July 24--The Minnesota Department of Human Services is commissioning an independent audit to respond to lingering questions about the state Medicaid program's past practices in paying private HMOs.

The Medicaid rate-setting process also is the subject of several federal investigations.

Questions have swirled at the state Capitol this year about whether Minnesota officials have been manipulating the rate certification process in Medicaid to wrongly gain excess federal funds.

In response, the administration of Democratic Gov. Mark Dayton has stressed that officials have adopted a different approach to paying HMOs than that used by the administration of Republican Gov. Tim Pawlenty.

In a letter dated Monday, June 23, Human Services Commissioner Lucinda Jesson wrote to legislative leaders that the new audit "will conduct a thorough review of Minnesota'sMedicaid payments to third-party managed care companies for the fiscal years of 2003 through 2011."

"This independent analysis will allow an outside independent expert to address, once and for all, whether the state's payments to those contractors were higher than the amounts allowable under state and federal law," Jesson wrote. "The results of this analysis will also inform the Medicaid contracting reforms undertaken by our administration since 2011."

Medicaid is a health insurance program for low-income people and those with disabilities that is jointly funded by states and the federal government. The majority

of Medicaid beneficiaries in Minnesota have their care administered through managed care organizations including nonprofit HMOs.

The new audit contract will go out for a competitive bid, so officials could not say what the work will cost. Contracts of this type, however, often cost $50,000 or more, said Jeremy Drucker, a spokesman for the Department of Human Services.

Questions about Minnesota's rate certification process first arose in February with testimony at the Capitol from a former lobbyist for the Minnesota Hospital Association. That's when Jesson confirmed federal officials were investigating the issue -- an inquiry that she later said was launched by the U.S. attorney for Minnesota.

Republicans in Congress also have launched inquiries. In May, the federal agency that runs the Medicaid and Medicare health insurance programs sent a letter asking Jesson to explain how Minnesota sets payment rates for managed care organizations in Medicaid.

Christopher Snowbeck can be reached at 651-228-5479. Follow him at twitter.com/chrissnowbeck.

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