Dakota County Commissioners were briefed last week on how fraud and the investigations surrounding it has affected county services, especially relating to medical assistance and childcare.
Part of the briefing was simply to disentangle the county’s role from previous or ongoing scandals like the Feeding Our Future scandal, which used state pandemic dollars from the Minnesota Department of Education.
“None of the counties had any involvement or any responsibility in administering that program,” said Director of Employment and Economic Assistance at Dakota County Dana DeMaster.
Part of the confusion of these programs is simply that they are riddled with acronyms and can be difficult to understand due to the complicated relationships in running the program between the counties, state, and federal government.
“It gets confusing fast,” said DeMaster.

Medical Assistance
Medical assistance (MA) is Minnesota’s largest healthcare program. Medical Assistance is Minnesota’s Medicaid system that supplements healthcare costs for people with low incomes and serves all sorts of people using state and federal funds.
While the funding for the program comes from the state and federal government, Dakota County determines eligibility for applicants.
“We play a very active role in eligibility determination, service authorization, the billing, and we share that role around program integrity with the state,” said Director of Social Services at Dakota County Emily Schug.
Once approved, the services are largely carried out by third party organizations called Managed Care Organizations (MCOs) or as Fee for Service (FFS) medical assistance.
The county often works closely with providers on casework management and is responsible for identifying service needs in MnCHOICES’ assessments.
Building relationships with providers was the first way Schug spoke to maintaining a high quality of service and avoiding fraud.
“That’s just a great vehicle to be able to, if something is not working or not working for either side, we know who to reach out to and kind of problem solve around things,” said Schug.
These relationships often fall to case managers who are able to work with both the recipient and the provider to ensure that high quality services are being administered.

Fraud vs. error
One of the differentiations Schug discussed was issues of service quality versus outright fraud.
“A lot of the concerns that county workers pick up or that are shared with us, may or may not be fraud. It may be a misunderstanding of policy. It could be a mistake, an honest mistake, and where there’s a lot of different shades and sometimes it’s hard to say from a worker perspective, is this fraud, or is this just poor care?” said Schug.
While Schug wouldn’t say that the term “fraud” is overused when talking about medical assistance, because the role of counties within programs varies, “I think that language when we talk about these sorts of things is important.”
Part of the reason Schug relies on relationships is because in having caseworkers who work closely with both the provider and the client, that caseworker will see both the service and quality of service. Seeing both allows caseworkers to know that high quality services are actually being provided.
This oversight improves quality and avoids fraud, providing better the service for residents.

Medical Assistant payment withholds
Currently within Dakota County, 15 providers have been identified as having credible threats of fraud and therefore have had payments withheld, with 112 Dakota County clients impacted from the stop in services, according to Schug.
These services include Integrated Community Support (ICS), night supervision, homemaking chore services, respite care, individualized home supports, customized living, and transition services, among others.
The payment withholds came after the Oct. 29, 2025 executive order from Minnesota Gov. Tim Walz, who ordered a “third party audit of billing for 14 high-risk Medicaid Services. Payments for these programs will be paused for up to 90 days,” according to the press release from the executive order.

Childcare Assistance
The Child Care Assistance Program (CCAP) supplements the cost of childcare to parents and guardians. As of December, 1,184 families and 2,677 children were enrolled in the program in Dakota County.
While the county’s role in Medicaid is largely focused on eligibility, within childcare assistance, the county has a “much larger share of responsibility,” said DeMaster.
The county’s role includes determining initial and ongoing eligibility, processing provider invoices, reporting suspected fraud, licensing family home licensed providers and investigating suspected fraud.
The county also has a dedicated fraud team for public assistance that primarily deals with client fraud.
“The highest percentage, almost all but one or two a year, are because there was an income discrepancy or household change that didn’t get reported,” said Dakota County Deputy Director of Employment and Economic Assistance Tiffinie Miller-Sammons.
These issues again can walk the line between fraud and error, however.
“Less than half are actually an overpayment. It’s more of an ‘okay, now we know,’” said Miller-Sammons.
Fraud reports for medical assistance are reported to the state.
The funds for CCAP are federal, with families enrolled in CCAP’s subprogram Minnesota Family Investment Program (MFIP) receiving up to $512 per week at a childcare center and $250 per week for a licensed home provider, depending on the age of the child.
Families are eligible for CCAP if they receive MFIP or have an income at or below 47% of the state median income which for a family of four is $67,679.
On Dec. 30, 2025, the Department of Health and Human Services froze federal childcare funds for the state, which totals some $185 million annually from the Administration of Children and Families, citing “blatant fraud,” according to Deputy Secretary of Health and Human Services Director Jim O'Neil.
The state was required to submit documentation about specific centers and data on all CCAP participants statewide.
While the federal funding has been frozen, Minnesota state funds have been used to fill the gap and are expected to support CCAP services for several months according to DeMaster: “State funds are sufficient to keep the CCAP portion going for several months while they work through the legal aspects of this and what their response will be.”
Despite the freeze in federal funds, the Department of Children and Families is “saying to continue to operate as usual,” said DeMaster.

Community confusion
Part of the issue with the move to prosecute fraud is the general confusion, anger and fear surround the topic. Because of the complicated relationships and funding mechanisms between the county, state and federal levels of government, who exactly is responsible is often unclear to residents.
“We also receive near-daily accusations of fraud, of people calling us and not being very polite about that and coming into the lobby in escalated situations,” said DeMaster.
Break-ins, threats and vandalization in childcare centers—especially for Somali-run childcare centers—have spiked in recent weeks, even for centers that have no ties to fraud.
The county is currently working on a communication policy to attempt to dispatch some of the confusion around fraud, especially because many of the programs provided are not only crucial to many residents but mandated by the state or federal government.
“About 97% of what we pay nonprofits are human service-related programs. They are to address state and federal mandates,” said Dakota County Finance Director Will Wallo.
“These programs are core parts of our continuum of care,” said Schug.