On behalf of the Minnesota Association of Residential and Supportive Housing (MARSH), I am writing to express serious concerns regarding the recent Medicaid provider revalidation process and the unintended consequences it has had on Family Residential Services (FRS) providers and the vulnerable Minnesotans they serve.
While MARSH supports appropriate oversight and accountability measures to ensure program integrity, many FRS providers became caught up in the revalidation process despite having no high-risk Medicaid programs on their licenses and no connection to the fraud concerns that prompted increased scrutiny. As a result, providers who have spent years serving individuals with disabilities and complex support needs have faced disenrollment, licensing disruptions, suspension of compensation, and significant uncertainty.
The impact of these actions extends far beyond paperwork and compliance requirements. FRS providers are already struggling to adapt to the recently implemented flat-rate reimbursement system, which has created substantial financial pressures throughout the disability services sector. At the same time, providers are absorbing the costs associated with newly implemented licensing fees and other regulatory requirements. Many organizations are operating on razor-thin margins while attempting to recruit and retain qualified staff during an ongoing workforce shortage.
The revalidation process has added another layer of strain to an already fragile system. Providers have experienced months of uncertainty, anxiety, and emotional distress while trying to navigate evolving requirements, unclear expectations, and the possibility of losing their ability to continue serving the individuals who depend on them. Many providers have invested their lives, personal finances, and careers into caring for Minnesota's most vulnerable residents. Being treated as though they are part of a larger problem—despite having no history of fraud or misconduct—has been deeply discouraging and demoralizing.
Compounding these challenges is the extraordinary burden placed on providers who have been forced to appeal terminations, disenrollments, and adverse actions despite having committed no fraud, abuse, or wrongdoing. Rather than focusing on serving vulnerable Minnesotans, providers are spending countless hours gathering documentation, responding to agency requests, seeking legal guidance, and defending their right to continue operating. The appeals process itself requires significant financial and administrative resources, creating costs that many providers simply cannot absorb. Small providers, in particular, are being forced to divert limited resources away from direct care and operations in order to challenge decisions that stem from administrative or procedural deficiencies rather than any finding of misconduct. It is fundamentally unfair to place the burden of correcting agency errors or systemic failures on providers who have done nothing wrong.
Most importantly, the people receiving services are paying the price. Individuals with disabilities rely on stability, consistency, and trusted relationships with their caregivers. When providers are disenrolled or forced to suspend services due to administrative issues rather than findings of fraud, it creates fear and disruption for residents, families, guardians, and direct support staff alike. Families are left wondering whether services will continue, employees worry about their livelihoods, and vulnerable individuals face uncertainty about their homes, supports, and daily routines.
We are also concerned that providers were subjected to heightened oversight and enforcement actions that may have been avoided had proper oversight, communication, and monitoring occurred earlier. The burden of correcting systemic administrative failures should not fall on providers and the individuals they serve. When providers are forced to spend months appealing decisions and fighting to maintain services, the state's most vulnerable citizens ultimately suffer the consequences.
We respectfully urge the Legislature to:
• Review why providers without high-risk Medicaid programs were swept into this process.
• Examine whether DHS provided adequate communication, technical assistance, and oversight throughout the revalidation effort.
• Assess the impact of provider disenrollments on individuals receiving Family Residential Services and other disability supports.
• Consider the cumulative financial burden created by the flat-rate reimbursement system, new licensing fees, workforce shortages, increased administrative requirements, and costly appeals processes.
• Examine the financial and administrative burden imposed on providers who are required to appeal disenrollments or terminations despite no findings of fraud, abuse, or misconduct.
• Create a pathway for qualified providers to regain enrollment when issues stemmed from administrative deficiencies rather than fraud or abuse.
• Hold state agencies accountable for ensuring that future oversight efforts protect vulnerable Minnesotans without creating unnecessary service disruptions.
Minnesotans with disabilities deserve access to stable, high-quality services. The providers who care for them deserve fair treatment, clear guidance, meaningful support, and due process from the agencies responsible for oversight. They should not be forced to bear the financial, emotional, and operational costs of correcting problems they did not create. We ask for your leadership in ensuring that efforts to strengthen accountability do not unintentionally harm the very people these programs were designed to protect.
Thank you for your consideration and for your continued commitment to Minnesota's most vulnerable citizens.
Sandra A. Bond
MARSH President
651-592-7319
