Committee report: EIDBI / Autism Services

Early Intensive Developmental and Behavioral Intervention (EIDBI) or Autism Services Hearing Date: February 23, 202664

Background:

EIDBI is an unlicensed Medicaid (Medical Assistance or MA)-funded service created in 2013. Similar to Housing Stabilization Services, this program has faced widespread fraud allegations while also having significantly less oversight than licensed services.

The Committee held a hearing on the topic following the release of the largely redacted Optum analysis of the 14 designated high-risk programs, which flagged an astounding 90% of EIDBI reimbursements as problematic.65 In addition, the U.S. Attorney’s Office (USAO) in the District of Minnesota announced the first conviction in the EIDBI program in December of 2025.

Due to previous concerns about the EIDBI program, in 2025 the Legislature authorized provisional licensing for EIDBI providers, as well as other oversight measures. This action gave the agency permanent authority for increased oversight, twelve years after the benefit’s creation. The Committee investigated why this action took so long, and why the agency allowed EIDBI spending to grow exponentially before exercising the oversight that should be expected in any government program.

Note: From USAO 12/18/2025 Press Conference66

64 YouTube video, House Fraud Prevention and State Agency Oversight Policy Committee 2/23/26. 65 Optum State Government Solutions, Minnesota DHS/MNIT Vulnerability Assessment, Jan. 31, 2026. 66 YouTube video, FULL PRESS CONFERENCE: U.S. Attorney's oTice announces new fraud charges in Minnesota, Dec 18, 2025.

Red flags have been visible in EIDBI for years. In addition to the massive growth in spending, enormous increases have also been observed in the number of units billed, program participants, spending per participants, and number of new EIDBI providers.

Note: From DHS Legislative Report EIDBI Licensing Recommendations.67

Finding: The EIDBI (Autism) program had minimal oversight by DHS, despite exponential growth. DHS failed to use existing oversight tools.

Discussion surrounding EIDBI and its lack of oversight as an unlicensed program reignited some discussion that was had in the wake of HSS fraud being exposed. Legislators and the public were interested to know how these programs were created in statute with such extensive vulnerabilities.

As is often the case with complex healthcare programs that intertwine state and federal law, the bill language usually originates from the executive branch, as part of the Governor’s annual budget recommendations. Both of these programs originated from budget recommendations proposed by former Governor Dayton.

Governor Dayton’s 2013 budget recommendations for Human Services proposed the funding of the EIDBI benefit.68 That year, section 256B.094969 was created in statute, implementing the benefit contingent on CMS approval, which was given in 2015.

67 Minnesota Department of Human Services, EIDBI Licensing Recommendations, Jan. 2025. 68 Minnesota Management and Budget, 2014–15 Revised Budget: Human Services, Mar. 2013. 69 Minnesota Statutes Section 256B.0949

Governor Dayton’s 2017 budget recommendations for Human Services included the creation of Housing Support Services as an MA benefit.70 That year, a bill was passed creating Minnesota Statutes section 256B.05171 providing for Housing Support Services. A 2021 bill renamed the program to Housing Stabilization Services (HSS), as we know it today.

The Committee began by noting that 90% of EIDBI reimbursements analyzed by Optum were flagged as problematic, according to their recent heavily redacted report. Chair Robbins questioned how the issue became this widespread, noting that hundreds of new companies had appeared in recent years lacking basic operational tools, such as websites or phone numbers, yet they received massive reimbursements from the state. The Committee questioned the latest round of site visits conducted by DHS of EIDBI providers as part of an enhanced revalidation process mandated by CMS.

Chair Robbins: “How are you and the Department routinely seeing these anomalies and taking steps before you have to be told to do it by our Committee, by CMS, by somebody else? This is a complete failure.”

The Committee was surprised to hear about the recent change in authority of the Department to conduct site visits. Prior to the legislative action in 2025, the agency claimed it was unable to conduct basic oversight, such as site visits.

This contradicted information Chair Robbins’ received from the Centers for Medicare and Medicaid Services (CMS). According to CMS, DHS has always had the authority to designate a program as high-risk and conduct pre-payment reviews – they were choosing not to do so.

