Commissioner's authority to impose sanctions against individuals or entities that receive payments from medical assistance or provide goods or services for which payment is made from medical assistance clarified, and medical assistance sanctions and monetary recovery provision recodified.

A bill for an act

relating to human services; clarifying commissioner authority to impose sanctions

against individuals or entities that receive payments from medical assistance or

provide goods or services for which payment is made from medical assistance;

recodifying medical assistance sanctions and monetary recovery provisions;

amending Minnesota Statutes 2024, sections 245.095, by adding a subdivision;

256B.064, subdivisions 1b, 1c, 1d, 2, 3, 4, 5, by adding subdivisions; Minnesota

Statutes 2025 Supplement, section 15.013, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 15.013, is amended by adding a

subdivision to read:

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Subd. 7.

new text end

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Exemption.

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Nothing in this section modifies, supersedes, limits, or expands

the authority of the commissioner of human services to impose sanctions under section

256B.064.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

new text end

Sec. 2.

Minnesota Statutes 2024, section 245.095, is amended by adding a subdivision to

read:

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Subd. 7.

new text end

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Exemption.

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Nothing in this section modifies, supersedes, limits, or expands

the commissioner's authority to impose sanctions under section 256B.064.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 3.

Minnesota Statutes 2024, section 256B.064, subdivision 1b, is amended to read:

Subd. 1b.

Sanctions available.

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(a)
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The commissioner may impose the following sanctions

for the conduct described in subdivision 1a:
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suspension or withholding of payments to an

individual or entity and suspending or terminating participation in the program, or imposition

of a fine under subdivision 2, paragraph (g).
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(1) suspending payments to an individual or entity;

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(2) withholding payments to an individual or entity;

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(3) suspending participation in the program;

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(4) terminating participation in the program; or

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(5) imposing a fine under subdivision 2a.

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(b)
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When imposing sanctions under this
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section
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subdivision
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, the commissioner
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shall
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must
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consider the nature, chronicity, or severity of the conduct and the effect of the conduct

on the health and safety of persons served by the individual or entity.

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(c)
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The commissioner
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shall
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must
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suspend an individual's or entity's participation in the

program for a minimum of five years if the individual or entity is convicted of a crime,

received a stay of adjudication, or entered a court-ordered diversion program for an offense

related to a provision of a health service under medical assistance, including a federally

approved waiver, or health care fraud.

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(d)
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Regardless of imposition of sanctions, the commissioner may make a referral to the

appropriate state licensing board.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 4.

Minnesota Statutes 2024, section 256B.064, subdivision 1c, is amended to read:

Subd. 1c.

Grounds for and methods of monetary recovery.

(a) The commissioner

may obtain monetary recovery from an individual or entity that has been improperly paid

by the department either as a result of conduct described in subdivision 1a or as a result of

an error by the individual or entity submitting the claim or by the department, regardless of

whether the error was intentional. Patterns need not be proven as a precondition to monetary

recovery of erroneous or false claims, duplicate claims, claims for services not medically

necessary, or claims based on false statements.

(b) The commissioner may obtain monetary recovery using methods including but not

limited to the following: assessing and recovering money improperly paid and debiting from

future payments any money improperly paid. The commissioner
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shall
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must
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charge interest

on money to be recovered if the recovery is to be made by installment payments or debits,

except when the monetary recovery is of an overpayment that resulted from a department

error. The interest charged
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shall
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must
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be the rate established by the commissioner of revenue

under section
270C.40
.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 5.

Minnesota Statutes 2024, section 256B.064, subdivision 1d, is amended to read:

Subd. 1d.

Investigative costs.

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(a)
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The commissioner may seek recovery of investigative

costs from any individual or entity that willfully submits a claim for reimbursement for

services that the individual or entity knows, or reasonably should have known, is a false

representation and that results in the payment of public funds for which the individual or

entity is ineligible.

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(b)
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Billing errors that result in unintentional overcharges
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shall
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are
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not
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be
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grounds for

investigative cost recoupment.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 6.

Minnesota Statutes 2024, section 256B.064, subdivision 2, is amended to read:

Subd. 2.

Imposition of monetary recovery and sanctions
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; generally
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.

(a) The

commissioner
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shall
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must
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determine any monetary amounts to be recovered and sanctions

to be imposed upon an individual or entity under this section. Except as provided in
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paragraphs (b) and (d), neither
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subdivisions 2b to 2d, the commissioner must not obtain
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a

monetary recovery
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nor
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or impose
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a sanction
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will be imposed by the commissioner
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without

prior notice and an opportunity for a hearing, according to chapter 14, on the commissioner's

proposed action
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, provided that the commissioner may suspend or reduce payment to an

individual or entity, except a nursing home or convalescent care facility, after notice and

prior to the hearing if in the commissioner's opinion that action is necessary to protect the

public welfare and the interests of the program
deleted text end
.

