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SF4354 • 2026
Program integrity requirements modification for the medical assistance program
This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.
The plain English breakdown is still being put together. The official documents below are already here.
Author added Utke
Withdrawn and re-referred to Human Services
Introduction and first reading
Program integrity requirements modification for the medical assistance program
A bill for an act relating to human services; modifying program integrity requirements for the medical assistance program; directing the commissioner of human services to create a medical assistance program integrity advisory board; directing the commissioner of human services to make recommendations on provider enrollment standards, modernizing program integrity infrastructure, and program integrity interventions; directing the commissioner of human services to conduct audits; requiring reports; appropriating money; amending Minnesota Statutes 2024, sections 245.095, by adding a subdivision; 256B.064, subdivisions 1b, 1d, 2, 3, 4, 5, by adding subdivisions; Minnesota Statutes 2025 Supplement, sections 15.013, by adding a subdivision; 256B.064, subdivision 1a. 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: new text begin Subd. 7. new text end new text begin Exemption. new text end new text begin This section does not apply to the medical assistance program administered by the commissioner of human services. 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. 2. Minnesota Statutes 2024, section 245.095, is amended by adding a subdivision to read: new text begin Subd. 7. new text end new text begin Exemption. new text end new text begin Subdivision 5 does not apply to any individual or entity that receives payments from medical assistance or provides goods or services for which payment is made from medical assistance. 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. 3. Minnesota Statutes 2025 Supplement, section 256B.064, subdivision 1a, is amended to read: Subd. 1a. Grounds for sanctions. (a) The commissioner may impose sanctions against any individual or entity that receives payments from medical assistance or provides goods or services for which payment is made from medical assistance for any of the following: (1) fraud, theft, or abuse in connection with the provision of goods and services to recipients of public assistance for which payment is made from medical assistance; (2) a pattern of presentment of false or duplicate claims or claims for services not medically necessary; (3) a pattern of making false statements of material facts for the purpose of obtaining greater compensation than that to which the individual or entity is legally entitled; (4) suspension or termination as a Medicare vendor; (5) refusal to grant the state agency access during regular business hours to examine all records necessary to disclose the extent of services provided to program recipients and appropriateness of claims for payment; (6) failure to repay an overpayment or a fine finally established under this section; (7) failure to correct errors in the maintenance of health service or financial records for which a fine was imposed or after issuance of a warning by the commissioner; and (8) any reason for which an individual or entity could be excluded from participation in the Medicare program under section 1128, 1128A, or 1866(b)(2) of the Social Security Act. (b) For the purposes of this section, goods or services for which payment is made from medical assistance includes but is not limited to care and services identified in section 256B.0625 or provided pursuant to any federally approved waiver. (c) Regardless of the source of payment or other item of value, the commissioner may impose sanctions against any individual or entity that solicits, receives, pays, or offers to pay any illegal remuneration as described in section 142E.51, subdivision 6a , in violation of section 609.542, subdivision 2 , or in violation of United States Code, title 42, section 1320a-7b(b)(1) or (2). No conviction is required before the commissioner can impose sanctions under this paragraph. (d) The commissioner may impose sanctions against a pharmacy provider for failure to respond to a cost of dispensing survey under section 256B.0625, subdivision 13e , paragraph (g). (e) The commissioner may impose sanctions against a pharmacy provider for failure to respond to a Minnesota drug acquisition cost survey under section 256B.0625, subdivision 13e, paragraph (i). new text begin (f) For the purposes of this section, "abuse" means the activities listed in paragraph (a), clauses (2), (3), and (7), but does not include billing errors that result in unintended overcharges. new text end Sec. 4. Minnesota Statutes 2024, section 256B.064, subdivision 1b, is amended to read: Subd. 1b. Sanctions available. new text begin (a) new text end The commissioner may impose the following sanctions for the conduct described in subdivision 1a: deleted text begin suspension or withholding of deleted text end new text begin suspending new text end payments to an individual or entity deleted text begin and deleted text end new text begin ; withholding payments to an individual or entity; new text end suspending deleted text begin or terminating deleted text end participation in the program deleted text begin , deleted text end new text begin ; terminating participation in the program; new text end or deleted text begin imposition of deleted text end new text begin imposing new text end a fine under subdivision deleted text begin 2, paragraph (g) deleted text end new text begin 2a new text end . new text begin (b) new text end When imposing sanctions under this deleted text begin section deleted text end new text begin subdivision new text end , the commissioner deleted text begin shall deleted text end new text begin must new text end 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. new text begin (c) new text end The commissioner