FILE - Minnesota Jodi Harpstead

Jodi Harpstead speaks to reporters at the Minnesota Capitol on Monday. Aug. 12, 2019, after Gov. Tim Walz, right, named her to be his new commissioner of Human Services. 

Minnesota counties may not have to repay nearly $9 million they mistakenly received from the Department of Human Services (DHS).

DHS in November sent letters to every county in Minnesota requesting to recoup a total of the $8.8 million owed for improper payments from January 2014 through May 2019, when the state used federal Medicaid funds to pay for substance-use disorder treatment in Institute of Mental Disease (IMD) settings.

DHS Media Relations Manager Sarah Berg told The Center Square in an email that Minnesota isn’t eligible to claim federal reimbursements for services in IMD settings larger than 16 beds, so according to federal law, DHS must reimburse those payments to the federal government.

“State law requires DHS to bill counties for a share of substance-use disorder services and outlines the formula for calculating that share,” Berg said. “Because these facilities were not eligible for federal matching funds, the department underestimated the county share for these payments. State law requires DHS to collect the additional share of the cost from counties.”

Gov. Tim Walz announced at the Association of Minnesota Counties conference last month that they will not have to repay DHS for the payment errors.

Berg said that DHS is updating treatment service claims for which counties will be billed monthly for their service share and that if counties can’t pay the full amount, they must notify DHS in writing and provide a timeline for payments.

Minnesota Public Radio reported that DHS is responsible for reimbursing the federal government a total of $61 million, including the $8.8 million billed to counties ranging from $46 for Dodge County to almost $2.2 million for Hennepin County. The bills were received after the counties made their 2020 budgets.

Hennepin County Deputy County Administrator for Health & Human Services Jennifer DeCubellis told The Center Square that Walz’s announcement to waive the county repayments was fortunate.

“So we are continuing to work in partnership with DHS to ensure seamless services for residents as a priority and are confident that the Governor will follow through on that commitment so that other critical County services do not have to be impacted negatively to solve for this funding gap,” DeCubellis said in an email.

Beltrami County Administrator Kay Mack told The Center Square that their $86,866 bill “caught us off guard.”

Mack said she had sent DHS a letter stating that the county doesn’t plan to pay the bill.

“Actually, we’ll add that to our legislative priorities because our Human Service System is a state-supervised, county-administered system that’s dependent on the systems training and oversight provided by DHS,” Mack said.

DHS Commissioner Jodi Harpstead said in a statement that she’s committed to working with county and state legislators “to find a workable solution.”

“The plan for my first 90 days as commissioner includes rooting out billing and payment problems in the Department of Human Services, being transparent about them, and using what we learn to build a new system of process controls that prevents them from happening in the future,” Harpstead said.

The Minnesota legislature reconvenes on February 11, when some lawmakers have said they plan to break up the $18 billion agency.

Staff Reporter

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.