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(b) Except when the commissioner finds good cause not to suspend payments under

Code of Federal Regulations, title 42, section 455.23(e) or (f), the commissioner shall

withhold or reduce payments to an individual or entity without providing advance notice

of such withholding or reduction if either of the following occurs:

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(1) the individual or entity is convicted of a crime involving the conduct described in

subdivision 1a; or

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(2) the commissioner determines there is a credible allegation of fraud for which an

investigation is pending under the program. Allegations are considered credible when they

have an indicium of reliability and the state agency has reviewed all allegations, facts, and

evidence carefully and acts judiciously on a case-by-case basis. A credible allegation of

fraud is an allegation which has been verified by the state, from any source, including but

not limited to:

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(i) fraud hotline complaints;

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(ii) claims data mining; and

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(iii) patterns identified through provider audits, civil false claims cases, and law

enforcement investigations.

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(c) The commissioner must send notice of the withholding or reduction of payments

under paragraph (b) within five days of taking such action unless requested in writing by a

law enforcement agency to temporarily withhold the notice. The notice must:

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(1) state that payments are being withheld according to paragraph (b);

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(2) set forth the general allegations as to the nature of the withholding action, but need

not disclose any specific information concerning an ongoing investigation;

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(3) except in the case of a conviction for conduct described in subdivision 1a, state that

the withholding is for a temporary period and cite the circumstances under which withholding

will be terminated;

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(4) identify the types of claims to which the withholding applies; and

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(5) inform the individual or entity of the right to submit written evidence for consideration

by the commissioner.

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(d) The withholding or reduction of payments will not continue after the commissioner

determines there is insufficient evidence of fraud by the individual or entity, or after legal

proceedings relating to the alleged fraud are completed, unless the commissioner has sent

notice of intention to impose monetary recovery or sanctions under paragraph (a). Upon

conviction for a crime related to the provision, management, or administration of a health

service under medical assistance, a payment held pursuant to this section by the commissioner

or a managed care organization that contracts with the commissioner under section
256B.035

is forfeited to the commissioner or managed care organization, regardless of the amount

charged in the criminal complaint or the amount of criminal restitution ordered.

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(e) The commissioner shall suspend or terminate an individual's or entity's participation

in the program without providing advance notice and an opportunity for a hearing when the

suspension or termination is required because of the individual's or entity's exclusion from

participation in Medicare. Within five days of taking such action, the commissioner must

send notice of the suspension or termination. The notice must:

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(1) state that suspension or termination is the result of the individual's or entity's exclusion

from Medicare;

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(2) identify the effective date of the suspension or termination; and

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(3) inform the individual or entity of the need to be reinstated to Medicare before

reapplying for participation in the program.

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(f)
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(b)
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Upon receipt of a notice under paragraph (a)
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or subdivision 2c or 2d
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that a

monetary recovery or sanction is to be imposed, an individual or entity may request a

contested case, as defined in section
14.02, subdivision 3
, by filing with the commissioner

a written request of appeal. The appeal request must be received by the commissioner no

later than 30 days after the date the notification of monetary recovery or sanction was mailed

to the individual or entity. The appeal request must specify:

(1) each disputed item, the reason for the dispute, and an estimate of the dollar amount

involved for each disputed item;

(2) the computation that the individual or entity believes is correct;

(3) the authority in statute or rule upon which the individual or entity relies for each

disputed item;

(4) the name and address of the person or entity with whom contacts may be made

regarding the appeal; and

(5) other information required by the commissioner.

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(g) The commissioner may order an individual or entity to forfeit a fine for failure to

fully document services according to standards in this chapter and Minnesota Rules, chapter

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9505

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. The commissioner may assess fines if specific required components of documentation

are missing. The fine for incomplete documentation shall equal 20 percent of the amount

paid on the claims for reimbursement submitted by the individual or entity, or up to $5,000,

whichever is less. If the commissioner determines that an individual or entity repeatedly

violated this chapter, chapter

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254B

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or

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245G

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, or Minnesota Rules, chapter

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9505

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, related to

the provision of services to program recipients and the submission of claims for payment,

the commissioner may order an individual or entity to forfeit a fine based on the nature,

severity, and chronicity of the violations, in an amount of up to $5,000 or 20 percent of the

value of the claims, whichever is greater.

