The FBI announced its investigation of Kentucky-based treatment provider Addiction Recovery Care (ARC) for potential Medicaid billing fraud in the summer of 2024. A new federal lawsuit and database revealing monthly Medicaid payments have now shed light on what the large and influential company allegedly did.
Federal prosecutors are targeting an extraordinary spike in Medicaid payments the company received for performing “psychoeducation” services, which a whistleblower alleges was fraudulently billed. According to a review of a new federal database, ARC was paid 70 million dollars from Medicaid for this psychoeducation service in 2023 and 2024, which accounted for 20% of all Medicaid payments under that billing code in the entire country for this two-year period.
Psychoeducation is a non-clinical service that provides general information about the recovery process, separate from actual addiction treatment provided by licensed psychotherapists and certified social workers. While this service is not usually paid for by Medicaid in most states in Kentucky’s region, payments to addiction treatment providers in Kentucky for psychoeducation exploded in recent years—quadrupling to 34.7 million dollars from 2020 to 2023, and then quadrupling again in 2024 alone to 165.6 million dollars.
State Oversight and Response
State officials received warnings in August 2024 that provider spending for non-clinical psychoeducation was skyrocketing, and were urged to stop payment for these services. Ken Fleming, chair of the Kentucky Medicaid Oversight and Advisory Board from Louisville, called this situation “a direct failure of the administration not overseeing and managing taxpayers’ money.”
Several Medicaid bills have been filed in response to the crisis, including one that ends all Medicaid payments for psychoeducation services in Kentucky.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://thelevisalazer.com/kpr-how-kentuckys-addiction-recovery-care-allegedly-committed-massive-medicaid-fraud/