LITTLE ROCK – Empower Healthcare Solutions, a managed care organization that serves nearly 20,000 Arkansas Medicaid beneficiaries with complex health needs, filed a lawsuit in federal court on Tuesday against a Boston-based company that owns a 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 concerned about Empower’s ability to function after Beacon’s departure is finalized. The Arkansas Department of Human Services (DHS) said in its Nov. 2 letter to Empower that it has until Nov. 24 to complete a “preparation exam” commissioned by DHS, which oversees the Medicaid program. Arkansas.
Empower is one of four managed care organizations that contract with DHS to pay for and coordinate care for 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 patient group. PASSE primarily play the role of insurance companies but must be partly owned by health care providers; it also provides “care coordinators” who act as case managers for the beneficiaries.
Beacon, one of the largest behavioral health companies in the country, has held a 16.66% stake in Empower since PASSE’s inception in 2017. (The rest of Empower is owned by several healthcare entities based in the ‘Arkansas.) Beacon also contracts with Empower to provide administrative services and has played a vital role in Empower’s day-to-day operations.
But in 2020, Beacon was bought out by insurance giant Anthem. Anthem also owns a stake in another Arkansas PASS, Summit Community Care, a rival of Empower. A state law passed earlier this year prohibited ownership of more than one PASS, 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,” states Empower’s complaint. Empower claims Beacon has refused to hand over critical phone numbers, email accounts and databases and documents as the two companies finalize their divorce.
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 Beacon had his own complaints about the separation.
The August 26 letter, obtained from DHS with a public registration request, described a dispute over Empower’s adoption of new accreditation policies for healthcare providers in its network after Beacon left. Beacon has been responsible for the accreditation of suppliers as part of its management services at Empower. The letter stated that Beacon considered the fruits of this labor to belong to him alone – and not to Empower – and suggested that the Empower board was attempting to “deny Beacon accreditation from its own network”.
“The proposed accreditation policy may have the effect of invalidating accreditation decisions from our existing network,” wrote Melissa Ortega, vice president of Beacon based in Little Rock. “Beacon obviously cannot accept any policy that would have this result. Empower has been combative and uncooperative in addressing these concerns. “
In his lawsuit, Empower cites this episode as further evidence of Beacon’s alleged attempts to sabotage Empower. “Beacon made false statements about Empower to DHS, which representations (if believed by DHS) could jeopardize Empower’s future involvement in the PASSE program,” the complaint states.
The Directorate of Personal Services pays a fixed monthly amount for each PASS per registered beneficiary. The PASSE must then cover the costs of taking charge of these members, which may include costly services such as hospitalization or home help for disabled people. 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. (Empower’s revenue for 2020 was over $ 460 million, according to the lawsuit.)
Empower’s complaint says Beacon was “essentially the director of operations” for PASS. Under a service contract between the two companies, Beacon provided all “services required for [Empower’s] execution of the PASSE Contract [including] all staffing and administrative services. Beacon was “generously paid” for these services, according to the complaint, receiving “over $ 52 million in 2020 alone.”
But because Beacon has played such an important role in Empower’s day-to-day operations, the impending break-up raises questions about the future of PASSE and the beneficiaries who depend on it.
On the same day Empower filed for his lawsuit, Nov. 2, DHS sent him a letter warning PASS that he had not yet completed a mandatory “practice exam” before Beacon released on Dec. 31. DHS has given Empower until Nov. 24 to respond to a list of outstanding requirements. If PASSE 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 required to “ensure a smooth transition and continuation of services 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, in the letter. 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 spokesperson did not respond to questions about what action DHS might 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 the company was “prepared to demonstrate DHS compliance and stay[ed] very confident that he will provide formal approval to Empower to continue operating as Arkansas PASS for calendar year 2022 and beyond. Morris declined to comment on the lawsuit.
When provided with the November 2 letter for review, Thomas Nichols, an attorney for the disability rights organization in Arkansas, said DHS “is probably covering its bases to ensure it there are no gaps in services “for beneficiaries.
PASSE members cannot afford any interruption in their coverage, Nichols said, because they are so dependent on the services Medicaid pays for.
“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. People sometimes rely on it for tube feeding… Some people rely on it for life-saving drugs.
“These are things people need to have every day. They must be paid for each day.
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 verge of collapse due to mergers and acquisitions. “
In addition to Beacon, Empower is co-owned by five other healthcare 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, part-owned by an Ohio-based managed care company, was licensed earlier this year.
This story is courtesy of the Arkansas Nonprofit News Network, an independent, non-partisan news project dedicated to producing journalism that matters to the Arkansans.