Committee report: Housing Stabilization Services

2026-05-13 · report chapter · r-hss

Source: Minnesota House Fraud Prevention & State Agency Oversight Committee · original.

Root source: https://www.house.leg.state.mn.us/comm/docs/PBkehwf-FEOo19Pitj0Z8A.pdf#page=34

What it establishes: Housing Stabilization Services (HSS) was a Medicaid-funded program, first offered in Minnesota in 2020, that paid for housing consultation and moving expenses for people with disabilities leaving homelessness; the report says initial estimates of $2.6 million a year gave way to $104 million in claims in 2024. The committee held a hearing on September 17, 2025, and found that DHS was repeatedly warned about fraud in HSS, by Hennepin Health, county employees, the nonprofit Hearth Connection and media reporting, but failed to take timely statewide action. The report lists the fraud it says the Walz Administration overlooked: billing for deceased clients, services that never occurred, forged records, free-rent kickbacks, duplicate billing and pressure on vulnerable clients. By August 1, 2025 DHS had suspended payments to 77 providers that had received more than $88 million, and the program formally ended on October 31, 2025 after CMS approval. The committee also found that the same red flags, including many licensees sharing one address, appear across the broader HCBS/245D program, and the report concludes that over $100 million was stolen and that HSS should not be renewed.

Housing Stabilization Services (HSS) was a Medicaid-funded program, first offered in Minnesota in 2020, that paid for housing consultation and moving expenses for people with disabilities leaving homelessness; the report says initial estimates of $2.6 million a year gave way to $104 million in claims in 2024. The committee held a hearing on September 17, 2025, and found that DHS was repeatedly warned about fraud in HSS, by Hennepin Health, county employees, the nonprofit Hearth Connection and media reporting, but failed to take timely statewide action. The report lists the fraud it says the Walz Administration overlooked: billing for deceased clients, services that never occurred, forged records, free-rent kickbacks, duplicate billing and pressure on vulnerable clients. By August 1, 2025 DHS had suspended payments to 77 providers that had received more than $88 million, and the program formally ended on October 31, 2025 after CMS approval. The committee also found that the same red flags, including many licensees sharing one address, appear across the broader HCBS/245D program, and the report concludes that over $100 million was stolen and that HSS should not be renewed.