Inspector General Clark: “That was because EIDBI was not a high-risk provider type, and it was not licensed. For licensed programs, we have statutory authority to do unannounced site visits. For high-risk provider types, we have authority to do unannounced site visits. If it’s unlicensed, and not a high-risk provider type, I believe under either state or federal regulations, only allow us to do unannounced site visits as a part of a fraud investigation. These were not fraud investigations, they were compliance investigations, therefore we were required to give 24-hour notice.”

Chair Robbins: “So do you need more authority from the state to say “yes” you can do unannounced site visits as you need to inspect for fraud or compliance?”

Inspector General Clark: “Yes, I think that’s something the legislature should look into, a blanket authority to give the department the ability to do unannounced site visits for any reason it so chooses, we just don’t have that authority right now.”

Rep. Shultz: “High-risk is the caveat here, they have the authority to designate. This is abdication of responsibility here, telling us that we need to put the absolute prescription into law about how they should be doing their job to protect the taxpayer. That’s your job.”

70 Minnesota Management and Budget, 2018–19 Revised Budget: Human Services, Feb. 2017. 71 Minnesota Statutes Section 256B.051

Finding: DHS relies on attestation from providers to ensure staff at autism centers are adequately trained to provide the services.

The Committee then discussed the qualifications of individuals employed at EIDBI agencies and the Department’s ability to verify staff credentials. In their announcement regarding the first defendant charged in the EIDBI fraud scheme, USAO noted that the defendant’s company, Smart Therapy, employed unqualified individuals as “behavioral technicians.” These staff were often 18- or 19-year-old relatives of the defendant with no formal education beyond high school and held no training or certification to treat children with autism.72

Rep. Schultz: “Do you verify those details that they are qualified currently?”

Ms. Graume: “My understanding is that providers attest, and there are documentation requirements that they have to provide to ensure that they are qualified.”

Rep. Schultz: “That appears to be a gap in the system right there.”

Finding: DHS allows individuals who work for providers to conduct the needs assessment that determines what services are provided and billed. This structure creates an incentive to assess the maximum billable services to maximize revenue to the provider.

Continuing the discussion of staff at EIDBI agencies, Chair Robbins pointed out that the individuals who assess the level of need and service for children are in many cases employees of an EIDBI agency.

Chair Robbins: “They work for the provider, they qualify the kid, they come up with the level of treatment that’s billed for, and we have seen that the level of billing has gone up 3,000%. This is a huge issue. We need to know if these employees are inflating the billing. Their incentive, because they work for the provider, is to inflate the billing and qualify as many kids as possible.”

Commissioner Gandhi; “I hear what you’re saying about the alignment of the diagnosis and then providing the treatment and billing. Part of the vendor report that we did was to look at vulnerabilities and overlaps like that in order to give us indication of where we need to close gaps, tighten requirements, or create stronger internal controls that separate specific actions like that. While I don’t have the details, we are digging into that.”

Based on hearing testimony the Committee identified three gaps in oversight:

could exercise additional authority, including conducting unannounced site visits at unlicensed programs,

72 U.S. Attorney’s Office, District of Minnesota, “First Defendant Charged in Autism Fraud Scheme,” Sept. 24, 2025.

assessment that determines the level of service needed for clients, effectively allowing providers to choose how much they may bill the state.

Finding: DHS failed to request additional oversight authority from the Legislature.

None of these oversight gaps were addressed in the Governor’s budget recommendations or brought to the Legislature by DHS as concerns they needed the Legislature to address. These issues were revealed by Members of the Committee through intense questioning and scrutiny of the agency’s operations.

Members of the Committee were frustrated that these types of gaps are not being proactively brought to the Legislature by the agencies with oversight responsibility for the programs. It is symptomatic of the failure of leadership and culture that the people directly administering programs, who know about these gaps in statute, cite a lack of authority in statute as the reason they fail to do their jobs.

