ST. PAUL — The Minnesota Department of Human Services spent at least $3.7 million over the course of two years on care for Medicaid recipients who were dead, according to a federal audit released this week.

The unallowed payments were made between 2014 and 2016 to managed care organizations, which Minnesota pays to administer medical benefits to people enrolled in state health care programs. The payments happened because the state had not updated its records to show the Medicaid recipients had died, according to the Inspector General of the U.S. Department of Health and Human Services, who released the multi-state audit this week.

Federal auditors recommended that Minnesota refund $3.2 million to the federal government and work to recover improper payments.

Minnesota DHS officials said the improper payments were made during a switchover to a new state computer system. The department began fixing the issues and recovering the payments before the federal audit was conducted, Commissioner Jodi Harpstead said. She noted that the improper payments were a small portion of the $15 billion that was properly paid out during that time.

“Ensuring our records are up-to-date so we do not pay for individuals who are no longer receiving care is a continual challenge,” Harpstead said in a statement. “We gather death information from many different sources, which do not always report in a timely manner. Because these payments are made to health plans in advance we will always have to reconcile accounts.”

Payment issues scrutinized

The improper payments outlined in the audit have brought more scrutiny on Minnesota’s massive Human Services agency. DHS has come under fire in recent months after several of its top leaders resigned and separate payment issues came to light.

Over the past five years, the department overpaid two Native American tribes $29 million for substance abuse treatment covered under Medicaid. Officials learned of the overpayments earlier this year and are working with tribal leaders from the Leech Lake Band of Ojibwe and the White Earth Nation as they figure out how to pay back the feds.

The agency also improperly paid out $48 million in Medicaid funds over the past five years to certain drug treatment providers. Repayment for that error was accounted for in the state budget that lawmakers passed in May, according to DHS.

Quick math: $48 million + $29 million + the $3.7 million paid to dead Medicaid recipients = $80 million that Minnesota owes the federal government, because of DHS errors.

Republican State Sen. Michelle Benson, who chairs the Senate Health and Human Services Committee, said the department needs to adopt more program integrity measures to protect taxpayer funds.

“Senate Republicans don’t want to see a single tax dollar go to waste because we know that every tax dollar that goes to government comes directly from the family budget and the retiree’s savings account,” said Benson, R-Ham Lake, in a statement. “The people of Minnesota don’t just have $3.7 million dollars laying around they weren’t going to use.”

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