TOPEKA — State welfare officials now say that there appear to have been about $2 million in questionable expenses at Kansas Health Solutions, the nonprofit contractor that processes state payments to community mental health centers.
Angela De Rocha, communications director for the Kansas Department of Social and Rehabilitation Services, said a "preliminary report" based on SRS audits of the firm had turned up "approximately $2 million in questionable expenses for administrative services."
She said she couldn't comment on other details "because it involves a potential criminal investigation."
Whether a crime was actually committed, she said, remains to be seen.
"I’m not saying this is a crime or that it was fraudulent, but there were questionable payments made that raised suspicions," de Rocha said.
In an email to KHI News Service, Jeff Wagaman, deputy chief of staff at the Attorney General’s Office, confirmed that the case "...is currently under review."
Meanwhile, those in mental health circles continue to buzz about the alleged financial irregularities and the potential ramifications.
Mike Hammond, the executive director of the Association of Community Mental Health Centers of Kansas, has been avoiding public comments to the media about the situation, instead deferring questions to a Kansas City public relations firm.
But he has been posting comments about the case on a Facebook page maintained by the group Keys for Networking.
"Let me assure everyone that the damage has been contained," Hammond wrote in a post that appeared last week on the Facebook page. "The developments are the actions of one employee that has unfortunately placed the entire organization and the managed care plan at risk."
The company’s chief financial officer, Jason Sellers, was fired in late August. Then, KHS Chief Executive Michael Goldberg resigned earlier this month.
Hammond and others have said that Goldberg was not directly involved in the problems.
Keys for Networking Executive Director Jane Adams said she asked Hammond to post his comments on the group's Facebook page.
"KHS has done a good job for the families we work with and represent," she said. "We certainly support them."
Keys for Networking works with mentally ill and emotionally disturbed children and their families.
Hammond serves on the KHS board of directors, representing the mental health centers.
Kansas Health Solutions is a wholly owned and operated subsidiary of the association. Seven of the 15 seats on the company’s board are reserved for community mental health center directors.
SRS and the association formed Kansas Health Solutions in 2006 after federal officials raised concerns that the state's mental health system was limiting consumer choice. At the time, Medicaid-funded mental health services were limited to those provided by the state’s community mental health centers. Private counselors, therapists and social workers were excluded.
Now, most private providers may participate in the Medicaid-funded system if they contract with Kansas Health Solutions.
"The system we have now has only been in place since 2007 and we’d like to see it preserved," said Sky Westerlund, executive director of the Kansas Chapter of the National Association of Social Workers. "It is our belief that opening the system up to social workers in the private sector provided better access to services and more expertise in the care offered."
SRS is in the process of renegotiating its contract with Kansas Health Solutions. That contract would expire June 30, 2012.
Later this fall, Lt. Gov. Jeff Colyer is expected to propose a major Medicaid reform package that many are predicting will expand the state’s reliance on outside managed care organizations.
"We have every intention of bidding or partnering on the contract," next time it is up, Hammond told KHI News Service. "KHS is not broken, it’s not dysfunctional. There’s been an incident that’s raised questions, but the company continues to function in a meaningful way and we have a long list of successes that we can point to."
Hammond said the financial improprieties were discovered by people at Kansas Health Solutions and brought to the attention of SRS officials within 24 hours.
Any losses due to financial irregularities, he said, would be covered by insurance.
The KHI News Service is an editorially-independent program of the Kansas Health Institute and is committed to timely, objective and in-depth coverage of health issues and the policy making environment.