Findings the committee states

The committee says its investigation and hearings showed DHS measured HSS success by the number of people allegedly served and the money spent, not by improvement in clients' quality of life. p. 34DHS measured success by the amount of people allegedly served, and the amount of money spent, rather than improvement to the quality of life
Because HSS required no license and had low barriers to entry, significant DHS oversight was needed to prevent fraud; the report says this did not happen and costs exploded. p. 34significant oversight by DHS was necessary to prevent fraud. This did not happen, and costs exploded.
The committee concludes that nearly all HSS billing activity was fraudulent. p. 34Our investigation and Committee hearings showed that nearly all of this activity was fraudulent.
Finding: DHS was repeatedly warned about widespread fraud in HSS but failed to take timely statewide action. p. 35DHS was repeatedly warned about widespread fraud in HSS but failed to take timely statewide action.
The committee could not hear from former DHS Assistant Commissioner Eric Grumdahl, who administered HSS, because DHS terminated him the day before the hearing; Commissioner Shireen Gandhi gave no explanation when asked. p. 35DHS terminated Grumdahl the day before the committee's HSS hearing.
The committee lists six kinds of fraud it says the Walz Administration overlooked: billing for deceased clients, phantom or no-show services, forged or falsified documentation, kickbacks and free-rent inducements, inflated or duplicate billing, and exploitation of vulnerable clients. p. 35The Committee observed the following fraud that the Walz Administration overlooked:
After being pressed by the committee, DHS admitted that billing for deceased clients was a pattern across multiple providers. p. 35After being pressed by the committee, DHS eventually admitted that this was a pattern across multiple providers.
The committee found billing clusters suggesting systemic inflation. p. 36The Committee found billing clusters that suggested systemic inflation.
The committee found that some clients were pressured to sign forms without understanding them. p. 36The Committee found that some clients were pressured to sign forms without understanding what they agreed to.
The report says DHS and the Walz Administration ignored multiple fraud reports for nearly two years before acting. p. 36DHS and the Walz Administration ignored multiple reports to blatant fraud in HHS for nearly two years before finally taking action.
The report calls the program's rapid claims growth a structural red flag that DHS at minimum ignored. p. 36This rapid, exponential growth was a structural red flag that DHS at a minimum ignored, and at worst, appeared to celebrate.
Warnings from county employees, honest providers and advocates in late 2023 were ignored by DHS and later confirmed by media investigative reporting. p. 37These outside warnings were ignored by DHS and the Walz Administration more broadly, but were later confirmed by independent media investigative reporting.
Providers suspended or terminated by Hennepin Health in late 2024 were able to keep billing DHS through other health plans, which the report attributes to DHS inaction. p. 37Due to inaction by DHS, providers suspended and terminated by Hennepin Health are able to continue billing DHS through other health plans.
Finding: The red flags observed in HSS are present more broadly in Home and Community Based Services (HCBS) programs. p. 39The red flags observed in HSS are present more broadly in Home and Community Based Services (HCBS) programs.
Many HCBS/245D programs share HSS's low barriers to entry and high revenue potential; 42% of DHS provider licenses in Hennepin County are in that program. p. 39Many HCBS/245D programs have similar attributes as HSS -- low barriers of entry and high revenue potential.
The committee lacks confidence that the Governor's fraud prevention proposals will stop new fraudulent providers from enrolling when the 245D licensing moratorium expires on December 31, 2027. p. 39the committee lacks confidence that the Governor's fraud prevention proposals will be sufficient to
Finding: The Walz Administration failed to recognize or investigate other obvious red flags in the HCBS program. p. 40The Walz Administration failed to recognize or investigate other obvious red flags in the HCBS program.
At the time of the HSS hearing, 25% of the 1609 HCBS licenses in Hennepin County listed the same address as another licensee. p. 40of the 1609 HCBS licenses in Hennepin County, 25% listed the same address as another licensee.
The committee says it is aware of no evidence that DHS noted or aggressively investigated the shared-address red flag. p. 40The Committee is aware of no evidence that DHS has taken note or aggressively investigated this obvious red flag.
Among 22 HCBS providers in one Hennepin County commercial building, the report's data show newly licensed companies, often cited for several violations, rapidly growing in state reimbursements. p. 41a pattern emerges of newly licensed companies, often cited for several violations, rapidly growing in state reimbursements.
The report's summary says DHS created no meaningful fraud controls and ignored red flags and warnings from providers, county and MCO whistleblowers, and media. p. 41Not only did DHS not create meaningful fraud controls, it ignored clear and obvious red flags, warnings from its own providers, county and MCO whistleblowers
The report concludes that over $100 million was stolen from taxpayers and almost no services were provided. p. 41over $100 million was stolen from taxpayers and almost no services were provided.
The report concludes that HSS operated almost solely as a conduit for fraud, so few affected Minnesotans complained when it was shut down. p. 41HSS had operated almost solely as a conduit for fraud.
The report concludes that the broader HCBS program is also riddled with fraud and that investigations must continue. p. 41It is also clear that the broader HCBS program is also riddled with fraud, and investigations must continue.

