Our Mental Health System Needs A Mix Of Private Care And Public Oversight

By Sue Abderholden and Kate Schuett, Minnesota Reformer

February 19, 2026

Fraud is in the news. And no one likes it or wants it. Not elected officials, legitimate service providers, or the people who use the services.

The state is focused on 14 Medicaid benefits, four of which are adult mental health services:

• Integrated Community Supports, which provides in-home supports to people with disabilities or mental illnesses so that they can live in their home community. There are over 230 providers in nearly 500 locations. Some provide services in just one location, some provide services in multiple locations.
• Adult Rehab Mental Health Services, which provides basic living and social skills, community intervention, medication education, and support to people with mental illnesses in their homes. There are 339 providers.
• Assertive Community Treatment, which provides coordinated intensive community services and treatment to people with serious mental illnesses. There are only 20 providers of ACT teams in the state.
• Intensive Rehabilitation Treatment Services, which are residential treatment providers for people with mental illnesses. There are 85 licensed facilities that each serve 16 people or less.

These are very important services in our mental health system, and even with current capacity, many adults are waiting for services. The mental health community has long advocated to increase the availability of these services, especially in rural areas and to meet the needs of culturally diverse communities. Stopping payments and expansion of these services could be problematic.

Many ideas have been tossed around as to how to address fraud. One is especially problematic: to stop privatizing services. It’s a simplistic solution that doesn’t grasp who actually provides the services in question and the numbers of people involved.

The state and counties cannot take over providing the necessary care, treatment and support to the thousands of people with mental illnesses currently using or needing these services. There are over 500 providers, and that’s without even considering disability services, substance use treatment and other services. Many mental health agencies provide more than one service.

Add it up, and this is a fiscally and logistically unrealistic solution. For the state or counties to provide these services, we’d need thousands — probably tens of thousands — of new government employees.

There is also an inherent conflict of interest for the state of Minnesota to fund, regulate and deliver services, especially within one agency. Someone needs to regulate the services, and you don’t want the same agency providing and regulating the services. This is why so many mental health organizations supported spinning off the direct care and treatment division from the Department of Human Services into its own agency to allow for some separation of duties. But many of us believe that the state and counties should operate services only when the private sector cannot.

Nonprofits have provided social services to meet the needs of people in their communities for hundreds of years. Many began through faith communities (think: Lutheran Social Services, Catholic Charities). There are thousands of nonprofits in our state providing a wide array of services, including health care, mental health care, food, housing, substance use disorder care, child care, in-home services, residential services and nursing homes. All of them have boards of directors, and many mental health centers and Certified Community Behavioral Health Centers have county commissioners serving on their boards. All of the mental health services mentioned above are required to be certified or licensed.

While having private — mainly nonprofit — groups provide mental health services isn’t perfect, it does allow for a faster response to community needs. And we have seen programs both close and grow in response to the local needs. Their expansion is largely limited due to rates and workforce issues.

As someone involved in closing the institutions in the 1980s, I can attest to how difficult it is to close a state-run program due to politics. On the other hand, the facility where I worked in the 1970s closed because the development of community services allowed young children with disabilities to remain at home instead of going to a residential facility. Centralizing decision making on the scope and location of services for vulnerable people risks a less responsive system that does not lead to the best outcomes.

Ending privatization is not the answer.

So, what can be done to address fraud? Here are some recommendations:

• Meet with current long-established providers to learn where the vulnerabilities are. Ask them how to strengthen the programs and billing systems.
• Re-establish learning collaboratives with new providers to help them build the necessary skills to correctly bill Medicaid and to learn from each other.
• Provide additional oversight to new providers. And not just to catch fraud but to offer technical assistance to assure quality services are being delivered and to navigate through certification/licensing and Medicaid billing.
• Examine the contracts with health insurance companies. Most of Medicaid is funneled through contracts with health insurance companies, which we call managed care. What is their role in monitoring for fraud since they are the ones paying the bills for many of these services?
• Strengthen case management. For many of these mental health services people have a case manager whose role it is to assist people in obtaining needed mental health and other services, ensuring coordination of services, and monitoring the delivery of services. What is their role in identifying fraud?
• Licensing and certification. They are already visiting and reviewing records at these facilities. Can they look for irregularities? Talk to clients? Ensure people are receiving services?
• Create a task force with providers, health plans, counties and advocacy groups to develop recommendations.

One saying that comes to mind is “sunshine is the best disinfectant,” i.e., the more eyes on vulnerable people, the safer they are.

So, the more interactions the state, counties, and others have with people receiving these services and their providers, the safer our funds will be.

The Minnesota Reformer is an independent, nonprofit news organization dedicated to keeping Minnesotans informed and unearthing stories other outlets can’t or won’t tell..