Department of Human Services Investigations of Alleged Kickbacks in the Early Intensive Developmental and Behavioral Intervention Program

DHS has long authorized sanctions for kickbacks by citing federal Social Security Act provisions.

DHS’s administrative rules have contained a decades-old error in the definition of fraud, which limited its authority to address kickbacks.

Without correcting the rule or state law definitions, it is unclear whether DHS can suspend payments for kickbacks alone during an investigation.

The 2025 Legislature added explicit authority to sanction MA providers for kickbacks and criminalized kickbacks; however, suspension authority remains unclear and not clearly established by statute or rule.

DHS’s interpretation that it needed a determination by the Health and Human Services agency before suspending payments for kickbacks was overly cautious.

OLA found that in the majority of OIG investigations, actions were appropriate, but three kickback-related complaints were closed without investigation due to perceived lack of authority.

OIG closed 25 complaints without investigation (7 were investigations) involving EIDBI providers; three complaints involved kickbacks.

DHS could have acted under existing authority prior to 2025 to sanction kickbacks; the rule error and unclear authority created ongoing limits.

Amend the administrative rule defining fraud to clearly include kickbacks.

If the rule is not amended, the Legislature should act to resolve the issue.

Clarify authority to suspend payments during an investigation into kickbacks by updating rule or statute to explicitly include kickbacks as fraud.