The Arkansas Department of Human Services this week approved Empower Healthcare Solutions LLC to continue operating as the state's largest managed care provider for Arkansans with developmental disabilities.
For nearly a year, Empower has been under increased scrutiny from state agencies after it announced that it would split with one of its main shareholders because of conflicting interests with another provider-led Arkansas Shared Savings Entity in the state.
Including Empower, the four Arkansas Shared Savings Entities in Arkansas funnel Medicaid benefits to networks of providers that offer services to individuals with complex behavioral health, developmental or intellectual disabilities.
More than 50,000 Arkansans qualify to participate in the Arkansas Shared Savings Entity program, which was created by Act 775 of 2017. Empower serves about 20,000 clients.
In early January, Empower agreed to pay almost $8 million in civil penalties and reimbursement to the Arkansas Medicaid program over how it reported expenses.
The settlement was based on a joint fraud investigation conducted by the Medicaid Fraud Control Unit of the Arkansas attorney general's office and the U.S. Department of Health and Human Services inspector general.
The state Department of Human Services had been conducting a "partial readiness review" of Empower after it began its transition away from the Boston-based Beacon Health Options Inc., which owned a 16.66% stake in the Arkansas Shared Savings Entity.
The Arkansas Insurance Department on Friday approved the Dallas-based private equity firm Trive Capital as Empower's new equity partner. Trive is acquiring a 16.67% stake in Empower, according to Arkansas Insurance Department records.
Tanner Cope, managing director at Trive, said at Friday's Insurance Department hearing that Trive delayed closing its investment in Empower at the end of 2021 because of the Department of Human Services' ongoing review and the attorney general's fraud investigation. The Insurance Department had initially signed off on the deal in November.
A Human Services Department spokesman said the agency was aware of Friday's hearing, but the timing of the readiness approval was coincidental.
"We made decisions based on Empower having completed all necessary pieces of DHS readiness review," spokesman Gavin Lesnick said Friday.
Beacon's departure, finalized at the end of 2021, raised concerns from regulators over whether Empower could continue to support existing clients and accept new ones this year without Beacon's involvement. Beacon managed much of Empower's day-to-day operations.
In a letter Monday, a Human Services Department official said the managed care provider had "fulfilled all the requirements within the stipulated timeframes."
Such requirements included assessments of Empower's capabilities in certain areas, such as staffing, claims management, care coordination, grievances and appeals, and member information.
"DHS will continue to monitor Empower and will hold regular meetings with Empower for enhanced monitoring," the letter said. "DHS has determined that these requirements were met and has finalized the formal readiness review."
"Empower is excited about that achievement and looks forward to continued collaboration with DHS and to welcoming more members into enrollment with Empower during 2022 and beyond," Mitch Morris, Empower's chief executive officer, said via email Friday to the Arkansas Democrat-Gazette.
The Monday letter added that the Department of Human Services ceased daily payment reviews on Feb. 1 and that automatic assignments of new clients to the Arkansas Shared Savings Entity will resume Monday.
Last November, the Department of Human Services issued sanctions against Empower "due to Empower's misrepresentation of information furnished to DHS" concerning its capacity to operate without Beacon.
Those sanctions included a suspension of automatic mandatory assignments and enrollment of new clients, effective Nov. 19, while the Department of Human Services deepened an ongoing review of Empower.
The Department of Human Services increased its scrutiny of Empower's operations after the Arkansas Shared Savings Entity filed a lawsuit against Beacon Health on Nov. 2.
The suit outlined examples of alleged contract breaches by Beacon and services, data and personnel issues that Empower said Beacon failed to resolve to complete the transition, according to court documents.
It also alleged that Beacon was trying to sabotage Empower's business operations in the state to benefit rivals.
The Department of Human Services said the court documents presented information contrary to transition plans Empower provided to the agency last summer.
The passage of a law last year barring shareholders to own stakes in more than one Arkansas Shared Savings Entity triggered the split between Beacon Health and Empower. In March 2020, the Indiana-based insurance giant Anthem Inc. announced that it acquired Beacon.
Anthem also owns part of Summit Community Care, another Arkansas Shared Savings Entity and competitor to Empower.