The state's largest managed care provider for Arkansans with disabilities is under investigation for Medicaid fraud, according to documents obtained by the Arkansas Democrat-Gazette.
Empower Healthcare Solutions LLC, which serves some 20,000 people in the state who need services for complex behavioral health disorders or developmental disabilities, received a notice of sanctions from the state Medicaid inspector general, notifying the entity that it is being investigated for fraud and that some Medicaid payments will be suspended.
The letter, dated Wednesday, said the state Office of Medicaid Inspector General "received complaints against Empower and performed an investigation regarding alleged fraudulent payments made by Empower to certain providers and vendors that resulted in unnecessary costs to the Medicaid program."
The letter, addressed to Mitch Morris, the chief executive of Empower, said the inspector general's office referred the case to the Arkansas attorney general's Medicaid Fraud Control Unit, which "determined that credible evidence of fraud exists."
In an email, Morris said Empower is "cooperating fully with the state's ongoing investigation but denies any allegations of fraud or any other misconduct."
"The programs under review comply with federal and state laws and are designed to enhance the delivery of services and to improve care to our beneficiaries," Morris said. "The issues being investigated do not involve care provided to members."
Medicaid payments will be partly suspended to Empower, which is one of four Provider-led Arkansas Shared Savings Entities, or PASSEs, in the state. These entities funnel Medicaid benefits to a network of providers that offer care to qualifying beneficiaries.
Care could include anything from counseling and speech therapy to inpatient psychiatric visits and medical equipment.
[DOCUMENT: Letter from state AG's office to Medicaid officials » arkansasonline.com/123agletter/]
The PASSE model was created by the General Assembly in 2017 and aimed at reducing the care costs for one of Arkansas' most expensive patient populations.
With 20,500 beneficiaries, Empower Healthcare is the largest PASSE. Summit Community Care has 17,150 members; Arkansas Total Care has 14,486, according to data from the Arkansas Department of Human Services, which manages the PASSE program.
There are 51,823 Arkansans enrolled, and CareSource is under review to become a fourth PASSE.
The Department of Human Services sent a letter Thursday to Empower Healthcare's members, notifying them the "Office of Medicaid Inspector General has partially suspended Empower as of December 1, 2021."
"Don't worry. You're not losing coverage, and nothing will change for you at this time," the letter said. "To ensure you continue to have the access to care and services that you need, Empower will continue to get payment from Medicaid for services."
The inspector's general office said it decided to not suspend all Medicaid payments -- for now.
[DOCUMENT: Letter from state Inspector General's office » arkansasonline.com/123igletter/]
"We have reached this determination due to the fact that Empower currently serves over 20,000 Medicaid beneficiaries who depend on Empower for continuity of care, and there are other available remedies that can more effectively protect Medicaid funds," the letter from Elizabeth Smith, secretary of the Department of Inspector General, said.
In a letter sent Tuesday to state Medicaid regulators, Lloyd Warford, a deputy attorney general over the Medicaid Fraud Control Unit, said a full investigation was underway.
"The finding of credible evidence of fraud is based upon a careful and judicious review of all allegations, facts and evidence specific to this case," Warford wrote. "It is important to note that a finding of credible evidence of fraud is the threshold necessary to open a formal investigation and not a final determination.
"It simply means that the allegations have been found sufficiently verified and credible to require a full investigation."
The fraud allegations against Empower Healthcare are the latest state investigation into the company, which has been embroiled in reviews, sanctions and court battles after splitting with one of its shareholders earlier this year.
The Arkansas Department of Human Services required Empower to undergo a readiness review to ensure the group had the capacity to continue to operate as a PASSE after its separation from Beacon Health Options Inc., a Boston-based behavioral health provider that owned a 16.6% stake in Empower.
The two parted ways over the summer after legislation passed earlier this year placed a new prohibition on companies from having more than one stake in a PASSE.
Insurance giant Anthem Inc., which owns a stake in rival Arkansas PASSE Summit Community Care, announced in March that it had completed its acquisition of Beacon Health, meaning Beacon and Empower had to separate.
[DOCUMENT: DHS Letter to Empower Members » arkansasonline.com/123dhs/]
Empower alleged that, as the two sides began the transition away from each other, Beacon Health engaged in activities designed to sabotage Empower's business.
In a lawsuit filed at the beginning of November, Empower said that since the merger with Anthem Beacon "has engaged in conduct that suggests that it is functioning as a Trojan-horse for Anthem seeking to destroy Empower," court documents said.
Empower has faced ongoing increased scrutiny from state agencies, including the Department of Human Services, since the suit was filed.
The agencies cited concerns that Empower misrepresented its capacity to operate without Beacon, which provided a number of services to Empower, ranging from management of its website and emails to the cellphone numbers of employees.
The Department of Human Services issued a "notice of immediate sanction" against Empower Healthcare Solutions on Nov. 16 on grounds that the information outlined in court documents was contrary to the transition plan provided to the agency at the end of July.
The intermediate sanction resulted in the suspension of "all new assignment, enrollment and voluntary transitions to the [Empower] PASSE, including automatic mandatory assignment and enrollment, effective Nov. 19, 2021," according to the letter, addressed to Morris, the Empower CEO.
That "readiness review is still pending, and no decision is expected today," Gavin Lesnick, a spokesperson for the Human Services department, said in an email Thursday, adding that the "readiness review" is a separate investigation not connected to the fraud probe.
In letters to Empower, the Department of Human Services indicated a deadline for the readiness review of Nov. 24 so that the agency had at least 30 days to notify Empower members if they needed to transfer their services to another managed care providers should Empower not pass the readiness review.
"We look forward to resolving these issues with the state of Arkansas and continuing our focus on advancing health services and outcomes for the 20,000 Arkansans served by Empower," Morris said in an email Thursday.
The letter sent Tuesday to state Medicaid regulators said the Medicaid Fraud Control Unit found that "no provider audits were done for six months in 2019 at the direction of Empower."
"It has also been alleged that certain providers were protected from the normal audit process," the Tuesday letter said.
The agency said it also "determined credible evidence exists that $3.7 million Medicaid dollars" were "illegally retained and improperly reported as payment for Medicaid services for 2020."
The Medicaid Control Fraud Unit said it also found a misappropriation of funds in Community Investment programs and "that some of the Medicaid dollars may have been spent inappropriately or on expenses, costs or fees not included" in proposals to the Department of Human Services.
Empower will continue to receive the "per member per month payment" but all other expenditures must be approved by the Human Services department before disbursement, the Department of Inspector General letter sent Wednesday to Empower said.
"All new assignments, enrollments and voluntary transitions to Empower are suspended immediately," the letter said, adding that the Department of Human Services and the Office of the Medicaid Inspector General "will conduct enhanced monitoring of Empower."