Figures

$2.6 million per year	Initial estimate of HSS funding levels when Minnesota became the first state to offer the program (estimate)	p. 34
8	Individuals in the first wave of HSS indictments; page 38 dates the U.S. Attorney's announcement of these charges Sept. 18, 2025 (charged)	p. 35
$21 million; 8,300 individuals	HSS claims in 2021 and the number of individuals they covered (claims)	p. 36
$42 million; 14,200 individuals	HSS claims in 2022 and the number of individuals they covered (claims)	p. 36
$74 million; 16,900 individuals	HSS claims in 2023 and the number of individuals they covered (claims)	p. 36
$104 million; 21,300 individuals	HSS claims in 2024 and the number of individuals they covered (claims)	p. 36
$50	Payment county employees alleged HSS providers made to homeless individuals at shelters to complete HSS paperwork, reported to DHS in April 2024 (alleged)	p. 37
over $141,000	Overbilling alleged in Hennepin Health's July 2024 official fraud referral of Start Today Hennepin (alleged)	p. 37
3 weeks	Period after a woman's death during which billing for her continued, per evidence Hennepin Health sent DHS in July 2024	p. 37
$141,435	Overbilling the report says Start Today Hennepin employees admitted, after which Hennepin Health terminated the grantee and referred it to MFCU (Nov.-Dec. 2024)	p. 37
50+	Providers whose HSS payments DHS initially halted after the July 2025 FBI raids	p. 38
77	Providers with HSS payment suspensions due to fraud, as reported by DHS by Aug. 1, 2025	p. 38
more than $88 million	Total received by the 77 suspended providers (paid), which the report says was the overwhelming majority of HSS payments	p. 38
14	High-risk services, including HSS, covered by Governor Walz's Oct. 29, 2025 order stopping payments and ordering an audit	p. 39
5	Additional charges against individuals who allegedly defrauded HSS, announced by the U.S. Attorney on Dec. 18, 2025 (charged)	p. 39
$18 billion	Amount spent across the 14 designated high-risk Medicaid waiver programs (spent)	p. 39
half of $18 billion	Share of spending across the 14 high-risk programs that the U.S. Attorney estimated to be fraudulent reimbursements (estimate)	p. 39
42%	Share of all DHS provider licenses in Hennepin County that are in the HCBS/245D program	p. 39
two-year	Length of the moratorium on new 245D licenses DHS announced Dec. 1, 2025 (expires Dec. 31, 2027)	p. 39
283%	Growth in applicants for the 245D license that DHS cited when announcing the moratorium	p. 39
1609	HCBS licenses in Hennepin County at the time of the HSS hearing	p. 40
25%	Share of those 1609 Hennepin County HCBS licenses listing the same address as another licensee	p. 40
22; 20; 15; 14 (two buildings)	Providers per building cited by Rep. Rarick at the hearing: 22 in one building, 20 in another in Minneapolis, 15 in another, 14 in each of two buildings (member's statement)	p. 40
22	HCBS providers located in the same commercial building in Hennepin County, in the report's supporting data	p. 41
over $100 million	Amount the report's summary says was stolen from taxpayers through HSS (committee conclusion; no itemized basis given)	p. 41

Witnesses

Department of Human Services officials (not named in this chapter), Minnesota Department of Human Services p. 35
HSS client (not named), Client defrauded by an HSS provider p. 35

Recommendations

HSS should not be renewed; the report notes it was removed from statute during the 2026 session. p. 41
Investigations into the broader HCBS program must continue. p. 41
HSS should serve as a warning about new, lightly regulated programs whose services are hard to audit and easy to falsify. p. 41

What it establishes. The report sets out a dated record of warnings DHS received about HSS from Hennepin Health, county employees and Hearth Connection in 2023-2024, the program's claims growth from $21 million (2021) to $104 million (2024), and DHS's own August 2025 report of fraud-related payment suspensions for 77 providers that had received more than $88 million.

What it does not. The people described were charged, not convicted, as of this chapter, and the misconduct examples come largely from FBI affidavits, MCO referrals and media reports rather than adjudicated findings. 'Over $100 million stolen' and 'nearly all of this activity was fraudulent' are conclusions of the majority report (DFL members abstained), and the USAO's half-of-$18-billion figure is an estimate across 14 programs, not a measured HSS total.

