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Published March 26, 2013, 09:29 PM

Auditor: DHS violated law in MinnesotaCare program

Despite a decade of warnings that it was violating state and federal laws, the Minnesota Department of Human Services failed to properly check recipients enrolling in MinnesotaCare, a $526 million taxpayer-subsidized health insurance program, the legislative auditor said Tuesday.

ST. PAUL — Despite a decade of warnings that it was violating state and federal laws, the Minnesota Department of Human Services failed to properly check recipients enrolling in MinnesotaCare, a $526 million taxpayer-subsidized health insurance program, the legislative auditor said Tuesday.

About 129,000 people are enrolled in MinnesotaCare, a program for Minnesota residents who can't afford private health insurance but don't qualify for Medicaid. The human services department has known for years it was failing to verify recipients' income and Social Security numbers to ensure they were eligible, Legislative Auditor Jim Nobles said in a report.

Human Services officials say a new computer system that will be launched in conjunction with MNsure, Minnesota's upcoming health insurance exchange, should fix the problem. But Nobles said he remains skeptical, the Star Tribune reported (http://bit.ly/X9RM9a).

After Nobles' office issued a report in 2003 identifying the eligibility problem, the department said it was developing a new web-based computer system to resolve the issue. After spending $40 million, the agency scrapped that effort years later with no fix.

"It was a complete failure," Nobles said. "It was abandoned. Now we say the computer fix is going to be in the development of the insurance exchange. I certainly hope that will be true. But it isn't going to happen by magic."

In a letter to Nobles, Human Services Commissioner Lucinda Jesson agreed with the findings and said her agency takes the issues "very seriously."

"We will work diligently to correct them," Jesson said.

Nobles said income and eligibility verification are crucial in publicly subsidized programs to lower the risk of fraud and mistakes.

"This is not just a nice thing to do," he said. "It's a requirement of both state and federal law. The department has not been in compliance with the law."

Copyright 2013 The Associated Press.

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