ST PAUL, Minn. — “Clearly, we got some work to do this next session,” said DFL State Senator John Hoffman.
Sen. Hoffman chairs the powerful Human Services Committee, and reviewed records KARE 11 uncovered as part of its investigation into the partnership between a for-profit company called Kyros, the state’s largest provider of peer services, and its non-profit partner, Refocus Recovery.
Peer services, which are billable to Medicaid, are designed so that people in recovery can be paid to help mentor others battling addiction.
When KARE 11 investigated, we found that Kyros and Refocus engaged in numerous questionable practices, including:
- Allowing its workers to bill for phone calls not allowed under state regulations.
- Allowing workers to take multiple clients to group events but bill as if they were back-to-back, one-on-one meetings, a potential violation of state and federal law.
- Among those group events – movie nights, where taxpayers paid for Kyros peers and clients to watch hit movies.
- Allowing its workers to compete for prizes based on increasing their Medicaid billings.
“Did you know that having phone calls with clients counts as services hours, keep your client hours up,” Sen. Hoffman read from an internal Kyros record KARE 11 uncovered.
“This is an actual email?” Hoffman asked.
“It’s text, yeah,” responded KARE 11’s A.J. Lagoe.
“Well, it’s inconsistent with my current understanding of state law,” the exasperated senator responded holding up a copy of the statute.
RELATED: KARE 11 Investigates: Overbilling allegations in new program to help people in addiction recovery
Both Kyros and Refocus were founded by the same man, Daniel Larson.
Larson canceled two scheduled interviews with KARE 11, including one where our team was already standing in their lobby.
Kyros later sent a statement saying in part: “We take measures to ensure that our billing for peer services, including phone calls, adheres to the guidelines set forth by the law …”
Under state regulations peer provider phone calls can be billed to Medicaid only when an appointment is made ahead of time, or the client calls the provider in an emergency.
Former Kyros employees say they were never told about those limits and the company's public website told its workers “any phone call over 8 minutes qualifies.”
Just hours after KARE 11 published its investigation, Kyros removed the "any phone call" language from its webpage.
Under state law, Larson’s for-profit Kyros cannot bill Medicaid directly for peer services. But his non-profit Refocus Recovery can. So, the non-profit hires the for-profit company to provide the client care.
As KARE 11 revealed, Kyros told investors it expected to make tens of millions of dollars – all based off a revenue model of billing Medicaid.
“You cannot get rich on the backs of Medicaid recovery clients and brag about it,” said GOP State Senator Jim Abeler, “It’s not ok."
Records show the Refocus/Kyros partnership has to date received more than $14 million in Medicaid reimbursements.
Records also show Kyros workers may have repeatedly violated state law, which says peer services must be provided one-on-one. Kyros supervisors routinely encouraged its CPRSs to bill for group events, records obtained by KARE 11 show.
During Kyros-sponsored movie nights, peer service workers were told to bring multiple clients to the events and bill for them.
“THIS IS A BILLABLE EVENT,” a Kyros manager wrote in an email to workers before the Avatar movie night last December.
The email instructs workers to “BRING 2 CLIENTS TO THE MOVIE AND IT COUNTS AS A 2 HOUR APPOINTMENT FOR EACH CLIENT,” according to a copy of the email obtained by KARE 11.
“THAT IS WIN, WIN, WIN!!!” the manager wrote.
Senator Abeler labeled it something else.
“It’s a suggestion to maximize billing on services that are not compensable,” said Abeler while reading the email, “What would you call it?”
“I don’t know how the Inspector General, and the (DHS) Commissioner, and Governor cannot pay attention to this,” he added.
Based on the information and records in KARE 11’s investigation, Sen. Hoffman said he was going to begin drafting legislation to increase oversight of the state’s peer services program and is calling on the DHS Office of Inspector General to do a complete and thorough investigation.
“Clearly,” he said, “questions need to be asked.”
If you have information for the reporters working on this story, email them to: investigations@kare11.com
RELATED: KARE 11 Investigates: Overbilling allegations in new program to help people in addiction recovery