ST PAUL, Minn. — The Inspector General for the Minnesota Department of Human Services told state lawmakers Wednesday there’s an active investigation into the for-profit addiction recovery company Kyros and its non-profit partner Refocus Recovery.
Since December, KARE 11 has been reporting about questionable billing practices by the two firms.
Records reviewed by KARE 11 show Refocus has billed taxpayer-funded Medicaid millions of dollars to provide peer services to help people recovering from addiction.
Refocus Recovery and Kyros were both founded by Daniel Larson. Records reveal that non-profit Refocus then hires for-profit Kyros to actually provide the peer services.
In an investment overview obtained by KARE 11, Kyros told investors it projected to make nearly $30 million in gross profits by the end of this year by providing Medicaid-funded peer services.
Under questioning by GOP Senator Jim Abeler, DHS Inspector General Kulani Moti said, “DHS can confirm an ongoing investigation regarding Kyros and Refocus Recovery.” Because it is an active investigation, she said she could not provide additional details.
Sources tell KARE 11 the Minnesota Attorney General's office is also investigating.
Lawmakers pressed DHS to take quick action to identify and root out possible fraud.
“I hope DHS starts flexing some muscle as quickly as fast as you can to stop the bleeding- if there’s places of money going where it should not be going,” said Rep. David Baker, a Willmar Republican. “Right now, I think we’ve got the wild, wild west out there, unfortunately.”
KARE 11 has reported about former Kyros clients who say Medicaid was billed for services they were never provided.
KARE 11 also interviewed former Kyros peers who said they were told to bill for group events by falsely reporting them as individual, back-to-back meetings – a possible violation of state and federal law.
Lawmakers stressed the importance of providing support for people struggling with addiction but said there needs to be strong oversight.
“There’s so much need and we can’t afford to waste anything. If you want to do fraud, pick another state,” Abeler said.
“One or two bad players can blow everything up, and that’s kind of where we’re at,” Baker added.
Tom Poul, a registered lobbyist for Kyros, attended the legislative hearing but said he was not authorized to comment when approached by KARE 11. In the past, officials from both Kyros and Refocus have declined repeated interview requests. In an earlier written statement, the company said, “Kyros monitors billing practices closely to ensure they meet statutory requirements, and any deviation found is addressed promptly and appropriately.”
Lawmakers indicated they were concerned about the allegations of questionable billing in KARE 11’s reports. “The media brought some very important stuff to us that we should have known,” Baker said.
Inspector General Modi said DHS's current investigation began before KARE 11 began airing its reports. Records show DHS had investigated Refocus Recovery earlier, but found only minor violations – and closed the case when the two sides agreed to an $850 settlement.
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