Watch the hearing: 2025-09-17

Read this chapter in the searchable report

Full text, pages 34–41

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Housing Stabilization Services Hearing Held: Wednesday, September 17, 202552

Background:

Housing Stabilization Services (“HSS”) is a relatively new Medicaid-funded program created to help people with disabilities move from homelessness to permanent housing. The program does not actually provide housing, but instead pays for underlying services like housing consultation and moving expenses. In 2020, Minnesota became the first state in the nation to offer the HSS program, which should have caused the Walz Administration to ensure that program controls and anti-fraud safeguards were in place. Instead, our investigation and hearings showed that DHS measured success by the amount of people allegedly served, and the amount of money spent, rather than improvement to the quality of life of Minnesotans in need. Given these incentives, the resulting massive fraud is unsurprising. Public pressure, including our own hearing, caused the Walz Administration to discontinue the program on October 29, 2025.

When Minnesota became the first state in the country to offer HSS, expectations were that funding levels would be low, with initial estimates at $2.6 million per year.53 However, reimbursements quickly skyrocketed beyond expectations, and the program was flooded with new providers. Since there is no license needed to provide HSS, and barriers to entry are low (given that most of the services are of a consultative nature), significant oversight by DHS was necessary to prevent fraud. This did not happen, and costs exploded.

Note: From USAO 12/18/2025 Press Conference54

Our investigation and Committee hearings showed that nearly all of this activity was fraudulent.

52 YouTube video, House Fraud Prevention and State Agency Oversight Policy Committee 9/17/25. 53 U.S. Attorney’s Office, District of Minnesota, “Defendants Charged in First Wave of Housing Stabilization Fraud Cases,” Sept. 18, 2025. 54 YouTube video, FULL PRESS CONFERENCE: U.S. Attorney's office announces new fraud charges in Minnesota, Dec 18, 2025.

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Finding: DHS was repeatedly warned about widespread fraud in HSS but failed to take timely statewide action.

In the first wave of indictments against eight individuals suspected of HSS fraud, acting U.S. Attorney Joe Thompson stated:

“I want to be clear on the scope of the crisis. What we see are schemes stacked upon schemes, draining resources meant for those in need. It feels never ending. I have spent my career as a fraud prosecutor and the depth of the fraud in Minnesota takes my breath away.”

Extensive coverage of stories from clients, as well as others who attempted to warn DHS of the widespread fraud in HSS, were reported by the media. The Committee heard testimony from DHS, as well as a client defrauded by an HSS provider, to learn about DHS’ oversight of the program, why it failed, and whether the same vulnerabilities extend to other service areas.

Note: The Committee was denied the ability to hear testimony from former DHS Assistant Commissioner Eric Grumdahl who was responsible for the administration of HSS. This occurred because DHS terminated Grumdahl the day before the committee’s HSS hearing. DHS Commissioner Shireen Gandhi would not give any explanation for Grumdahl’s termination despite being asked.

Widespread reporting and investigation by local media revealed extensive fraud schemes within the HSS program. This reporting also revealed blatant red flags that would have been caught early with better internal controls and program integrity efforts. The Committee observed the following fraud that the Walz Administration overlooked:

1. Billing for Clients Who Were Deceased • Some providers submitted claims for housing services on behalf of clients who had died. • In one case, a top-billing provider allegedly billed Medicaid for months after the client’s death. • After being pressed by the committee, DHS eventually admitted that this was a pattern across multiple providers. 2. Phantom Services / No-Show Billing • HSS providers billed for housing support meetings, visits, and case management that never occurred. • An FBI affidavit detailed falsified progress notes and signatures to make it appear services were delivered. • Clients told investigators they never met with the staff who claimed to have helped them. 3. Forged or Falsified Documentation • Some HSS providers forged client signatures or created fabricated visit logs.

