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DHS To Pause New 245D Home and Community-Based Services Licenses
The moratorium on new Home and Community-Based Services licenses aims to address program oversight and capacity concerns.
The Minnesota Department of Human Services (DHS) announced earlier this month that it plans to impose a temporary moratorium on licensing for 245D Home and Community-Based Services (HCBS), effective Jan. 1, 2026. The move follows heightened state scrutiny after DHS identified widespread fraud, waste, and abuse within the Medical Assistance (Medicaid) program.
Rapid provider growth cited
In a letter to legislators (pdf), Interim DHS Commissioner Shireen Gandhi said the moratorium is driven by several factors, including rapid growth in the number of HCBS providers that now exceeds the service needs of individuals enrolled in waiver programs.
DHS reported that the number of active 245D licenses is nearly equal to the number of pending applications, indicating that provider capacity has expanded faster than the waiver population over the past five years.
DHS also cited limited staffing and funding to address the growing application backlog while meeting federal requirements to review each licensed provider at least once every three years.
Scope and duration of the pause
The moratorium, authorized under Minnesota Statutes section 245A.03, subdivision 7a, and Executive Order 25-10 (pdf), is expected to last about 24 months, ending Dec. 31, 2027. During that time, DHS will stop issuing new 245D licenses, stop accepting new applications, prohibit the addition of new services to existing licenses, and cancel pending license applications. Applicants affected by canceled applications may request refunds of licensing fees through Dec. 31, 2026.
Exceptions process planned
DHS will establish an exception process for cases identified by counties, tribal nations, or managed care organizations responsible for waiver case management. The agency has said it will finalize and publicly share details on the exception criteria and request process before the moratorium takes effect.