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Sept. 12, 2011
TOPEKA State welfare officials today said they have ordered a new oversight framework for a major state contractor that is being investigated by state and federal law enforcement officials because of alleged financial irregularities.
Topeka-based Kansas Health Solutions, if it is to continue as a state contractor, must become licensed as a managed care company with the Kansas Insurance Department and abide by a set of additional requirements imposed by the Kansas Department of Social and Rehabilitation Services.
As part of the new accountability structure, KHS must use an independent, outside firm to manage its finances and hire an outside attorney or law firm to serve as the company’s legal counsel. The financial managers and lawyers hired by the company must meet SRS approval.
Also, Kansas Health Solutions must have the new executives it hires vetted by SRS.
The new requirements were described Monday to KHI News Service by Angela De Rocha, communications director for SRS, which is the agency that manages the state’s contract with Kansas Health Solutions.
"The contractor shall ensure that competent leadership approved by SRS is managing the day-to-day operations so that the contractor operates in a fraud-free, effective, efficient and accountable manner," De Rocha said.
Two top KHS officials recently left the firm following the allegations of financial problems. Their replacements have not been announced. Dr. Michael Leeson, the company’s medical director, is serving as interim executive director following the resignation of Michael Goldberg earlier this month. Goldberg's departure was preceded by that of KHS chief financial officer Jason Sellers.
Kansas Health Solutions is closely aligned with and processes payments for the state’s community mental health centers. About $200 million a year in federal and state dollars cycle through the organization.
De Rocha said SRS also will continue its ongoing audit of KHS books.
Scott Jackson, chairman of the board for Kansas Health Solutions, said the firm already had begun the process to become a licensed managed care company "several months before the current investigation."
He said because KHS was in the "final stages" of negotiating its contract with SRS and because investigations of the alleged irregularities were ongoing, it would be "inappropriate to speculate" on what corrective steps KHS might agree to or abide by.
The contract under negotiation would expire June 30, 2012.
Jackson, who's also executive director at the Spring River Mental Health and Wellness Center in Riverton, said KHS "regularly engages the services of outside legal counsel and outside accountants."
He said KHS contract negotiations with SRS were "going well and KHS expects to have a new contract in place soon."
Bob Hanson, a spokesman for the Kansas Insurance Department, said the department's review process for firms applying for a managed care license typically would take between 30 and 60 days.
Among the things the department would review would be an applicant's financial solvency, plan of operation, contract forms and benefit schedules, and bylaws and articles of incorporation.