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Other HSS providers back-dated or mass-produced records in a (largely successful) effort to deceive auditors. • HSS providers copied and reused records for different clients. 4. Kickbacks & “Free Rent” Schemes • Certain HSS providers (e.g., Evergreen Recovery) allegedly offered free or reduced rent to clients as an inducement to enroll in their HSS program. • These practices allowed HSS scammers to bill Medicaid for inflated case management “services” while using housing as bait. • An FBI affidavit described this as a central element of the fraud. 5. Inflated or Duplicate Billing • Some companies billed for multiple hours of service in a single day for one client, or for the same client under different staff names. • Others submitted identical claims across multiple clients (“copy-paste” billing). • The Committee found billing clusters that suggested systemic inflation. 6. Exploiting Vulnerable Clients • The Committee found that some clients were pressured to sign forms without understanding what they agreed to. • Providers sometimes enrolled people experiencing homelessness in large groups, and billed Medicaid even if services were never delivered. • Families said they remained unhoused even while providers billed thousands in their names. As the following timeline makes clear, DHS and the Walz Administration ignored multiple reports to blatant fraud in HHS for nearly two years before finally taking action.

July 2020 — HSS program starts

2021–2024 — Rapid growth in claims and enrollment: • 2021 -- $21 million in claims for 8,300 individuals • 2022 -- $42 million in claims for 14,200 individuals • 2023 -- $74 million in claims for 16,900 individuals • 2024 -- $104 million in claims for 21,300 individuals

This rapid, exponential growth was a structural red flag that DHS at a minimum ignored, and at worst, appeared to celebrate.

Late 2023 — Local actors (not DHS) reported concerns: • County employees, honest providers, and a few advocates reported likely violations to DHS. Reporters questioned whether services were actually being provided, and pointed to operational and provider-quality concerns about how HSS was being delivered.

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These outside warnings were ignored by DHS and the Walz Administration more broadly, but were later confirmed by independent media investigative reporting.

March 2024 — Hennepin Health filed their first complaint to the Walz Administration: • County-run managed care organization (MCO) Hennepin Health notified DHS of concerning billing patterns by Start Today Hennepin, the State’s largest HSS biller. • Hennepin Health noted that Start Today Hennepin billed unusually high numbers of hours, duplicated service logs, and charged for clients who did not need services (because they were already housed, in prison, or hospitalized). • DHS took no action.

April – October 2024 — Multiple credible outside complaints and investigations related to fraud in HSS; no action by DHS: • In April, County employees contacted DHS alleging fraud and bribery by HHS providers. They had evidence of HSS providers paying $50 to homeless individuals at shelters to complete HSS paperwork. • In May, Hennepin Health manager asked DHS OIG if their fraud and kickback complaints were making it to the OIG team. DHS OIG admitted they were not, and stated “we’re flying blind on this so far.” • In July, Hennepin Health sent DHS multiple fraud complaints, including: 1) an official fraud referral for Start Today Hennepin alleging over $141,000 in overbilling; and 2) evidence of billing for a deceased woman for 3 weeks after her death. • In August, Hearth Connection, a non-profit, reported to DHS about the lack of quality assurance safeguards in the program, predatory behavior by providers, and asked for a meeting. DHS delayed the meeting until December, when Hearth Connection made several more fraud allegations. DHS conducted no known follow-up.

November – December 2024 — Frustrated by DHS inaction, Hennepin Health suspends providers on its own: • Hennepin Health suspended payments to multiple providers and refers them to Medicaid Fraud Control Unit (MFCU) at DHS. • Hennepin Health met with DHS to discuss issues and findings from 2024 investigations. • Hennepin Health terminated grantee Start Today Hennepin (and referred it to MFCU) after Start Today Hennepin employees admit to falsified logs and overbilling by $141,435. • Due to inaction by DHS, providers suspended and terminated by Hennepin Health are able to continue billing DHS through other health plans.

January 2025 — DHS Commissioner downplays fraud allegations: • DHS Commissioner Jodi Harpstead minimizes fraud allegations in Senate Committee saying “There’s a lot of rumors of fraud more than there is actual fraud”55 and insists there is no widespread fraud. She is replaced a few weeks later.

