Red state governor touts Medicaid savings as Minnesota grapples with widespread fraud allegations

One red state's Medicaid reforms are drawing fresh attention to deep-blue Minnesota's fraud crisis, standing in contrast by raking in hundreds of millions in savings generated through what one Republican calls "common-sense" measures.

"Medicaid, which we share with the feds, all states are going to find low-hanging fruit to pick," Indiana Gov. Mike Braun said Sunday.

"We found folks that should have been on Medicare that were still on Medicaid. People double-dipping Medicaid through a couple of different states, pharmacies with a 340B program, buying drugs at a discount, selling them at high margins. We're just picking that low-hanging fruit, and that's why we're going to lead the country."

Braun then pointed to Minnesota, which is currently enshrouded in a fraud scandal that has exposed widespread abuse of taxpayer-funded programs and raised questions about oversight.

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A Wall Street Journal report from Friday echoed estimates that fraud losses in Minnesota since 2018 could top $9 billion, highlighting cases in which bad actors openly exploited the system. 

The Journal went on to describe the repeated cycle of establishing "sham" companies and submitting false claims to take advantage of the system.

Braun said the solution is "common sense." 

"I ran a business for 37 years before I became a U.S. senator, was on health, education, labor and pensions there. … You can see what happens in a place like Minnesota, where they just want the government benefits but don't do anything to run them like you do a business," Braun said.

Gov. Tim Walz, who has come under scrutiny since the fraud issue came to light, has publicly acknowledged the problem and pledged to tackle it, saying the situation "is on my watch" and that he is "accountable" for fixing it, even as his administration has questioned some federal estimates about the scale of the fraud.

Walz also issued a third-party audit of Medicaid billing through Minnesota's Department of Human Services and paused payments for some services while the audit is underway, according to FOX 9, an affiliate based in St. Paul.

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Walz previously told the outlet in a statement, "We cannot effectively deliver programs and services if they don't have the backing of the public's trust. In order to restore that trust, we are pumping the brakes on 14 programs that were created to help the most disadvantaged among us, yet have become the target of criminal activity."

He added, "If you attempt to defraud our public programs and steal taxpayer dollars out from under the people who need them most - you will be stopped, and you will be held accountable." 

Braun said Sunday that while waste and abuse exist across government, states that are willing to act can fix problems without waiting for Washington.

"We had some of this before Medicaid was even an issue, but as it's grown to occupy more of all state budgets, you've got to run it better," Braun said, adding that Indiana continues to find inefficiencies that could be "run better."

He contrasted Indiana's efforts with what he described as persistent federal gridlock, arguing that states are better positioned to deliver results.

"The fraud and abuse that we found on health, education, labor and pensions when I was on committees that were looking for it - the federal government, for instance, would write 2% to 3% of their checks to the wrong payee or for the wrong amount or both. It's rampant."

Braun said Indiana's reforms show what states can accomplish when leaders focus on accountability, adding, "Enterprising states will fix a lot of these problems, and we've just been doing it a year and already got a lot done."