ST. PAUL — The Minnesota Department of Human Services overpaid the Leech Lake Band of Ojibwe and the White Earth Nation by $25.3 million for medication-assisted therapy treatments covered under Medicaid, according to internal memos obtained by the Pioneer Press.

DHS officials learned this spring that they overpaid the two tribes for therapy used to treat substance abuse disorder, the memos state. The sprawling social services agency reimbursed the tribes for in-person visits with health care providers when the patients actually were self-administering the medication at home.

The situation has led to resignations in at least one of the tribal governments, strained relations, and appears to have officials scrambling to figure out what happened and for how long, according to somewhat contradictory statements and records from the tribes and state.

It also has brought a fresh wave of scrutiny on DHS, which has a nearly $18 billion budget and oversees a range of programs for the state’s most vulnerable residents. The agency has come under fire recently for a slew of unexplained resignations and its handling of an investigation into its inspector general.

The $25.3 million in overpayments is a preliminary estimate. The internal state memo does not explain how this happened. Medicaid payments to tribal providers are fully funded by the federal government, with DHS acting as an intermediary.

“We value our relationship with the tribes and are aware of the critical importance of these services,” DHS Acting Commissioner Pam Wheelock said in a statement Thursday. “DHS is now determining the estimated amount over payment, has informed the tribes, and is working with them to determine the final amount. DHS is reviewing internal processes and policy guidance to determine how the overpayments occurred and how to prevent them from happening again.”

Walz explains overpayments

Gov. Tim Walz said in a statement that the overpayments occurred over the past five years — before he took office in January — and that the payment structure was corrected in May.

Here’s his full statement:

“When I first took office, I directed my new commissioners to surface issues within their agencies. The Department of Human Services uncovered this problem, which had been going on for the last five years,” Walz said. “My Administration finds problems, and we deal with them. That is why we are confronting this issue head on.”

“As of May, the payment structure was corrected, and the problem was stopped. We are now taking a deeper dive to figure out the root of this issue and help ensure nothing like it happens again. In order to do this, we brought the issue to the Office of the Legislative Auditor who has agreed to conduct an investigation. We welcome that report. I have spoken directly with tribal leadership, and I am committed to working with them to get to the bottom of what happened here while ensuring Minnesotans get the treatment they need.”

State Legislative Auditor Jim Nobles confirmed that his office learned of the overpayments 10 days ago and soon will start investigating.

In an interview, Wheelock said DHS staff have spent the past few months analyzing individual claims to understand the scope of the problem — which she states is why the agency did not publicly disclose the overpayments sooner.

The overpayments date back to 2017 for White Earth and 2014 for Leech Lake, Wheelock said. Officials do not yet know whether the overpayments were caused by a clerical error or something more serious.

“I think that’s one of the things that we all want to know more about,” she said.

DHS appears to be working with the tribes and federal government to determine how much money is owed, how it will be paid back and how the errors happened. But there’s also tension between the state and at least White Earth.

White Earth: State shares blame

According to White Earth, the tribal government began looking into the issue before the state — and the state has been less than cooperative.

“We are deeply troubled by the lack of meaningful consultation on this issue and assert that none of the communications with the Tribe concerning this topic qualifies as appropriate government-to-government conversations,” Eugene “Umsy” Tibbetts, White Earth Vice Chairman, said in a statement Thursday. “At a bare minimum, we expected an actual dialogue between a State agency and a Tribal government as ordered by the Governor. That is manaaji’idiwin — respect.”

In the two-page statement, Tibbetts said the tribe’s own investigations have led to at least one resignation and a behavioral health director being placed on “investigative suspension.”

Tibbetts said he understood the overbilling to have started in 2017 and that DHS was requesting “an $11 million take back” in overbilled funds. “The Tribe will honor this claim so long as it is proven,” he said.

But he made clear he believes the state shares blame.

“Because DHS and the State were the architects of the billing structure that is being recalled, and specific Tribal employees that designed the billing for the Tribe have since resigned amid the audits the Tribe authorized in 2018 and 2019, the situation calls for shared responsibility,” he said.

In a separate statement, the Leech Lake Band of Ojibwe disputed the claim that DHS overpaid it for substance abuse treatment. The statement said “any and all billing (Leech Lake) submitted to DHS was done so in accordance with its billing agreement with DHS and pursuant to technical guidance provided by DHS.”

Leech Lake Chairman Faron Jackson said the agency had not “meaningfully consulted” tribal leaders on the issue. He added that leaders tried to voice their frustrations to the governor but he was unavailable.

“If the technical assistance DHS provided to us regarding our billing practices was incorrect, we hope and trust they will step up to the plate and admit that this is their error, not Leech Lake’s,” Jackson said. “We will not accept responsibility or admit to culpability where we were not in the wrong.”

Walz has highlighted tribal relations as a priority for his administration. Lt. Gov. Peggy Flanagan is an enrolled member of the White Earth Band of Ojibwe.

Wheelock said DHS “can always do a better job” of communicating, but “clearly having turnover at leadership doesn’t always help effective and timely communication.”

The news adds to ongoing turmoil at the state’s largest agency. DHS Commissioner Tony Lourey and his chief of staff resigned last month after his two top deputies said they would leave the agency. Deputy Commissioners Chuck Johnson and Claire Wilson rescinded their resignations after Lourey and his chief of staff quit.

The overpayments to the two tribes are “completely unrelated” to the resignations, Wheelock said. Neither DHS nor the governor’s office have clearly explained why the resignations occurred.

Health officials with the Leech Lake Band could not be reached for comment.

Dave Orrick contributed to this report.