55 KARE 11 Investigates, “‘Flying Blind’: State Agency Missed or Ignored Repeated Housing Fraud Warnings,” Sept. 11, 2025.

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May 2025 — Initial KARE 11 Report: • KARE 11 publishes their first article on HSS fraud documenting instances of individuals noticing companies they never heard of billing for services never received.56 This would become the first in a series of articles throughout summer and fall of 2025 exposing the extent of the fraud and lack of action by DHS.

July 16–28, 2025 — FBI raids HSS providers57: • FBI and federal agents searched multiple locations tied to HSS providers. • Acting U.S. Attorney Joe Thompons described HSS fraud scheme as “massive.” • FBI unsealed affidavits alleging companies billed Medicaid for services not delivered, directly referencing reporting by KARE 11. • Governor and DHS officials then ordered payments frozen while investigations continued. DHS used billing analytics and investigations to identify suspect providers; DHS suspended payments to dozens of providers (50+ halted payments initially; 77 providers had payments suspended by Aug. 1).

Aug 1, 2025 — DHS moved to terminate the program58: • DHS reported 77 providers with payment suspensions due to fraud. The total amount received by these fraudulent providers exceed $88 million, which represented the overwhelming majority of HSS payments. • Citing “credible allegations of fraud” and lack of program controls, DHS formally asked CMS to approve terminating HSS while it worked to redesign the program to stop the clear and pervasive fraud.

September 16, 2025 – Eric Grumdahl, DHS director of HHS program, is terminated.

September 17, 2025 — House Fraud Prevention & State Agency Oversight Hearing on HSS Fraud:

The Committee heard testimony from DHS and questioned the agency on when they first

knew about HHS fraud and what actions they took.

The day of the hearing, Governor Walz issues an executive order aimed to combat

fraud.59

September 18, 2025 — First wave of HSS charges:

US Attorney announced the first wave of criminal charges against eight individuals for

allegedly defrauding the HSS program.

56 KARE 11 Investigates, “Fake Meetings & Phantom Services Alleged as Minnesota’s Housing Stabilization Services Program Booms,” May 1, 2025. 57 KARE 11 Investigates, “Federal Agents Raid Homes & Businesses Seizing Evidence in Housing Fraud Investigation,” July 16, 2025. 58 Minnesota Department of Human Services, “DHS Moves to Terminate Housing Stabilization Services Program,” Aug. 1, 2025. 59 Office of Gov. Tim Walz, Executive Order 25-10, “Empowering State Agencies to Continue Combatting Fraud,” Sept. 17, 2025.

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October 2025 — The Walz Administration takes belated action60:

On October 29th, Governor Walz issued ordered stopping payments and an audit for 14

high-risk services including HSS.

On October 31st, HSS program formally ended after the state received approval from

CMS.

December 18, 2025 — More indictments and scope of the crisis expanded61:

US Attorney announced five additional charges against individuals who allegedly

defrauded HSS. USAO unveiled expansive fraud schemes, including “fraud tourists” who traveled to Minnesota to steal public funds.

US Attorney expanded its investigation to other Medicaid waiver services such as ICS

and EIDBI.

US Attorney estimated half of the $18 billion spent across the 14 designated high-risk

Medicaid waiver programs to have been fraudulent reimbursements.

2026 — Walz Administration attempted to revive HSS62:

Governor Walz recommended that DHS submit a redesign of HSS in the executive

branch’s budget recommendation to begin efforts to reintroduce the fraud-ridden program.

Finding: The red flags observed in HSS are present more broadly in Home and Community Based Services (HCBS) programs.