To the agency’s credit, concerns have been brought to the Legislature, but without language for immediate fixes. The 2023 Governor’s budget recommendations, a full decade after the creation of EIDBI, requested the Legislature commission a study with recommendations for future EIDBI licensure. In those recommendations, the first reason cited for why licensure may be useful is the ability to conduct more site visits as the program is rapidly growing.73

As was pointed out earlier, DHS has always had the ability to designate a program as high-risk, which would have increased the tools they had for immediate action. Instead of using this existing authority or requesting additional tools for immediate use in unlicensed programs experiencing rapid growth, DHS’ lax oversight continued until the program was designated high- risk in June 2025. They could have done this much earlier.

Finding: DHS did not use new tools it had requested from the Legislature.

Legislators expect agencies to request what they need and we expect them to use the tools they are given in statute. During the 2025 legislative session, there was bipartisan support to create Minnesota Statutes section 15.013, which grants state agencies broad authority to withhold payments when there is evidence of fraud.74 Agencies are required to report on instances this authority is used for payment withholding.

When the legislature received the first report in March 2026, agencies reported this new payment withhold authority was used zero times, and that they opted to use their previous statutory authority instead.75 The new tool, designed to help agencies immediately combat fraud, went unused and required the Legislature to make additional changes to the statute this year.76

73 Minnesota Management and Budget, 2024–25 Revised Budget: Human Services, Mar. 2023. 74 Minnesota Statutes section 15.013. 75 Minnesota Management and Budget, Report on State Agency Payment Withholding, Mar. 16, 2026. 76 Minnesota House File 3621, 94th Legislature, 2025–2026.

Finding: Lax oversight by DHS failed to catch obvious patterns of fraud seen in other programs, including kickbacks.

As seen in childcare fraud, kickbacks to parents to enroll their children in programs are an obvious red flag. As first reported in the USAO’s indictment of Asha Farhan Hassan for fraudulent activity at her Smart Therapy Autism Center77, parents were paid kickbacks of up to $1500/child to enroll or stay in Hassan’s center. Parents, who were actively participating in this scheme, would threaten to take their children to other centers if the kickbacks stopped or were not high enough.

This is identical to the kickback scheme used by members of the Minnesota Minority Childcare Association, which well-known to DHS back in the period 2015-2018, as evidenced by the response to Chair Mary Franson’s data practices request back in 2019.78

Furthermore, subsequent to this hearing on February 23, 2026, the OLA came out with report on kickbacks in EIDBI programs.79 DHS was well aware of this report by the time of our hearing, as they were writing a response to the OLA’s draft. The OLA report criticized DHS for failing to investigate reports of kickbacks by claiming they lacked the authority.

Finding: DHS failed to review potential connections between Feeding Our Future defendants and Medicaid-service providers, including Autism Centers (EIBDI providers). Several Feeding Our Future Fraudsters have connections to EIDBI clinics.

As noted in other fraud-prone services, criminals often operate in a network, with multiple taxpayer-funded business entities, often across multiple programs. In the Feeding Our Future scheme, investigators discovered that defendants operated a number of Medicaid funded businesses in multiple service areas, including Autism Centers/EIDBI.80 Shortly before the Committee’s hearing on EIDBI, the 79th defendant in the Feeding Our Future scheme, Fahima Mahamud, had been arrested while attempting to flee the country.81 The Committee quickly found that the CCAP funded daycare that participated in the scheme wasn’t Mahamud’s only business. She is also connected to an EIDBI agency and two assisted living facilities. Back in February of 2025, the Committee had recommended that DHS investigate Mahamud’s daycare as the top recipient of CCAP funds in 2024. It does not appear the agency took any action on Mahamud’s daycare or any of the others on the list of the top 72 CCAP providers that the Committee provided to DHS prior to that hearing.

77 U.S. Attorney’s Office, District of Minnesota, “First Defendant Charged in Autism Fraud Scheme,” Sept. 24, 2025. 78 5/5/2026 Committee Document “DHS Data Request 2019.” 79 Office of the Legislative Auditor, Department of Human Services Investigations of Alleged Kickbacks in the EIDBI Program, Special Review, Mar. 17, 2026. 80 Deena Winter, “Some Feeding Our Future Defendants Had Ties to Autism Centers,” Minnesota Reformer, July 18, 2024. 81 Soyoung Kim, “Feeding Our Future: 79th Person Charged,” FOX 9, Feb. 19, 2026.

