State Punishes Empower, Says Managed Care Company Medicaid ‘Twisted’ Facts
The Arkansas Department of Social Services has suspended new registrations for Empower Healthcare Solutions, a managed care organization serving approximately 20,000 Medicaid beneficiaries with intellectual or developmental disabilities, behavioral disorders, or both.
Empower is one of the four Vendor-Led Arkansas Shared Savings Entities, or PASSES – managed care organizations that contract with the Arkansas Department of Human Services (DHS) to pay for and coordinate care for high-need, high-cost Medicaid clients. But the recent unrest within Empower has raised the question of whether the PASSE will have the capacity to continue operating in 2022. Earlier this month, DHS gave him a deadline of November 24 to complete a “partial readiness review.”
On Tuesday David Jones, a DHS Medicaid official, informed Empower that new PASSE registrations will be suspended as of Friday, November 19. letter.
On Thursday, an Empower lawyer wrote a scathingly-worded response, denying that the PASSE had misled DHS and saying the agency had acted illegally.
“Empower demands that DHS immediately withdraw the imposition of the sanction, which, as you must know, will irreparably harm Empower,” wrote Marshall Ney, lawyer at Friday Eldredge & Clark LLP. “In the absence of this, Empower will have to take whatever steps are necessary to mitigate this harm, and as you know, DHS is not immune from prosecution for ultra vires acts like this. (An ultra vires action is an action taken beyond the legal authority of an entity.)
PASSES depend on registrations for income. A PASS acts as an insurance company, receiving a fixed monthly amount from DHS for each person it enrolls. The PASSE then covers the costs of all its members, which may include costly services such as hospitalization or home help for disabled people. The price to pay can be huge: In 2020, Arkansas Medicaid paid nearly $ 1.3 billion to some 50,000 state PASSE recipients, according to documents submitted to a legislative committee in June. (Empower’s revenue for 2020 was over $ 460 million.)
Empower CEO Mitch Morris said in an email Friday that Empower typically receives around 150 new beneficiaries each month. About 20,000 members are currently registered with the PASSE.
Empower’s current issues are the result of its ongoing split from Beacon Health Options, a Boston-based company that is one of the nation’s largest behavioral health organizations. Beacon has held a 16.66% stake in Empower since PASSE’s inception in 2017. (The rest of Empower is owned by several Arkansas-based healthcare entities.) Beacon also contracts with Empower to provide administrative services and played a critical role in holding accountable the day-to-day operations of.
But in 2020, Beacon was bought out by insurance giant Anthem. Hymn too holds a stake in another Arkansas PAST, Summit Community Care, a rival of Empower. A State Law enacted earlier this year prohibited companies from owning portions of more than one PASS, and Beacon quickly began to part ways with Empower.
November 2, Empower sued Beacon, accusing him of sabotaging Empower for the benefit of its new owner. The lawsuit claims Beacon refused to hand over critical phone numbers, email accounts and databases and documents as the two companies scrambled to finalize their divorce at the end of the year. Empower and Beacon also fought over the issue of supplier accreditation within Empower’s supplier network.
“Since the merger, Beacon has adopted behavior which suggests that it functions as a Trojan horse for Anthem,” states Empower’s complaint. (The lawsuit was originally filed in federal court, but earlier this week the company withdrew it and re-filed in Pulaski County Circuit Court. As of Friday, no court date had been set. .)
The DHS sanction letter sent on Tuesday indicates that allegations made by Empower in his lawsuit reveal that Beacon’s departure created many more problems for PASSE than he had previously admitted to the state.
In July, “Empower identified some areas that would change due to the transition away from Beacon,” wrote Jones, the head of Medicaid. “Empower indicated that the issues identified in the letter were the alone areas that were changing and, therefore, a full readiness review was not necessarily. DHS accepted partial readiness review based on Empower’s performance[.]The letter goes on to list statements Empower made in his lawsuit that describe how Empower’s business activities were allegedly hampered by Beacon.
Had DHS known that Empower would lose access to phone numbers, email accounts, and documents in the divorce process, “a full readiness review would have been required,” Jones wrote.
Empower’s response letter states that PASSE has always kept DHS informed of its progress: “Empower has been cooperative, open, acted in good faith and acted in the best interests of its members. Empower has also previously communicated to DHS, on several occasions, that Empower may have to take legal action based on Beacon’s uncooperative behavior.
Morris, the CEO of Empower, continued to express his optimism when asked for an answer on Friday.
“Despite the sanction, which will be dealt with by Empower in due course, the transition process with DHS is going extremely well from my perspective,” he wrote in response to questions sent by email.
DHS spokesperson Amy Webb said on Friday that the agency “continues to monitor the situation closely and will provide more information to our clients as it becomes available.”
If a PASS cannot continue to participate in the program, Webb said that “clients would be transferred to another PASS. With rare exceptions, PASSEs have the same providers in their networks, which would minimize disruption to affected customers.
Loretta Cochran, a parent advocate, said switching to a new PASS could nonetheless mean “a huge change” for clients and their families. Cochran is the mother of one PASS beneficiary and the legal guardian of another (none registered with Empower or Summit).
“Theoretically, all PASSE should have had the same provider networks and the same reimbursement relationships, so it would be fluid to switch from one to the other,” she said. But changing PASSES could still force clients and their families to go through paperwork, such as verifying that their current health care providers are in the network, Cochran said.
“If I were a parent or Empower client, I now have to look at this big notebook – which may or may not be accurate – to see if the dentist I use, the mental health care provider I use , the hospital I use, the pediatrician I use, the therapist I use, the psychiatrist I use, the pharmacy I use, the sustainable medical equipment company I use, that all of these companies are in my new PASS, ”she said. “They are medically complex people here.”
Cochran said the change in care coordinators – who are employed by PASSE to manage services for registrants – could also create disruption.
“My care coordinator can call my son, they will talk and she will figure out what to do. They have a great relationship now – one that has taken years to build. It’s not something you do on a dime, and not with someone who has communication issues, in particular.
The uncertainty created for beneficiaries and families by the split between Beacon and Empower, she said, is “unacceptable”.
“If I was an Empower parent, man, I’d be crazy. I would be completely angry, hurt and scared, because the person to whom I entrusted my child’s life – there is now a situation there, “Cochran said.
In addition to Beacon, Empower is a condominium by five other health care organizations. These are the Arkansas Community Health Network, a consortium of four hospital systems; Statera, a long-term care company; Independent Case Management, a provider of home and community services for people with developmental disabilities; The Arkansas Healthcare Alliance, a group of behavioral health and developmental health service providers; and ARcare, a network of clinics and other providers.
According to documents provided to a legislative committee in June, Empower has the largest share of beneficiaries among Arkansas’ four PASS, with nearly 20,000 members. Summit Community Care, the PASSE co-owned by Anthem, had over 16,000 members. Arkansas Total Care, part of the Centene health insurance company, had more than 13,000 members. The Fourth PASS is a newcomer to the state: CareSource PASS, owned in part by an Ohio-based managed care company, was licensed earlier this year and is currently undergoing a prep exam.
This story is courtesy of Arkansas Nonprofit News Network, an independent, non-partisan news project dedicated to producing journalism that matters to the Arkansans.