While HSS received unique scrutiny for the numerous red flags that DHS and the Walz Administration ignored, the Committee observed similar concerns among the broader Home and Community Based Service (HCBS)/245D program, of which HSS is part of. HCBS/245D is massive – 42% of all provider licenses granted by DHS in Hennepin County are in that program. Many HCBS/245D programs have similar attributes as HSS -- low barriers of entry and high revenue potential. As Rep. Schultz commented to DHS at the hearing:

“There are providers that provide services not just for Housing Stabilization Services, but they are interwoven through a whole number of HCBS services, and I didn’t hear from you today, nor do I have any level of confidence, that you are tracking the individuals who are involved in providing those services to those other programs. There’s no evidence that you’re applying the same principles that are happening with HSS to other Medicaid funded programs.”

On December 1, 2025, DHS announced a two-year moratorium on all new 245D licenses63. In their letter announcing their intent, the agency cited a massive growth in providers outpacing program participants as applicants for the license had exploded by 283%.While this action will prevent an influx of new providers in the largest licensing category administered by DHS, the committee lacks confidence that the Governor’s fraud prevention proposals will be sufficient to

60 Office of Gov. Tim Walz, “Governor Walz Orders Third-Party Audit of Medicaid Billing at DHS,” Oct. 29, 2025. 61 U.S. Attorney’s Office, District of Minnesota, “Six Additional Defendants Charged, One Defendant Pleads Guilty in Ongoing Fraud Schemes,” Dec. 18, 2025. 62 Minnesota Department of Human Services, 2026 DHS Governor’s Budget Summary, Mar. 17, 2026. 63 Minnesota Department of Human Services, 245D Licensing Moratorium Letter to Legislators, Dec. 1, 2025.

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stop a wave of new fraudulent providers enrolling when the moratorium expires on December 31st 2027.

Finding: The Walz Administration failed to recognize or investigate other obvious red flags in the HCBS program.

Another red flag observed by the Committee across HCBS programs (especially within HSS) was the number of businesses using the same address. For example, federal prosecutors noted a high concentration of HSS providers located at the Griggs-Midway building in St. Paul. The Committee found a similar pattern across the HCBS program. At the time of the HSS hearing, of the 1609 HCBS licenses in Hennepin County, 25% listed the same address as another licensee. As Rep. Rarick stated:

“All you have to do is show up at their door and realize that in one building alone there were 22 providers. That's not unique. In another building in Minneapolis there are 20 providers, in another building 15, two buildings 14. There are multiple providers in the exact same location. This isn’t rocket science, this is easy stuff.”

The Committee is aware of no evidence that DHS has taken note or aggressively investigated this obvious red flag.

Supporting Data on Shared Address Issue

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Among 22 HCBS providers located in the same commercial building in Hennepin County, a pattern emerges of newly licensed companies, often cited for several violations, rapidly growing in state reimbursements.

Summary

When the Walz Administration made Minnesota the first state in the nation to provide Housing Stabilization Services, it had a special duty to implement strict program controls and fraud prevention measures. This was especially true because of the low barriers to entry and consultative nature of the program, which made the nascent program an obvious fraud target.

Not only did DHS not create meaningful fraud controls, it ignored clear and obvious red flags, warnings from its own providers, county and MCO whistleblowers, and media reports. As a result, over $100 million was stolen from taxpayers and almost no services were provided. When the program was finally shut down, we heard few complaints from affected Minnesotans, because HSS had operated almost solely as a conduit for fraud. It is also clear that the broader HCBS program is also riddled with fraud, and investigations must continue.

This shameful episode should be a warning and reminder of the perils of new, lightly regulated programs where the alleged services are hard to audit and easy to falsify. The HHS program did little to meet the needs of Minnesotans and was removed from statute during the 2026 session. It should not be renewed.

Context

← chapter House Fraud Committee final report: Waste, Fraud, and Abuse in Minnesota
concerns Housing Stabilization Services
concerns Housing Stabilization Services ends
concerns The 14 high-risk Medicaid programs
concerns Joseph H. Thompson
concerns Jodi Harpstead
concerns Tim Walz
concerns Thompson press conference, FOX 9 live
concerns Thompson press conference, CBS
drawn from the hearing Fraud Committee: Housing Stabilization Services & Integrated Community Supports