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(h) The individual or entity shall pay the fine assessed on or before the payment date

specified. If the individual or entity fails to pay the fine, the commissioner may withhold

or reduce payments and recover the amount of the fine. A timely appeal shall stay payment

of the fine until the commissioner issues a final order.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 7.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision

to read:

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Subd. 2a.

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Imposition of fines.

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(a) The commissioner may order an individual or entity

to forfeit a fine for failure to fully document services according to standards in this chapter

and Minnesota Rules, chapter 9505. The commissioner may assess fines if specific required

components of documentation are missing. The fine for incomplete documentation equals

20 percent of the amount paid on the claims for reimbursement submitted by the individual

or entity or up to $5,000, whichever is less. If the commissioner determines that an individual

or entity repeatedly violated this chapter, chapter 245G or 254B, or Minnesota Rules, chapter

9505, related to the provision of services to program recipients and the submission of claims

for payment, the commissioner may order an individual or entity to forfeit a fine based on

the nature, severity, and chronicity of the violations in an amount of up to $5,000 or 20

percent of the value of the claims, whichever is greater.

new text end

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(b) The individual or entity must pay the fine assessed on or before the payment date

specified by the commissioner. If the individual or entity fails to pay the fine, the

commissioner may withhold or reduce payments and recover the amount of the fine. A

timely appeal stays payment of the fine until the commissioner issues a final order.

new text end

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EFFECTIVE DATE.

new text end

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This section is effective the day following final enactment.

new text end

Sec. 8.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision

to read:

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Subd. 2b.

new text end

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Mandatory suspension or termination after exclusion from participation

in Medicare.

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(a) The commissioner must suspend or terminate an individual's or entity's

participation in the program without providing advance notice and an opportunity for a

hearing when the suspension or termination is required because of the individual's or entity's

exclusion from participation in Medicare.

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(b) Within five days of taking an action under paragraph (a), the commissioner must

send notice of the suspension or termination to the individual or entity. The notice must:

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(1) state that suspension or termination is the result of the individual's or entity's exclusion

from Medicare;

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(2) identify the effective date of the suspension or termination; and

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(3) inform the individual or entity of the need to be reinstated to Medicare before

reapplying for participation in the program.

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EFFECTIVE DATE.

new text end

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This section is effective the day following final enactment.

new text end

Sec. 9.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision

to read:

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Subd. 2c.

new text end

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Imposition of withholding or reduction of payments before a hearing.

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(a)

Except as provided in paragraph (b), the commissioner may withhold or reduce payment

to an individual or entity after notice but before a hearing if, in the commissioner's opinion,

withholding or reducing payment is necessary to protect the public welfare and the interests

of the program.

new text end

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(b) The commissioner must not withhold or reduce payments to a nursing home or

convalescent care facility before a hearing.

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EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 10.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision

to read:

new text begin

Subd. 2d.

new text end

new text begin

Imposition of withholding or reduction of payments without prior

notice.

new text end

new text begin

(a) Except when the commissioner finds good cause not to suspend payments under

Code of Federal Regulations, title 42, section 455.23(e) or (f), the commissioner must

withhold or reduce payments to an individual or entity without providing advance notice

of the withholding or reduction if either of the following occurs:

new text end

new text begin

(1) the individual or entity is convicted of a crime involving the conduct described in

subdivision 1a; or

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new text begin

(2) the commissioner determines there is a credible allegation of fraud for which an

investigation is pending under the program. Allegations are considered credible when the

allegations have an indicium of reliability and the state agency has reviewed all allegations,

facts, and evidence carefully and acts judiciously on a case-by-case basis. A credible

allegation of fraud is an allegation that has been verified by the state from any source,

including but not limited to:

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(i) fraud hotline complaints;

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(ii) claims data mining; and

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(iii) patterns identified through provider audits, civil false claims cases, and law

enforcement investigations.

new text end

new text begin

(b) The commissioner must send notice of the withholding or reduction of payments

under paragraph (a) within five days of withholding or reducing payment unless requested

in writing by a law enforcement agency to temporarily withhold the notice. The notice must:

new text end

new text begin

(1) state that payments are being withheld according to paragraph (a);

new text end

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(2) set forth the general allegations as to the nature of the withholding action but need

not disclose any specific information concerning an ongoing investigation;

new text end

new text begin

(3) except in the case of a conviction for conduct described in subdivision 1a, state that

the withholding is for a temporary period and cite the circumstances under which withholding

will be terminated;

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(4) identify the types of claims to which the withholding applies; and

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(5) inform the individual or entity of the right to submit written evidence for consideration

by the commissioner.

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(c) The commissioner must cease the withholding or reduction of payments under this

subdivision after the commissioner determines there is insufficient evidence of fraud by the

individual or entity or after legal proceedings relating to the alleged fraud are completed,

unless the commissioner has sent notice of intention to impose monetary recovery or

sanctions.

