Back in 2020, Minnesota was the first state to use Medicaid dollars to help people with disabilities find and keep housing in their own homes.

At the time, it seemed like a splendid idea. But along the way things have gone seriously wrong. On August 1, the state announced it was moving to end the program “citing insufficient controls to prevent bad actors from accessing funding,” according to MPR News.  As of last Friday, the Minnesota Department of Human Services had “suspended payments” to 77 providers. 

An earlier mid-July news report explained that “Legislators initially expected the Housing Stabilization Services program to cost the Medical Assistance program, Minnesota’s version of Medicaid, $2.6 million annually. But investigators note that in its first year, it paid out $21 million, and by 2024, that figure reached $104 million.

What went wrong?

An affidavit unsealed on July 16, by FBI Special Agent Kurt Beulke stated that “The program has proved to be extremely vulnerable to 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 . . . These companies, and the individuals who run them, have taken advantage of the housing crisis and the drug addiction crisis in Minnesota to prey on individuals who need help getting back on their feet as they recover from drug addiction.”

In fact, according to the affidavit, reports KSTP.com, “many of the people the program was supposed to help — people who are homeless, at risk of losing housing or transitioning from a residential treatment program — report never receiving any services at all despite reimbursement paperwork claiming to provide dozens of hours in assistance per client.”

Meanwhile, homelessness continues to be a significant problem in the state. The latest Point in Time Count, required by the U.S. Department of Housing and Urban development found that the number of people in Minnesota on the night of January 24, 2024 was up 9.6 percent from the same time the previous year. 

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