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Health provider in scandals loses first 3 state contracts

by Doug Thompson | July 7, 2018 at 4:30 a.m.

SPRINGDALE -- The state began closing down the first three of its 16 contracts with Preferred Family Healthcare on Friday, after a year and a half of scandals that include convictions of four former lawmakers on corruption charges.

Preferred Family is a nonprofit behavioral health and substance abuse treatment company. It has 47 locations in Arkansas. The Springfield, Mo., company has $28 million in contracts with the state to provide services ranging from therapy and counseling for foster children to court-ordered drug and alcohol addiction treatment and professional consulting to the state Department of Human Services. In addition, the company received more than $33 million a year through the state Medicaid program. Preferred Family operates in five states.

The state suspended Medicaid payments to the company and announced it would use the anti-fraud provisions in the contracts that allow them to be assigned to other providers. Preferred Families cases and contracts will go to various other providers around the state in a process being worked out among Arkansas' Department of Human Services, Preferred Family and the other providers involved.

"Recognizing the realities of these decisions, it became apparent that Preferred Family Healthcare would be unable to adequately support our clients without the government contracts," the company said in a statement earlier this week. "Preferred Family Healthcare's first priority remains the clients served and the more than 700 employees who support them across the state of Arkansas."

A U.S. Department of Justice investigation has obtained three guilty pleas and one jury conviction against former Arkansas lawmakers in a multimillion-dollar corruption scheme that started at least as early as 2010. Preferred Family's former lobbyist, Milton R. "Rusty" Cranford of Bentonville, presided over the plan. Cranford also pleaded guilty to a conspiracy charge June 7. The investigation is ongoing. Cranford also served as an executive in the company, overseeing its Arkansas operations until January 2017.

The state was assured by Preferred Family it had dismissed the company executives involved since the first guilty plea Jan. 4, 2017. Then former Preferred Family executive Robin Raveendran was charged last week, accused of filing $2.3 million in improper Medicaid claims for mental health services. Gov. Asa Hutchinson and the state's Office of Medicaid Inspector General announced the state would cancel contracts with the company and suspend Medicaid payments to it.

Human Services administrators and executives of Preferred Family met Friday to begin shutting down the first three contracts, which are with the department's Division of Children and Family Services, according to a statement by the department Friday afternoon.

"We appreciate that Preferred Family Healthcare is collaborating with our agency in those efforts," said Dawn Stehle, department deputy director.

The transition for these first contracts is expected to take 30 days, the department's statement said. The department expects to have a timeline for all the remaining contracts within the next week, the statement said.

The contracts terminated Friday are for emergency shelters for children removed from their homes for their health and safety. Currently, no children are being served by the shelters involved, Friday's statement said. Two children in longer-term residential treatment in the second contract will be moved. Three clients receiving counseling services also will be served elsewhere, according to the statement.

Preferred Family is appealing the Medicaid payment suspension, it announced after the suspension.

Metro on 07/07/2018

Print Headline: Health provider in scandals loses first 3 state contracts


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