Minnesota fraud crackdown leaving disabled Medicaid recipients without housing

Brently Davis, a disabled 55-year-old man, is being threatened with eviction from his downtown St. Paul apartment. In the home he will soon lose, surrounded by his artwork — masks, Chinese calligraphy, paintings — he described the slew of issues he’s faced as a recipient of Integrated Community Supports, a state-run Medicaid-funded disability service.

For one, his provider, American Home Health Care, billed Medicaid $419 a day to provide him with 10 hours of services, but only showed up to his apartment a few hours a week, and sometimes just one hour, Davis said.

American Home Health Care employees were supposed to be there to help him manage his prescriptions, get to medical appointments and complete household tasks; the ones that did show up were often well-meaning but had no experience and limited English, Davis said.

He recalled a time when he asked for antacids and, after hours of the employee driving around, realized: “They had no idea what I was talking about.” Davis spent his days figuring out how to communicate with the workers to get the care he needed, he said.

“If it was something too complicated they just never showed up. They told me to do it myself or that it’s not their job,” Davis said.

Davis was a professional artist and carpenter before he became chronically disabled with an onslaught of diagnoses — Graves’ disease and Lyme disease among them — and neurological issues stemming from two car accidents and an incident at a hardware store when hundreds of pounds of garden hose coils fell off a shelf onto him. (He took no legal action after the garden hose incident, a decision he regrets.)

Now, Davis spends his time drawing and painting comics when he can and browsing the internet when his body becomes too tired for drawing.

In a darkened room — he keeps cloths draped over the tall windows due to his sensitivity to light — he said he feels isolated and wishes he could get help participating in the community around him. Davis said he’s struggled to get help from other services, too. He qualifies for two other state-run Medicaid services, also deemed vulnerable to fraud, but has never received them.

The silver lining: Integrated Community Supports helped him have a place to live. American Home Health Care rented an $1,800 apartment unit to Davis for $600, a workable rate for someone on Social Security disability payments.

Then, in September, Minnesota Department of Human Services began to withhold payments from some Integrated Community Supports providers, citing “credible allegations of fraud.” The department has withheld payments from at least 17 providers since then.

DHS also published an announcement that month reminding Integrated Community Supports providers that “covering or paying a portion of a recipient’s rent” in exchange for the recipient signing up for services with a provider is considered a kickback, and that knowingly participating in such kickbacks is considered fraud.

The practice of providers paying for part of a recipient’s rent appears widespread in Integrated Community Supports, and recipients and their advocates say the state’s apparent crackdown on what it considers kickbacks and other fraud in the program has left disabled people without housing.

The department’s attention on Integrated Community Supports is just the latest effort by the Walz administration to get a handle on fraud, waste and abuse in Minnesota’s social services, which has turned into a yearslong political scandal that began with revelations that hundreds of millions of dollars were stolen from a pandemic-era food aid program.

Fraud in Minnesota has faced national scrutiny in recent months. President Donald Trump has used the issue to attack Minnesota’s Somali-American community and justify sending 3,000 immigration agents to the state in Operation Metro Surge — an aggressive campaign that ignited massive resistance and resulted in two killings of American citizens by federal agents.

Integrated Community Supports — funded jointly with state and federal dollars — is one of 14 Medicaid services deemed to have a high risk of fraud. In recent months, the state has rolled out a new audit program and announced a “revalidation” plan to mitigate fraud in the high-risk Medicaid services, among other measures. The extent of fraud in those 14 services is still unclear — without providing evidence, a former federal prosecutor on social services fraud estimated $9 billion or more since 2018, a figure Gov. Tim Walz has challenged.

Davis has reported the incompetence from American Home Health Care to his county every year since 2023, he said. The state finally took action, suspending payments to that provider in September, following a KSTP report on Cain Pence, another disabled person who also said he received few to no services from American Home Health Care and no substantive response after complaining to the state starting in 2024.

What should have been a welcome development — the state finally investigating providers who bill Medicaid exorbitant amounts in exchange for providing little to no services — has turned into yet another source of distress for Davis and other service recipients.

