Due process procedures for home and community-based residential services modification

A bill for an act

relating to human services; modifying due process procedures for home and

community-based residential services; making technical changes; 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, 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.

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Exemption.

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This section does not apply to the medical assistance program

administered by the commissioner of human services.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 2.

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

read:

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Subd. 7.

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Exemption.

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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.

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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
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suspending
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payments to an individual or entity
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and
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; withholding payments to an individual or entity;
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suspending
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or terminating
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participation in the program
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,
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; terminating participation in the

program;
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or
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imposition of
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imposing
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a fine under subdivision
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2, paragraph (g)
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2a
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.

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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 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. 5.

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
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from
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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
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.

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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
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or has been
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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. 6.

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.

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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.

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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. 2b.

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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. The notice must:

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(1) state that the 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.

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This section is effective the day following final enactment.

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Sec. 8.

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

to read:

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Subd. 2c.

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Imposition of monetary recovery and sanctions 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.

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(b) Notwithstanding subdivision 2d, unless the commissioner first complies with the

applicable requirements of paragraph (c), the commissioner must not withhold or reduce

payments to the following entities:

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(1) a nursing home;

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(2) a convalescing care facility;

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(3) an entity providing residential supports and services as described in section 245D.03,

subdivision 1, paragraph (c), clause (3); or

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(4) an entity providing integrated community services described in section 245D.03,

subdivision 1, paragraph (c), clause (8).

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(c) When withholding or reducing payments under paragraph (a) or subdivision 2d to

an entity listed in paragraph (b), the commissioner must confirm suitable alternative services

and housing are established for the affected recipient before withholding or reducing

payments if withholding or reducing payments puts a recipient of the goods or services

provided by the entity in imminent danger of harm or at risk of homelessness.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 9.

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

to read:

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Subd. 2d.

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Imposition of monetary recovery and sanctions without prior notice.

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(a)

Except as provided in subdivision 2c, when law enforcement requests that the commissioner

not suspend payments or 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:

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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 by law enforcement is pending.

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(b) If the commissioner withholds or reduces payments under paragraph (a), clause (2),

the commissioner may withhold payments only for the specific submitted claims that the

commissioner has determined are potentially fraudulent and referred to law enforcement,

unless the commissioner determines that the credible allegation of fraud is an allegation of

pervasive fraud.

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(c) The commissioner may consider an allegation of fraud from any source, including

but not limited to:

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(1) fraud hotline complaints;

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(2) claims data mining;

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(3) patterns identified through provider audits, civil false claims cases, law enforcement

investigations, or investigations by other state or federal agencies; or

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(4) court filings or other legal documents.

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(d) The commissioner must independently verify that an allegation of fraud is credible

by carefully reviewing all the allegations, facts, and purported evidence of fraud to determine

if the allegations, facts, and purported evidence are indications of fraud and not merely of

improper payments that are not fraudulent. A credible allegation of abuse is not a credible

allegation of fraud.

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(e) For purposes of this subdivision, "fraud" means presenting information that is false

in whole or in part to the commissioner with the intent of obtaining greater compensation

for the provision of a good or service available under this chapter than the vendor of the

good or service is legally entitled.

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

under paragraph (a) within five days of withholding or reducing payments. The notice must:

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

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

sufficient detail to allow the entity or individual subject to the withholding action to determine

what written evidence submitted under clause (5) would be responsive to the allegations,

but the commissioner need not disclose any specific information concerning an ongoing

investigation by law enforcement;

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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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(g) The commissioner must acknowledge receipt of any written evidence submitted by

the individual or entity within five days of receipt of the written evidence. Within five days

of the commissioner's acknowledgment of receipt, the commissioner must (1) cease to

withhold or reduce payments, or (2) respond to the individual or entity with an explanation

of the commissioner's continued determination that there is sufficient evidence of fraud to

continue withholding or reducing payments.

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(h) The commissioner must cease to withhold or reduce 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.

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This section is effective the day following final enactment.

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Sec. 10.

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

to read:

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Subd. 2e.

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Forfeiture of withheld payments upon criminal conviction.

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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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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 11.

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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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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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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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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This section is effective the day following final enactment.

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Sec. 12.

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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must
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serve the notice required under
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subdivision
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subdivisions
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2
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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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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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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.

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This section is effective the day following final enactment.

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Sec. 13.

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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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.

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This section is effective the day following final enactment.

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