Walz's Plan To Overhaul MN Human Services Would Consolidate, Evaluate

ST. PAUL, MN — Gov. Tim Walz on Tuesday announced his proposal to overhaul Minnesota’s human services system in the wake of sweeping fraud allegations.

“This proposal begins the work of modernizing how we deliver human services so we can strengthen oversight, increase efficiency, and improve the quality of services Minnesotans rely on,” Walz said in a news release. “This is about asking whether the way our system is organized today best supports accountability, transparency, and effective service delivery for the future.”

The plan would see some services streamlined.

Currently, about 45 percent of Medicaid spending and nearly 80 percent of basic care services are administered through eight managed care organizations. Under Walz’s proposal, that model would be replaced by a single statewide organization responsible for administrative duties such as claims processing, financial transactions and provider services.

The Minnesota Council of Health Plans, representing the managed care organizations, told The Minnesota Star Tribune that the organizations, which often eat the losses when fraud occurs in distributed funding, had absorbed hundreds of millions of dollars worth of losses in recent years.

The governor’s proposal also calls for shifting the Medicaid eligibility determination process for health care and long-term services from counties to the state, which would assume responsibility for eligibility determinations and certain specialized eligibility processes by July 1, 2028.

The plan includes funding for a comprehensive study examining how human services programs are administered across Minnesota. The state human services department on Tuesday announced a request for proposals to re-evaluate and restructure its organization, operations and work culture.

Walz’s proposal would require the addition of a few hundred jobs, and both the elimination of state contracts with managed care organizations and the transition of some county tasks to the state would need legislative approval, according to the Tribune.

In a statement Tuesday, Minnesota Senate Human Services Committee Chair Sen. John Hoffman, D-Champlin, said he “was disappointed to learn about this proposal just last night without a thorough conversation with the committee that has primary jurisdiction over Minnesota’s human services system.”

“Major structural changes to a system that serves hundreds of thousands of Minnesotans require thoughtful collaboration between the executive branch and the Legislature,” Hoffman said in the statement. “The Senate Human Services Committee exists specifically to examine these types of proposals, hear from stakeholders, and ensure reforms are implemented responsibly.

“Moving forward, I hope the administration will engage directly with the Legislature so we can work together to improve outcomes, strengthen accountability, and protect the people who depend on Minnesota’s human services programs.”