After being cut off from state payments, Jama Mohamod, who runs American Home Health Care, ended services to Davis. Davis said he has been left alone for much of the winter without help he needs to get to doctor’s appointments and pick up medicine.

Mohamod also ended his business’s lease with the St. Paul building without notifying Davis, leaving Davis responsible for the full rent since October. Davis showed the Reformer notices from the building which list thousands of dollars of debt for rent and utilities that he said he doesn’t have the money to pay.

The property management company has since told Davis that it plans to begin the process of evicting him.

“I wish somebody could ask what they thought they’re doing in punishing the victims of the fraud. I’ve been left without any options,” Davis said.

Davis’ story mirrors the struggles of many Integrated Community Supports recipients in recent months.

At a Jan. 29 Senate Human Services Committee meeting, Jonah Giese, a legal advocate at the Minnesota Disability Law Center, told Minnesota lawmakers that he’s worked with over 30 people facing stopped services in Integrated Community Supports settings, the “vast majority (of whom) have ended up in emergency rooms, homeless shelters, or their parents’ basement, or other segregated settings.”

Giese said that he fears that the state’s interventions on fraud will continue to be at the expense of people with disabilities.

As of January, the state’s payment withholds to Integrated Community Supports providers have resulted in 255 disabled people having to move from their apartments. On Jan. 28, Department of Human Services Temporary Commissioner Shireen Gandhi told lawmakers that of those people, 176 were still in their apartments, and 79 had been transitioned to a “new setting of their choice.”

Gandhi said that DHS institutes a “safe transition period” when withholding payments from a provider, during which DHS works with county leaders and case managers, who are responsible for administering social services in Minnesota, to transition services.

Matthew Bergeron, an attorney who lobbies for the Residential Providers Association of Minnesota, said that DHS claims seem to contradict the experiences of disabled recipients, their advocates and disability service providers.

A DHS spokesperson said Wednesday that the agency has received no outreach from American Home Health Care or people receiving services requesting assistance, and that DHS is “striving every day to find an ethical balance between combating fraud and minimizing human impact.”

The spokesperson also said that it has no open requests for help from county case managers.

Minnesota’s human services system is supervised by the state but delivered by counties, a system developed nearly a century ago described as “slow, confusing (and) fragmented” by Julie Ring, the executive director of the organization that represents Minnesota counties.

Opaque layers of bureaucracy possibly account for the disconnect between DHS statements and the experiences of Davis and other service recipients.

Davis said that his Medicaid case manager, who communicates with the county, told him she’s “been trying to contact them since this whole thing began,” and that instead of getting help finding housing for Davis, she got a survey to fill out to notify the county when clients get housed.

Davis has tried to find a new apartment, but he said he’s struggling. He applied for a county-run emergency assistance program but was denied with a notice reading: “Paying for your emergency would not be cost effective. Shelter past due is over cap amount.”

“I’m trying to look at a future that isn’t hopeless. It’s really hard to have optimism,” Davis said.

‘A housing service masquerading as a service program’

In a September House fraud committee hearing, Pence described Integrated Community Supports as a “housing service masquerading as a service program.”

Because recipients depend on their provider for both housing and disability services, they’re especially afraid to complain about their services, Pence told the Reformer.

Pence lived in a luxury apartment building in Minnetonka when he was a client of American Home Health Care, where Davis and 10 others also lived before the building’s management kicked the provider and its clients out for reasons unclear to the two men. (An email to the building’s management for comment was not returned.)

KARE 11 documented that another client of American Home Health Care, Janelle Hansen, who goes by Sky, has been homeless since she was evicted from the Minnetonka building in June despite paying her rent, seemingly because the provider had stopped paying rent to the building.

In Minnetonka, Mohamod would call his clients names and would threaten to kick them out if they reported his shoddy services, Pence said.

“Jama would say: if you do anything, I’m gonna go after you,” Pence said.