deleted text begin shall deleted text end new text begin must new text end 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. new text begin (d) new text end Regardless of imposition of sanctions, the commissioner may make a referral to the appropriate state licensing board. new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end Sec. 5. Minnesota Statutes 2024, section 256B.064, subdivision 1d, is amended to read: Subd. 1d. Investigative costs. new text begin (a) new text end 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. new text begin (b) new text end Billing errors that result in unintentional overcharges deleted text begin shall deleted text end new text begin are new text end not deleted text begin be deleted text end grounds for investigative cost recoupment. new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end Sec. 6. Minnesota Statutes 2024, section 256B.064, subdivision 2, is amended to read: Subd. 2. Imposition of monetary recovery and sanctions new text begin ; generally new text end . (a) The commissioner deleted text begin shall deleted text end new text begin must new text end determine any monetary amounts to be recovered and sanctions to be imposed upon an individual or entity under this section. Except as provided in deleted text begin paragraphs (b) and (d), neither deleted text end new text begin subdivisions 2b to 2d, the commissioner must not obtain new text end a monetary recovery deleted text begin nor deleted text end new text begin or impose new text end a sanction deleted text begin will be imposed by the commissioner deleted text end without prior notice and an opportunity for a hearing, according to chapter 14, on the commissioner's proposed action deleted text begin , 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 . deleted text begin (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: deleted text end deleted text begin (1) the individual or entity is convicted of a crime involving the conduct described in subdivision 1a; or deleted text end deleted 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 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: deleted text end deleted text begin (i) fraud hotline complaints; deleted text end deleted text begin (ii) claims data mining; and deleted text end deleted text begin (iii) patterns identified through provider audits, civil false claims cases, and law enforcement investigations. deleted text end deleted text begin (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: deleted text end deleted text begin (1) state that payments are being withheld according to paragraph (b); deleted text end deleted text begin (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; deleted text end deleted 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; deleted text end deleted text begin (4) identify the types of claims to which the withholding applies; and deleted text end deleted text begin (5) inform the individual or entity of the right to submit written evidence for consideration by the commissioner. deleted text end deleted text begin (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. deleted text end deleted text begin (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: deleted text end deleted text begin (1) state that suspension or termination is the result of the individual's or entity's exclusion from Medicare; deleted text end deleted text begin (2) identify the effective date of the suspension or termination; and deleted text end deleted text begin (3) inform the individual or entity of the need to be reinstated to Medicare before reapplying for participation in the program. deleted text end deleted text begin (f) deleted text end new text begin (b) new text end Upon receipt of a notice under paragraph (a) new text begin or subdivision 2c or 2d new text end that a monetary recovery or sanction is to be new text begin or has been new text end 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. deleted text begin (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 deleted text end deleted text begin 9505 deleted text end deleted text begin . 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 deleted text end deleted text begin 254B deleted text end deleted text begin or deleted text end deleted text begin 245G deleted text end deleted text begin , or Minnesota Rules, chapter deleted text end deleted text begin 9505 deleted text end deleted text begin , 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. deleted text end deleted text begin (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. deleted 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. 7. Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision to read: new text begin Subd. 2a. new text end new text begin Imposition of fines. new text end new text begin (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 new text begin (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 new text begin EFFECTIVE DATE. new text end new text begin 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: new text begin Subd. 2b. new text end new text begin Mandatory suspension or termination after exclusion from participation in Medicare. new text end new text begin (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. new text end new text begin (b) Within five days of taking an action under paragraph (a), the commissioner must send notice of the suspension or termination. The notice must: new text end new text begin (1) state that the suspension or termination is the result of the individual's or entity's exclusion from Medicare; new text end new text begin (2) identify the effective date of the suspension or termination; and new text end new text begin (3) inform the individual or entity of the need to be reinstated to Medicare before reapplying for participation in the program. 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. 