UCare fraud failures fuel Walz push to scrap Medicaid managed‑care
After revelations that UCare — the state’s largest Medicaid managed‑care organization before it was seized last year and now being absorbed by Medica — and other MCOs failed to stop large fraud schemes, Gov. Tim Walz is pushing to eliminate private Managed Care Organizations from Minnesota’s Medicaid system and centralize accountability within the Department of Human Services; DHS Inspector General James Clark says that would streamline and unify oversight. About 80% of Minnesota’s Medicaid is administered by MCOs, which have paid more than $6 billion in claims since 2018, and prosecutors and watchdogs say MCOs and DHS (the only entities that can freeze funding) were “asleep at the wheel,” exemplified by the PITSTOP‑66 scheme in which a banned provider continued generating phantom UCare claims into 2021 despite warnings.
📌 Key Facts
- About 80% of Minnesota’s Medicaid care is administered by private Managed Care Organizations (MCOs); eight MCOs have paid more than $6 billion in Medicaid claims since 2018.
- Under the current model providers submit claims to MCOs (not the Department of Human Services), and MCOs — along with DHS — are the only entities that can freeze Medicaid funding over suspected fraud, making MCOs the "first line of defense."
- Governor Tim Walz has proposed eliminating MCOs from Minnesota’s Medicaid system and centralizing accountability within DHS; DHS Inspector General James Clark says that move would "streamline and unify" oversight because each MCO currently uses its own, not-always-shared fraud-detection approach.
- FOX 9 reports that UCare, formerly the state’s largest MCO, was seized last year by the Minnesota Department of Health for massive losses and is being absorbed by Medica; both companies declined to comment on their fraud-detection role.
- The PITSTOP‑66 investigation found that interpreter Nasro Takhal orchestrated a large Medicaid fraud scheme, using transportation companies, interpreters, drivers and specialty clinics to bill UCare for largely "phantom" services to Somali American members around Faribault.
- Takhal was formally banned by UCare in 2019 after a "credible allegation of fraud," yet she continued generating hundreds of rides and interpreter claims for nearly two more years by using invalid or fabricated names; a clinic alerted UCare in November 2019 but prosecutors say the fraud continued into 2021, producing a "remarkable increase" in UCare-paid funds.
- Former Medicaid fraud prosecutor Steve Forrest and at least one provider told FOX 9 that DHS and MCOs (including UCare) were "asleep at the wheel" on fraud detection, despite MCOs having a financial incentive to stop bogus billing.
- DHS Inspector General James Clark acknowledged the PITSTOP‑66 pattern — thousands of impossible or phantom claims tied to a single operator — "definitely should have raised some red flags" and been investigated sooner.
📊 Relevant Data
The Somali population in Minnesota is estimated at 79,449 based on 2019-2023 data.
Somali population - Cultural communities — Minnesota Compass
37.5% of Somali immigrant adults in Minnesota live below the poverty line, compared to 6.9% of native-born adults.
Somali Immigrants in Minnesota — Center for Immigration Studies
81% of Somali-headed households in Minnesota receive some form of welfare, compared to 21% of native-headed households, with Somalis representing 2.8% of households but accounting for a 3.5 times overrepresentation in welfare receipt.
Somali Immigrants in Minnesota — Center for Immigration Studies
73% of Somali households in Minnesota have at least one member on Medicaid, compared to 18% for native-born households.
Somali Welfare Fraud in Minnesota Has Cost American Taxpayers Billions — The Heritage Foundation
Nearly 100 individuals, the majority being Somali immigrants, have been charged in the Minnesota welfare fraud scandal, with total losses potentially exceeding $9 billion across state programs.
Somali Welfare Fraud in Minnesota Has Cost American Taxpayers Billions — The Heritage Foundation
📰 Source Timeline (4)
Follow how coverage of this story developed over time
- Details of the PITSTOP‑66 investigation: interpreter Nasro Takhal orchestrated a large Medicaid scheme using transportation companies, interpreters, drivers and Twin Cities specialty clinics to bill UCare for largely 'phantom' services to Somali American members around Faribault.
- Takhal was formally banned by UCare in 2019 after a 'credible allegation of fraud,' yet she continued to generate hundreds of rides and interpreter claims for nearly two more years by using invalid or fabricated names through the same agencies.
- A medical clinic alerted UCare in November 2019 that the banned provider’s scheme was still running, but prosecutors say the fraud nonetheless continued into 2021, producing what investigators called a 'remarkable increase' in UCare‑paid Medicaid funds.
- Former state Medicaid fraud prosecutor Steve Forrest explicitly characterizes UCare, other MCOs and DHS as 'asleep at the wheel' on fraud detection, while another provider told FOX 9 that UCare knew she was double‑billing and did nothing.
- DHS Inspector General James Clark concedes on the record that the PITSTOP‑66 pattern — thousands of impossible or phantom claims tied to one operator — 'definitely should have raised some red flags that folks should have looked into sooner.'
- Confirms that about 80% of Minnesota’s Medicaid care is administered by private Managed Care Organizations rather than directly by DHS.
- Reports that MCOs have paid out more than $6 billion in Medicaid claims since 2018, based on data FOX 9 obtained.
- Identifies MCOs and DHS as the only entities that can actually freeze Medicaid funding over suspected fraud, and quotes AG Medicaid Fraud Control Unit director Nicholas Wanka calling MCOs the first line of defense because they decide whether money goes out the door.
- Quotes former state Medicaid-fraud prosecutor Steve Forrest saying MCOs and the state were essentially "asleep at the wheel" on fraud despite MCOs’ financial incentive to stop bogus billing, and that it’s surprising large schemes weren’t caught earlier.
- Clarifies that in practice providers submit claims to the MCOs, not DHS, underscoring how far removed the state agency is from front-line utilization review under the current model.
- Walz stated plainly this week that he wants to eliminate Managed Care Organizations from Minnesota’s Medicaid system and 'centralize' accountability within DHS.
- DHS Inspector General James Clark criticized the current set‑up where each MCO uses its own fraud‑detection approach and 'they're not necessarily sharing information with each other,' arguing the Walz proposal would 'streamline and unify' oversight.
- Former Medicaid Fraud Control Unit prosecutor Steve Forrest told FOX 9 he 'never saw evidence that DHS or any MCO was appropriately tracking claims within their own systems' and said both DHS and MCOs were 'asleep at the wheel' on fraud.
- FOX 9 confirms via contracts and state data that eight MCOs have issued more than $6 billion in Medicaid payments since 2018 and emphasizes that MCOs and DHS are the only entities that can freeze Medicaid funding for suspected fraud.
- The piece notes that UCare was the state’s largest MCO before being seized by the Minnesota Department of Health last year due to massive losses and is now being absorbed by Medica; both declined to comment on their fraud‑detection role.