KHI News Service

Turmoil besets Kansas mental health community

Resignations or firings of top managed care officials raise bevy of questions

By Mike Shields | September 09, 2011

Questions surrounding alleged financial irregularities at Kansas Health Solutions, the state's mental health managed care company, have mental health advocates dismayed about the future of the state's mental health system, particularly as Gov. Sam Brownback's administration is poised to announce its plan for a major makeover of the Kansas Medicaid program.

'Up in arms'

"I think everyone is up in arms over the allegations and concerned about what this means for the mental health system," said Rick Cagan, executive director of the National Alliance on Mental Illness-Kansas. "It comes at the worst possible time."

Cagan and other mental health advocates said Kansas Health Solutions, despite its recent problems, generally has done a good job of processing payments to mental health providers in a timely manner and has been responsive to concerns raised by consumers.

Two top officials at Kansas Health Solutions have resigned or been pushed out following claims of "financial irregularities" at the nonprofit corporation that is under contract as administrative overseer for most of the state's mental health services. The firm processes about $190 million a year for the state, serving as the administrative bridge between the Kansas Department of Social and Rehabilitation Services (SRS), care providers and mental health clients.

The first to leave the company was Jason Sellers, the chief financial officer. Officials said the problems he left behind were being investigated by the Attorney General's Office and the Federal Bureau of Investigation. Shortly after Sellers left in late August, Michael Goldberg, the firm's chief executive, submitted his resignation. But few people knew of Goldberg's departure until late this week.

Michael Goldberg

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Investigation under way

“KHS continues to cooperate fully with the ongoing investigation by SRS and law enforcement into recently discovered financial irregularities allegedly attributed to the former chief financial officer," said Jason LaBerge, a Kansas City public relations specialist hired by KHS to help deal with the situation. "At this point, the board has no indication of wrongdoing by any other KHS employee, including Michael Goldberg."

Kansas Health Solutions, since its creation, has been closely aligned with the interests of the state's community mental health centers. It essentially has been a subsidiary of the Kansas Association of Community Mental Health Centers. Executive directors from various mental health centers sit on the firm's board of directors.

But mental health center directors and officials at the association were avoiding public comment about the situation on Friday. They instead referred calls to LaBerge.

The firm's contract with SRS was under review when the alleged money problems were discovered.

SRS Secretary Rob Siedlecki, in a news conference last week, credited the agency's new contracting procedures for discovery of the problems, which by some accounts include more than $1 million not properly accounted for.

“KHS takes its obligation to serve as stewards of taxpayer dollars for vital health care services very seriously. If the investigation reveals any wrongdoing, Kansas Health Solutions will take all appropriate corrective actions," LaBerge said.

Dr. Michael Leeson, the firm's clinical director, is temporarily replacing Goldberg.

Mental health advocates on Friday said they were still reeling from the developments, though there have been no reports of disrupted payments.

Medicaid makeover

Much of the concern they expressed had to do with the timing of the crisis, given the widespread assumption that the Brownback administration is considering wholesale changes in the way the state's Medicaid program is operated.

One expectation, or worry, is that the administration will decide to farm out administration of all Medicaid services to a single, large managed care company, perhaps one from out of state.

"When we heard the news about the alleged embezzlement at Kansas Health Solutions, it was pretty devastating to those of us in the mental health community," said Amy Campbell of the Kansas Mental Health Coalition. "We've been watching the whole Medicaid reform process pretty closely. It's not that we're married to KHS or even know they would be the best, but they are the closest and nearest Kansas solution. So when we looked at the options being considered and what's out there - whether they eventually go to capitated managed care or what - we were at least looking at a company made up of Kansans and people close to the mental health system in Kansas.

Amy Campbell of the Mental Health Coalition of Kansas

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"Basically for us it was kind of like seeing that implode and then wondering what that would mean for the system as a whole in the next steps," she said.

Preserving a carve-out

Cagan said his organization also was worried that services for the mentally ill would be lumped into a larger managed care contract.

"I think there have been indications that they (the administration) are interested in putting things into one overall managed care organization," he said. "But the mentally ill and those with substance abuse problems are special populations. The public interest, I think, would be well-served by having them treated on a carved-out basis."

Brownback officials have said they won't release their Medicaid makeover plan until sometime in October, so it remains uncertain to what degree, if any, the advocates' fears will be realized.

But with respect to the KHS financial issues, SRS Secretary Rob Siedlecki pledged a thorough investigation.

“SRS is diligently looking into the allegations of embezzlement and fraud surrounding KHS and will follow evidence no matter where it leads. Kansas taxpayers need to have faith that their money is being spent prudently to benefit our most vulnerable citizens,” Siedlecki said.