9. Minnesota Statutes 2024, section 256B.064, is amended by adding a subdivision to read: new text begin Subd. 2c. new text end new text begin Imposition of monetary recovery and sanctions before a hearing. new text end new text begin (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 new text begin (b) The commissioner must not withhold or reduce payments to a nursing home or convalescent care facility before a hearing. 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. 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 monetary recovery and sanctions 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 new text end 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 they are supported by a preponderance of the evidence 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 supported by a preponderance of the evidence that has been verified by the state, from any source, including but not limited to: new text end new text begin (i) fraud hotline complaints; new text end new text begin (ii) claims data mining; and new text end new text begin (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 need not disclose specific information concerning an ongoing investigation. The notice must: new text end new text begin (1) state that payments are being withheld according to paragraph (a); new text end new text begin (2) set forth the allegations as to the nature of the withholding action, which must specify: new text end new text begin (i) each disputed item, and for each disputed item the reason for the dispute and an estimate of the dollar amount involved; new text end new text begin (ii) the computation that the commissioner believes is correct; new text end new text begin (iii) the statute or rule the commissioner believes the individual or entity violated; and new text end new text begin (iv) other information necessary to aid the individual or entity when providing written evidence under clause (5) or filing an appeal under section 256B.064, subdivision 2; 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 not to exceed 60 days and cite the circumstances under which withholding will be terminated; new text end new text begin (4) identify the types of claims to which the withholding applies; and new text end new text begin (5) inform the individual or entity of the right to submit written evidence for consideration by the commissioner. new text end new text begin (c) The commissioner must cease to withhold or reduce payments under this subdivision after 60 days have passed, 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. 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. 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. new text end 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 deleted text begin shall deleted text end new text begin must new text end 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 deleted text begin 2 deleted text end new text begin 2b new text end . 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 deleted text begin subdivision 2 deleted text end new text begin this section new text end ; (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. new text begin EFFECTIVE DATE. new text end 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 deleted text begin shall deleted text end new text begin must new text end serve the notice required under deleted text begin subdivision deleted text end new text begin subdivisions new text end 2 new text begin and 2d new text end 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 deleted text begin shall deleted text end new text begin must new text end 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 deleted text begin shall deleted text end new text begin must new text end 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. new text begin 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 deleted text begin shall deleted text end new text begin must new text end conduct an in-camera review before determining whether to order disclosure of the reporter's identity. new text begin EFFECTIVE DATE. new text end new text begin This section is effective the day following final enactment. new text end Sec. 15. new text begin DIRECTION TO COMMISSIONER OF HUMAN SERVICES; MEDICAL ASSISTANCE PROGRAM INTEGRITY ADVISORY BOARD. new text end new text begin (a) By January 1, 2027, the commissioner of human services must establish a medical assistance program integrity advisory board. The board must oversee medical assistance program integrity efforts, evaluate the efforts, and provide recommendations, including but not limited to legislative changes, to the commissioner on ways to improve medical assistance program integrity. The board must advise the commissioner on enforcement proportionality, analytics governance, and program integrity metrics. new text end new text begin (b) The board must consist of seven members appointed by the commissioner of human services and must include: new text end new text begin (1) at least one member who is a forensic accountant; new text end new text begin (2) at least one member who is a data scientist; new text end new text begin (3) at least one member who is a long-term services and supports program expert; new text end new text begin (4) at least one member who is a program design and evaluation specialist; and new text end new text begin (5) at least one member of the public. new text end new text begin (c) The commissioner must annually select a board chair from among the members. The commissioner must develop procedures for appointing new members, compensation for members, and term length, if any, for members. new text end Sec. 16. new text begin DIRECTION TO COMMISSIONER OF HUMAN SERVICES; MEDICAL ASSISTANCE PROVIDER ENROLLMENT STANDARDS. new text end new text begin (a) By January 1, 2027, the commissioner of human services must make recommendations to the chairs and ranking minority members of the legislative committees with jurisdiction over human services policy and finance regarding statutory and program changes to ensure only qualified, prepared, and financially stable providers are permitted to enroll as a medical