Similarly, the first defendant charged with Autism/EIDBI fraud, Asha Farhan Hassan, referenced above, had also been using her Smart Therapy Autism Center to defraud taxpayers in the Feeding Our Future scheme. According to a press release from the US Attorney’s Office,82

“While using Smart Therapy to defraud the EIDBI autism program, Hassan also used Smart Therapy to engage in the Feeding Our Future fraud scheme to defraud the Federal Child Nutrition Program. Hassan enrolled Smart Therapy in the Federal Child Nutrition Program under the sponsorship of Feeding Our Future in July 2020”.

“Between 2020 and 2021, Hassan claimed to have served nearly 200,000 meals to children at the Smart Therapy site, for which she claimed to be entitled to approximately $465,000 in Federal Child Nutrition Program funds.”

Finding: An individual who operated a daycare raided by police, and shut down by DHS years ago, currently operates an EIDBI business.

Through the Committee's investigation of EIDBI clinics, it was discovered that an individual previously associated with a suspicious childcare center is also connected to three active, taxpayer funded healthcare companies. In 2015, Khadra Hirsi was one of the few individuals sentenced to prison time following the initial CCAP fraud investigations. Hirsi’s business, Ace Daycare, was located in a building owned by the City of Eden Prairie. Since Hirsi’s company could no longer operate, the lease was transferred to Roda Mohamed, who began operating a new daycare named Apple Childcare in the same location. The business operations caught the attention of neighbors, who reported suspicious activity to the City of Eden Prairie.

82 U.S. Attorney’s Office, District of Minnesota, “First Defendant Charged in Autism Fraud Scheme,” Sept. 24, 2025.

Ultimately, law enforcement investigations took place resulting in a raid of both Apple Childcare and the owner’s home.83 While charges were not filed against Mohamed, court documents reveal that DHS and county contracts were canceled, and Apple Childcare was no longer able to operate.

Similar to its predecessor, Apple Childcare attempted to transfer the lease again to a third recently-formed company to continue daycare operations at this location. However, the city evicted Apple Childcare and canceled the transfer of the lease, likely not wanting to do business with more problematic childcare providers.84

While the childcare business ended in failure for Mohamed, she has since found success with other companies. Since the closure of Apple Childcare, Mohamed has been connected to two home healthcare clinics and an EIDBI agency each approaching $1 million per year in annual state payments.

Committee staff visited each location listed on the companies’ licenses and could not find the providers at their supposed locations. One of the home health care companies was listed in a suite that didn’t exist in a commercial building filled with other providers. The other home healthcare company was listed at a suite where a different home healthcare company was operating. The EIDBI business was listed in a suite in the basement of a chiropractic office, with a sign in the window displaying the name and logo of an acupuncture association, not an autism center, and no noticeable activity during normal business hours on a weekday.

83 Alpha News Staff, “Minnesota Daycare Centers Searched in New Potential Fraud Case,” Alpha News, July 23, 2016. 84 City of Eden Prairie v. Lighthouse Daycare Center, Inc., et al., No. 27-CV-HC-17-701, Hennepin County District Court, filed Feb. 8, 2017.

Summary:

DHS has been aware of the explosive growth in autism/EIDBI providers but has failed to ensure basic oversight of the program.

Despite the Optum report on EIDBI being nearly fully redacted, the Committee found the following elements contributing to the EIDBI fraud scheme:

growth in spending, providers and recipients for more than a decade.

additional authority or to use the oversight tools they have been given.

Managed Care Organizations (MCOs).

and EIDBI providers.

Taxpayers work hard for their money and expect state agencies to be good stewards of it. When agencies fail to perform the most basic, common-sense oversight, it enables criminals to from hard-working Minnesotans, hurts citizens who need services, and erodes trust in government.