A Benton attorney is seeking class-action status in a lawsuit over delayed payments to health care providers -- delays that resulted from the shift to managed care on March 1 for about 40,000 Medicaid recipients with significant mental illness or developmental disabilities.
In the lawsuit, Luther Sutter has asked Pulaski County Circuit Judge Wendell Griffen to order the state to freeze further payments to the managed-care companies until providers are paid what they are owed.
Sutter also wants a judgment declaring that the managed-care system "is unprepared and dysfunctional to adequately provide services to Medicaid beneficiaries in this State."
The lawsuit was filed Tuesday evening on behalf of Home to Community Living, a Little Rock company that serves developmentally disabled Medicaid recipients.
Sutter is seeking class-action status on behalf of home and community-based providers who have provided services for Medicaid recipients in managed-care plans since March 1.
"A catastrophic failure of major proportions began on day one and has interrupted care to tens of thousands of recipients and hundreds of providers on a state-wide scale," Sutter said in the lawsuit.
The managed-care companies, known as Provider-led Arkansas Shared Savings Entities, began coordinating the care for Medicaid recipients with significant mental illness or developmental disabilities last year in exchange for monthly payments of $173.33 per recipient.
Under the second phase of the initiative, three of the companies in March began receiving larger payments, ranging from $998.86 to $12,671.62 per patient, in exchange for paying for all of the patients' care.
A fourth company, Forevercare, dropped out after the Human Services Department rejected its request to delay the start of the second phase until July 1.
The initiative is designed to reduce the cost to the state of caring for the recipients while generating revenue that can be used to reduce the number of adults and children with developmental disabilities who are on a waiting list for home- and community-based services, including help with daily living tasks.
The revenue comes from the state's 2.5% tax on insurance premiums. The tax is levied on the payments the state makes to the managed-care companies. The federal government provides 70% of the money for the payments, but the state keeps all of the premium tax.
Act 775 of 2017 requires at least half of the money from the tax to go toward reducing the number of people on the waiting list for services. More than 3,100 people were on the list as of February.
Provider complaints about difficulties in seeking reimbursement from the companies have been a focus of two hearings this month by the House and Senate committees on state agencies and governmental affairs.
Attached to the lawsuit filed Tuesday, Sutter included records indicating that Home to Community Living had provided at least $101,079 worth of services to clients from March through April 19 but had been paid just $31,258.
The company wasn't paid during all of March, according to the lawsuit.
"Home to Community Living (HCL) has incurred a tremendous financial hardship because the company was forced to miss the first payroll (Friday March 22, 2019) and soon will be forced to miss that next payroll on Friday, April 5, 2019," the company's director, ReeShema Britt, said in a March 29 letter to a managed-care company, Empower Healthcare Solutions, that was included with the lawsuit.
Sutter contends in the lawsuit that the goal of the managed-care program is to reduce the number of providers "by at least 25% by restricting claims payments to them upon transition until some cannot survive."
Arkansas Department of Human Services spokesman Amy Webb did not respond on Friday to a request for comment on the lawsuit.
Representatives of the three managed-care companies didn't return messages seeking comment.
Sutter has also attempted to intervene in a lawsuit by the owners of residential care facilities who unsuccessfully sought to delay the March 1 start date of managed care.
The facility owners contended that the managed-care companies weren't ready to take responsibility for recipients' care.
Pulaski County Circuit Judge Chris Piazza on Feb. 27 rejected the owners' request for an order delaying the start date, but he said he would keep the case open for six months so that the plaintiffs could renew their request for action by the judge "if we run into disaster."
Sutter's April 7 request to intervene in that case was filed on behalf of a woman, identified only as "Jane Doe," who Sutter said has a mental illness and has been unable to fill her prescriptions "because one or more Defendants lack the infrastructure to deliver appropriate services to her."
Piazza hadn't ruled Friday on the request to intervene.
Metro on 04/28/2019