Deputy Legislative Auditor Jodi Munson Rodriguez and Legislative Auditor Judy Randall present a report to a joint hearing of the House education finance and children and families committees on Feb. 8, 2023. Randall's office presented a report on assisted living facilities Wednesday. (Photo by Catherine Davis/House Information Services)
MINNESOTA (Minnesota Reformer) – A Minnesota assisted living facility was able to score average ratings from the state on resident health, safety and staffing, despite five separate incidents in two years that led to one resident death and four hospitalizations.
That’s because the Minnesota Department of Human Services doesn’t factor in serious maltreatment incidents when publishing an assisted living facility “report card” rating, according to a new report from the Office of the Legislative Auditor.
The legislative auditor, a nonpartisan watchdog in the legislative branch, evaluated the licensing process for the over 2,000 assisted living facilities that provide housing and medical services to seniors and disabled adults in Minnesota and also found the state is frequently late on its routine inspections of assisted living facilities.
“We have basically a simple recommendation that the department comply with the statutorily required timelines for assisted living facility inspections,” said David Kirchner, the manager for the evaluation, during a Wednesday presentation to legislators.
Minnesota established licensing for assisted living facilities in 2021 following a string of maltreatment investigations — becoming the last state to do so, KARE 11 reported at the time.
Assisted living facilities, state-regulated businesses sometimes referred to as “group homes,” can look like converted single-family homes with just a handful of residents, or large buildings that can serve sometimes hundreds of people. They differ from nursing homes, which are meant for people with higher medical needs and have to meet federal standards. The distinction in use is sometimes blurry, though, with seniors increasingly opting into assisted living homes over nursing homes, the Star Tribune reported.
Regulating assisted living facilities is complex: the state’s health department is responsible for licensing, while the human services department is responsible for paying facilities that have clients on Medicaid. A third regulatory body oversees licensing individual assisted living facility directors.
The Office of the Legislative Auditor found that, for the most part, the state “did a good job processing licensing applications.”
But it also found that health department inspectors completed their first two-year round of routine inspections a year late.
Health department leaders explained in a response to the report that the delay was caused in part by an unexpectedly high number of applications and many of its nurses being reassigned during COVID. Auditors noted that inspections have sped up since then, though in the latest data from the first half of 2025, still less than a third of inspections were completed by the statutory deadline.
Health department inspectors also investigate facilities that have complaints of neglect or abuse, and the health department regularly publishes substantiated maltreatment complaints. A recent MPR News investigation found that some assisted living facilities faced minimal consequences in cases of substantiated maltreatment.
How licensing has affected the amount of maltreatment in facilities was out of the scope of the new report, Kirchner said, though auditors did find that substantiated cases of maltreatment don’t hurt a facility’s rating.
Ratings of facilities have been published in report cards by the Department of Human Services since 2024 and are meant to help people find quality providers for themselves or their loved ones. Maltreatment findings are listed in the report card separately from a facility’s rating out of five stars.
Department of Human Services Temporary Commissioner John Connolly said that a facility’s rating “ideally would reflect” maltreatment findings, and that developing a system that properly incorporates maltreatment in the same scale as the existing rating system is doable but would take time.
Medicaid spending on assisted living facilities was around $1.1 billion in the 2024 fiscal year, according to the report. For context, that same year, Minnesota spent $18.5 billion on its entire Medicaid program.
Reports of Medicaid fraud and, by extension, the ongoing state-federal fight over federal Medicaid funding, have centered on 14 services deemed vulnerable to fraud, waste and abuse by the state. That list does not include assisted living services, called “customized living” in the state’s Medicaid program.
Still, auditors highlighted a possible “risk for incorrect payments”: DHS doesn’t check a facility’s maximum capacity when paying claims. Auditors cited one facility which had a licensed capacity of six residents but was paid for 18 residents during a single month in 2024.
Echoing a much-used sentiment in official communications, Department of Health Deputy Commissioner Wendy Underwood said at the Wednesday presentation: “Fighting fraud is everyone’s job at our agency.”
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