Minnesota DHS terminating Housing Stabilization Services amid fraud probe originally appeared on Bring Me The News.
The Minnesota Department of Human Services (DHS) is moving to terminate the state's Housing Stabilization Services (HSS) program amid a federal investigation into fraud among providers.
DHS Temporary Commissioner Shireen Gandhi on Friday made a request of the federal Centers for Medicare and Medicaid Services (CMS) to take the "unprecedented step" to end the program, which uses Medicaid funding to locate and maintain homes for Minnesotans with disabilities, mental illnesses, and substance abuse disorders.
The department intends to "redesign and relaunch the benefit" in collaboration with the Legislature, community partners, providers and the CMS to ensure "robust program integrity and service quality requirements to prevent bad actors from entering the program."
"Once that work is complete, DHS will then work with CMS to submit a new program framework for approval," the DHS said.
The program has come under scrutiny, to the point a federal probe has been launched, after payments rose from $2.5 million in 2020 – the year Minnesota became the first state to offer Medicaid funding for housing stabilization – to more than $100 million in 2024.
A federal search warrant alleged the program had become "extremely vulnerable to fraud," with "dozens of new companies ... created and enrolled in the program" since its launch.
The DHS said on Friday that it had stopped payments to an additional 11 companies enrolled in the program and has now stopped payments to 77 in total based on "credible allegations of fraud."
"DHS is rooting out fraud wherever we find it. We cannot allow one more cent of taxpayer money going out the door to providers who claim to serve Minnesotans in need of stable housing while lining their pockets for personal gain," said Gandhi.
"As I made clear in my letter to CMS, our own data analysis has shown that this program does not have the necessary controls to stop bad actors, and we are urging CMS to approve our request to end this program as swiftly as possible."
"As our OIG data and investigations have revealed, too many fraudulent, unqualified bad actors have likely stolen money from our state’s taxpayers, and also cheated Minnesotans who need housing services," said James Clark, DHS’ Inspector General.
"The termination of this program, while regrettable for those who need these services, is the necessary step at this time."
The DHS says service providers and recipients will receive notifications regarding the imminent shutdown of the program.
This story was originally reported by Bring Me The News on Aug 1, 2025, where it first appeared.
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