assistance provider type designated by the commissioner as high-risk under Minnesota Statutes, section 256B.04, subdivision 21. new text end new text begin (b) The commissioner must include in the recommendations enhanced provider enrollment screening standards related to the provider's regulatory knowledge, operational readiness, internal controls, financial liquidity and solvency, and capacity to comply with state and federal Medicaid requirements. new text end new text begin (c) In developing the recommendations, the commissioner must consult with the Health Law Section of the Minnesota State Bar Association, representatives of the medical assistance providers subject to the recommendations being considered, and other impacted groups. new text end Sec. 17. new text begin DIRECTION TO COMMISSIONER OF HUMAN SERVICES; PROGRAM INTEGRITY TECHNOLOGY MODERNIZATION. new text end new text begin By January 1, 2027, the commissioner of human services must develop recommendations on how to modernize program integrity infrastructure within the Department of Human Services. The recommendations must include the infrastructure's capability to provide near-real-time analytics and risk scoring; prepayment review and anomaly detection; cross-matching of enrollment data, licensure data, and claims data; and security dashboards for audits and investigations with privacy safeguards. By January 15, 2027, the commissioner must provide recommendations to the chairs and ranking minority members of the legislative committees with jurisdiction over human services program integrity functions. new text end Sec. 18. new text begin DIRECTION TO COMMISSIONER OF HUMAN SERVICES; PROGRAM STRUCTURE AND DESIGN AUDITS. new text end new text begin (a) By August 1, 2026, the commissioner of human services must select and contract with an independent research entity to conduct comprehensive program structure and design audits on the services listed in paragraph (b). Each audit must identify structural incentive misalignments; undue compliance burdens on good-faith providers; regulatory and billing ambiguities; and gaps in utilization controls. Each audit must also provide evidence-based redesign recommendations. new text end new text begin (b) The services that must be audited by the independent research entity include: new text end new text begin (1) adult companion services; new text end new text begin (2) adult day services; new text end new text begin (3) adult rehabilitative mental health services; new text end new text begin (4) assertive community treatment; new text end new text begin (5) community first services and supports; new text end new text begin (6) early intensive developmental and behavioral intervention; new text end new text begin (7) individualized home supports; new text end new text begin (8) integrated community supports; new text end new text begin (9) intensive residential treatment services; new text end new text begin (10) night supervision services; new text end new text begin (11) nonemergency medical transportation services; new text end new text begin (12) peer recovery support services; and new text end new text begin (13) recuperative care. new text end new text begin (c) Each audit must be completed by January 1, 2027. The commissioner must submit each completed audit report within 30 days of receipt to the chairs and ranking minority members of the legislative committees with jurisdiction over human services program integrity functions. new text end Sec. 19. new text begin DIRECTION TO COMMISSIONER OF HUMAN SERVICES; PROPORTIONAL MEDICAL ASSISTANCE PROGRAM INTEGRITY INTERVENTIONS. new text end new text begin (a) By January 1, 2027, the commissioner of human services must make recommendations to the chairs and ranking minority members of the legislative committees with jurisdiction over human services policy and finance on modernizing medical assistance program integrity efforts to strengthen fraud deterrence and promote clarity, proportionality based on the severity of an infraction, provider education, client protection, and continuity of care. new text end new text begin (b) The commissioner must include in the recommendations a comprehensive approach to proportional medical assistance program integrity interventions commensurate with the severity of an infraction of a medical assistance program requirement. new text end new text begin (c) For the purposes of the recommendations, the commissioner must consider three levels of severity: new text end new text begin (1) low-severity conduct, which includes clerical or documentation deficiencies with no evidence of intent to defraud; new text end new text begin (2) moderate-severity conduct, which includes repeat errors, evidence of weak internal controls, or other behavior that results in a pattern of improper payment; and new text end new text begin (3) high-severity conduct, which includes intentional actions by a provider to defraud and gain unearned payment. new text end new text begin (d) For the purposes of the recommendations, the commissioner must consider three levels of intervention: new text end new text begin (1) provider education for low-severity conduct; new text end new text begin (2) targeted audits for moderate-severity conduct; and new text end new text begin (3) suspended provider enrollment for high-severity conduct. new text end new text begin (e) In developing the recommendations, the commissioner must consult with the Health Law Section of the Minnesota State Bar Association, representatives of the medical assistance providers subject to the recommendations being considered, and other impacted groups. new text end Sec. 20. new text begin APPROPRIATION; MINNESOTA ATTORNEY GENERAL. new text end new text begin $391,000 in fiscal year 2027 is appropriated from the general fund to the attorney general to increase the number of staff within the Medicaid Fraud Control Unit to improve program integrity and increase the Medical Fraud Control Unit's capacity for compliance efforts. new text end