Managed care company Medicaid sues outgoing co-owner, alleging “sabotage”


Empower Healthcare Solutions, a managed care company that serves nearly 20,000 Arkansas Medicaid beneficiaries with complex health needs, filed a lawsuit in federal court on Tuesday against a company that owns part of Empower but plans to leave by the end of the year.

The lawsuit accuses Beacon Health Options of “seeking to destroy Empower … from within” for the benefit of one of Empower’s competitors.

Meanwhile, a letter obtained by the Arkansas Nonprofit News Network shows state Medicaid officials are concerned about Empower’s ability to function after Beacon’s departure is finalized. The Arkansas Department of Human Services (DHS) said in the Nov. 2 letter that Empower has until Nov. 24 to complete a “readiness exam” ordered by the agency, which administers the Medicaid program. ‘State.

Beacon, a Boston-based behavioral health organization with national reach, has owned a 16.66% stake in Empower since its inception in 2017. (The rest of Empower is owned by several Arkansas-based healthcare companies .) Beacon also contracted with Empower to provide administrative services and played a vital role in Empower’s day-to-day operations.

But in 2020, Beacon was bought out by insurance giant Anthem. Anthem holds a stake at another Arkansas Medicaid managed care company, Summit Community Care. A State Law passed earlier this year outlawed ownership of more than one of those companies, and Beacon began to separate from Empower.

Now, Empower’s lawsuit says Beacon “intentionally attempted to sabotage Empower” as he walked for the door.

“Since the merger, Beacon has adopted behavior which suggests that it functions as a Trojan horse for Anthem,” the complaint states. Empower says Beacon has refused to hand over phone numbers, email accounts, critical databases and business documents as the two companies go their separate ways. He also states that Beacon made “false statements” to DHS regarding the dissolution of the two companies.

A representative for Beacon did not respond to a request for comment on the lawsuit. But a letter Beacon sent to DHS on August 26 shows the company had its own complaints about his separation from Empower. The letter, obtained from DHS with an application for registration, asked the agency to disregard the board’s adoption of healthcare provider accreditation policies, despite Beacon’s objections. .

“The proposed accreditation policy could have the effect of invalidating the accreditation decisions of our existing network,” he said. “Beacon obviously cannot accept any policy that would have this result. Empower has been combative and uncooperative in addressing these concerns. “

Empower is one of four managed care companies that contract with Arkansas to pay for and coordinate the care of Medicaid recipients with severe behavioral disorders, intellectual or developmental disabilities, or both. Known as the Arkansas Provider-Led Shared Savings Entities, or PASSE, they were created by a 2017 state law that promised to both control spending and provide better services to this high-need, high-cost group of patients. (In 2020, the cost to Medicaid for the roughly 50,000 PASSE recipients in Arkansas was nearly $ 1.3 billion, according to documents provided to a legislative committee in June.)

The Department of Social Services, which administers Medicaid, pays a fixed monthly amount for each PASSE per recipient enrolled in the PASSE. In return, the PASSE must cover the costs of taking charge of these patients, which may include costly services such as home help for people with disabilities. PASSEs play a similar role to insurance companies – they are regulated by the state insurance department – but must be owned in part by health care providers.

The same day Empower filed his complaint, he received a letter from DHS warning the company that it had not yet completed the necessary “readiness exam” following the Beacon exit. DHS has given Empower until Nov. 24 to respond to a list of outstanding requirements. If the company does not meet this deadline, the letter suggested, it could be in danger of losing its contract with the state – its only source of business.

DHS is obligated “to ensure a smooth transition and continued service for any Medicaid member of a managed care entity whose contract is terminated or dissolved for any reason,” wrote Elizabeth Pitman, director of DHS Medical Services Division.

The agency “must be able to make a final decision” by December 1, she added, so that beneficiaries “and their recipient PASSEs have sufficient notice to ensure continuity of services and transition. as smooth as possible “.

A DHS spokeswoman did not respond to questions about what action DHS could take if the Nov. 24 deadline was missed or if Empower members were assigned to one of the other PASSEs.

Empower CEO Mitch Morris said in an email that the company is “prepared to demonstrate DHS compliance and remains very confident that it will provide formal approval for Empower to continue operating as a PASS of Arkansas for calendar year 2022 and beyond “. Morris declined to comment on the lawsuit.

When he received the letter, Thomas Nichols, an attorney for the disability rights organization in Arkansas, said that DHS was “probably covering its bases to make sure there was no gaps in services ”for beneficiaries. PASSE members often need intensive services and cannot afford any interruption in coverage, he said.

“People don’t rely on this just for primary care appointments,” he said. “You have people who need staff 24/7 because they need them to live safely in a community setting. “

Nichols said the uncertainty surrounding Empower’s future illustrated the pitfalls of shifting responsibility from Medicaid to managed care companies.

“It is predictable that privatizing Medicaid services and delivering them to a for-profit world would result in the kinds of potential damage we have now,” he said. “It is inexcusable that people with significant developmental disabilities and mental illnesses are suddenly on the brink of mergers and acquisitions. “

This story is courtesy of Arkansas Nonprofit News Network, an independent, non-partisan news project dedicated to producing journalism that matters to the Arkansans.


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