Pence recalled that another one of Mohamod’s clients, crying, once told him: “You’re the only one that’ll stand up to him. I don’t wanna lose my housing.”

Davis is upset at the money American Home Health Care received while neglecting its clients. He urged the state to talk to people receiving services as a way to detect fraud.

Mohamod did not return multiple calls from the Reformer. He previously denied Pence’s allegations to KSTP.

Integrated Community Supports was first offered by the state in 2021 to disabled Medicaid recipients who need assistance but don’t need to live in restrictive settings like group homes or assisted living homes, which are usually geared toward older adults. The recipient lives in a “provider-controlled setting” — often, a provider rents a few units designated for Integrated Community Supports use in an apartment building — where the provider is supposed to help the recipient with basic living tasks.

The program helps Minnesota stay in compliance with the law, as set forth in the U.S. Supreme Court case Olmstead v. LC, which ruled that the unnecessary segregation of people with disabilities from their community is a form of discrimination.

Davis said he was interested in the service specifically because he wanted to live in the community but needed help to do so.

In practice, several providers also subsidize the rent of recipients in addition to, or sometimes in the place of, providing services. After Pence left American Home Health Care, he said that he spoke to 30 other Integrated Community Supports companies that offered discounted rent; two providers even explicitly said they would provide an apartment but no services, Pence said.

In 2019 to 2021, after his symptoms became more severe and chronic, Davis lived out of an unheated house, a storage unit and, at times, out of his truck. Housing through Integrated Community Supports “saved me,” Davis said.

“I’ve gone and looked for every single kind of housing support thing out there,” Davis said. “As far as finding housing with care supports that isn’t an institution like a nursing home, there isn’t anything out there, except for ICS with housing.”

Murky guidelines

The state now seems to be cracking down on service providers subsidizing rent, though Bergeron and other representatives of providers say that DHS has not been clear on why exactly it withholds payments from providers.

Kickbacks — where service providers financially incentivize people to sign up for their services — have been illegal under federal law since the 1970s. Under federal law, Medicaid dollars also can’t be used to pay rent. A new statute that went into effect August 2025 now explicitly prohibits kickbacks under Minnesota law, giving state agencies more power to intervene when they uncover kickbacks, DHS said.

Federal investigators are also looking into rent kickbacks in an ongoing investigation into the program first announced in December, when investigators raided the office of Ultimate Home Health Services, another Integrated Community Supports provider.

KARE 11 reported that one client of Ultimate Home Health Services had been renting her apartment for $60 a month and received little to no services; the provider billed Medicaid $163,000 a year for the services it didn’t provide.

So far, no providers have faced state or federal charges for defrauding Integrated Community Supports.

Bergeron, whose client trade association includes several Integrated Community Supports providers as members, said that he thinks it’s unrealistic to expect service recipients to be able to pay their rent in full. Bergeron said that the providers have limited access to county Housing Support contracts, which assist with rent, meaning that a provider subsidizing rent is often the only option for service recipients to afford their apartments.

Bergeron argued in a nine-page letter to DHS that an Integrated Community Supports provider subleasing apartments at a reduced rate is not necessarily the same as incentivizing a person to sign up for services, and so wouldn’t constitute a kickback. For example, in some instances, Bergeron said, a county case manager works with the provider to negotiate rent, as opposed to the provider offering discount rent upfront to incentivize sign-ups.

“It is way more nuanced and way more case-by-case specific,” Bergeron said.

Part of the problem, in the view of Bergeron and the providers association, is that the standards of the program are not codified in Minnesota law, but rather evolve at the direction of DHS.

“I think it is a program that has been kind of pulled together over time to meet kind of an undefined need or purpose,” Bergeron said.

David Holt, an attorney who works with Integrated Community Supports providers, said that he thinks the program should have been modeled off programs like assisted living and recuperative care, which use a daily rate that includes both services and housing.

“I don’t think anyone properly, or at least the Legislature didn’t and the policymakers didn’t properly, flesh out how the recipients just don’t have money to pay for housing,” Holt said.