Nonprofit Fraud Often Hurts Those Who Can Least Afford It

July 3, 2018; Arkansas Business

Trust is a very real concept for nonprofits. We do our work in stewardship or trust and, when that is broken, as we mentioned on Tuesday in our article on Susan G. Komen for the Cure, the results can be long-lasting and far-reaching. In Komen’s case, there are other national organizations standing ready to act as alternatives. By contrast, in Arkansas, patients seeking mental health services may have difficulty finding them in the future. Due to the alleged actions by Preferred Family Healthcare (PFH)’s Robin Raveendran and at least two other executives, the Springfield, Missouri–based nonprofit mental health agency is now suspended as a Medicaid provider in Arkansas.

In 2017, Raveendran was terminated from his position, accused of running a scheme to obtain Medicaid reimbursements for over 20,000 illegally billed mental health services between January 1, 2015, and October 19, 2017. The state estimates this amounts to $2.2 million in Medicaid fraud at the direction of Raveendran.

According to a Department of Justice press release, former Arkansas state representative Micah Neal pled guilty to conspiracy to commit honest services fraud. In return for providing general improvement funds to nonprofits in Arkansas, Neal received $38,000 in kickbacks and bribes from those nonprofits, including PFH. In a similar case, former Arkansas state Senator Jon Woods was found guilty of 15 counts in a federal trial; these charges include participating in a kickback scheme to provide state money to several organizations, one being PFH. Between the two charged politicians, approximately $400,000 in funding was directed to PFH.

While these allegations and cases took place in 2017, PFH was not suspended as a Medicaid provider until Raveendran was charged on June 29, 2018. According to Medicaid Inspector General Elizabeth Smith, “When a credible allegation of Medicaid fraud exists, suspension of Medicaid payments is required by federal law.”

PFH has 47 locations in Arkansas, as well as off-site service locations, to provide behavioral/mental health, substance abuse disorder, and social support treatment in the state. PFH also operates two residential, detox, and outpatient service centers in Bentonville and Searcy. According to a statement by PFH published in Arkansas Business, PFH has at least 4,000 employees still providing critical services in Arkansas, as well as Missouri, Kansas, Illinois, and Oklahoma.

According to a federal SAMHSA (Substance Abuse and Mental Health Services Administration) report, Behavioral Health Barometer: Arkansas, 2015, only 46.5 percent of state residents with mental illness received mental health services between 2010 and 2014. Of those treated, only 61.6 percent reported improvement, compared to 70.9 percent nationwide.

The University of Arkansas Medical Sciences department states that Arkansas residents have insufficient access to mental health care. Justin Hunt, MD, assistant professor of psychiatry at the University of Arkansas Medical Science College of Medicine, says that rural parts of the state are left without mental health care access: “We have a significant shortage in many rural regions.” Big steps taken over the past few years have reduced the number of Arkansans who lack health insurance by 57 percent from its one-in-four level in 2014.

Medicaid remains the single largest funding source for mental health services in the United States, covering more than a quarter of all mental health patients nationwide. When considering the availability, or lack thereof, of mental health care in Arkansas, the suspension of Medicaid contracts to PFH could catalyze a mental health crisis in the state. In 2014, 595,807 of Arkansas’ 2.8 million citizens were enrolled in Medicaid. Now these individuals are down nearly 50 mental health care providers because of the actions of PFH and members of the Arkansas legislature, putting thousands at risk of mental health crises in an already underserved state.

Arkansas relies on nonprofits and 13 community mental health centers (CMHCs) throughout the state. Thirteen state-run CMHCs serve 65 of Arkansas’s 75 counties, with 119 service sites. The Division of Behavioral Health Services states these facilities serve approximately 74,000 individuals annually. Nonprofits not run by the state of Arkansas can likely expect an increase in service needs as the mental health care of PFH’s clients is not only interrupted but no longer available until the state completes its investigation.—Ember Urbach

Update: This article has been amended to better reflect the current state of Arkansans who lack health insurance.