staff to prevent and respond to fraud, including more workers to oversee managed care organizations' fraud prevention efforts.

One of the proposed changes would allow Minnesota to pause payments to a provider when there are red flags, and have a contracted medical review agent verify the claims. The DHS currently has to meet a high bar before withholding payments; the change could allow them to be more nimble.

What's being proposed at the State Capitol?

Three weeks ago, Walz signed an executive order creating a centralized state fraud investigations unit operated by the BCA and also introduced a legislative package to prevent, investigate and punish fraud in state programs.

The new unit would move the state Department of Commerce's fraud investigators to the BCA to create a fraud and financial crimes unit. Walz would also add staff members to the Medicaid Fraud Control Unit, as well as other agencies, to detect and fight fraud.

The state would use artificial intelligence to detect and prevent fraud. Walz also seeks to beef up penalties for fraud, including a new "theft of public funds" statute.

"Fraud and other financial crimes harm every Minnesotan," BCA Superintendent Drew Evans said. "By combining state law enforcement resources, we will improve our ability to root out and prosecute these crimes with consistency, transparency and efficiency."

Legislators have their own ideas.

Saying the state's current use of inspector generals in corrections, health and human services and education falls short of real oversight, Koran wants to create a truly independent Office of Inspector General that would have subpoena and investigative powers and be answerable only to the Legislature.

Under the current system, inspectors general report to the agency they monitor. The new office would be structured like the Office of the Legislative Auditor, Koran said.

Without true independence, he said, "it would continue to be stifled."

State Sen. Heather Gustafson, DFL-Vadnais Heights, who is also pitching an independent inspector general, agrees that a new inspector general's independence is key to fighting fraud. Existing inspectors general would be merged into the new office.

"It's critical," she said of combatting fraud. "And we really don't want this to be a politicized role — no witch hunts and not motivated or driven by politics."

While perhaps not as dramatic as a new investigative office, ramping up expectations and developing uniform standards will be key to decreasing fraud, said state Rep. Kristin Robbins, R-Maple Grove.

"I would say the first thing we are hoping to accomplish is a culture change," said the chairwoman of the House's Fraud Prevention and State Agency Oversight Policy Committee.

The public is fed up with fraud, she said, adding that it's time for real efforts to uncover and address it.

"The list is growing and every time we discover something new, the public is frustrated," Robbins said. "Fighting fraud should not be a partisan issue."