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EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 11.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision

to read:

new text begin

Subd. 2e.

new text end

new text begin

Forfeiture of withheld payments upon criminal conviction.

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new text begin

Upon conviction

for a crime related to the provision, management, or administration of a health service under

medical assistance, a payment held pursuant to this section by the commissioner or a managed

care organization that contracts with the commissioner under section 256B.035 is forfeited

to the commissioner or managed care organization, regardless of the amount charged in the

criminal complaint or the amount of criminal restitution ordered.

new text end

new text begin

EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 12.

Minnesota Statutes 2024, section 256B.064, subdivision 3, is amended to read:

Subd. 3.

Mandates on prohibited payments.

(a) The commissioner
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shall
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new text begin
must
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maintain

and publish a list of each excluded individual and entity that was convicted of a crime related

to the provision, management, or administration of a medical assistance health service, or

suspended or terminated under subdivision
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2
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new text begin
2b
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. Medical assistance payments cannot be

made by an individual or entity for items or services furnished either directly or indirectly

by an excluded individual or entity, or at the direction of excluded individuals or entities.

(b) The entity must check the exclusion list on a monthly basis and document the date

and time the exclusion list was checked and the name and title of the person who checked

the exclusion list. The entity must immediately terminate payments to an individual or entity

on the exclusion list.

(c) An entity's requirement to check the exclusion list and to terminate payments to

individuals or entities on the exclusion list applies to each individual or entity on the

exclusion list, even if the named individual or entity is not responsible for direct patient

care or direct submission of a claim to medical assistance.

(d) An entity that pays medical assistance program funds to an individual or entity on

the exclusion list must refund any payment related to either items or services rendered by

an individual or entity on the exclusion list from the date the individual or entity is first paid

or the date the individual or entity is placed on the exclusion list, whichever is later, and an

entity may be subject to:

(1) sanctions under
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subdivision 2
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new text begin
this section
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;

(2) a civil monetary penalty of up to $25,000 for each determination by the department

that the vendor employed or contracted with an individual or entity on the exclusion list;

and

(3) other fines or penalties allowed by law.

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EFFECTIVE DATE.

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new text begin

This section is effective the day following final enactment.

new text end

Sec. 13.

Minnesota Statutes 2024, section 256B.064, subdivision 4, is amended to read:

Subd. 4.

Notice.

(a) The department
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shall
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new text begin
must
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serve the notice required under
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subdivision
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new text begin

subdivisions
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2
new text begin
and 2d
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using a signature-verified confirmed delivery method to the address

submitted to the department by the individual or entity. Service is complete upon mailing.

(b) The department
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shall
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new text begin
must
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give notice in writing to a recipient placed in the Minnesota

restricted recipient program under section
256B.0646
and Minnesota Rules, part
9505.2200
.

The department
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shall
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new text begin
must
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send the notice by first class mail to the recipient's current address

on file with the department. A recipient placed in the Minnesota restricted recipient program

may contest the placement by submitting a written request for a hearing to the department

within 90 days of the notice being mailed.

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EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 14.

Minnesota Statutes 2024, section 256B.064, subdivision 5, is amended to read:

Subd. 5.

Immunity; good faith reporters.

(a) A person who makes a good faith report

is immune from any civil or criminal liability that might otherwise arise from reporting or

participating in the investigation. Nothing in this subdivision affects an individual's or

entity's responsibility for an overpayment established under this subdivision.

(b) A person employed by a lead investigative agency who is conducting or supervising

an investigation or enforcing the law according to the applicable law or rule is immune from

any civil or criminal liability that might otherwise arise from the person's actions, if the

person is acting in good faith and exercising due care.

(c) For purposes of this subdivision, "person" includes a natural person or any form of

a business or legal entity.

(d) After an investigation is complete, the reporter's name must be kept confidential.

The subject of the report may compel disclosure of the reporter's name only with the consent

of the reporter or upon a written finding by a district court that the report was false and there

is evidence that the report was made in bad faith. This subdivision does not alter disclosure

responsibilities or obligations under the Rules of Criminal Procedure, except that when the

identity of the reporter is relevant to a criminal prosecution the district court
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shall
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new text begin
must
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conduct an in-camera review before determining whether to order disclosure of the reporter's

identity.

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EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end

Sec. 15.

Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision

to read:

new text begin

Subd. 6.

new text end

new text begin

Application.

new text end

new text begin

This section supersedes any inconsistent or contrary provision of

law.

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EFFECTIVE DATE.

new text end

new text begin

This section is effective the day following final enactment.

new text end