Community Letter from Leadership at The Arc

May 15, 2018

As we shared late last month, The Arc of Anchorage recently settled with the State of Alaska after a two-year investigation that determined serious errors in our Medicaid billing processes. In April, the settlement was resolved and The Arc re-paid the state, including fees and penalties. As part of the agreement, The Arc has undergone many positive changes, both in training of staff, hiring of highly-skilled managers and greatly improving our billing practices. These changes, along with our Corporate Integrity Agreement, have provided our billing team a more accurate, transparent and efficient process for Medicaid billings.

The Arc’s work with the state over the last two years was an important experience that ultimately provided a positive outcome. The Arc wants to thank the team at the state agencies involved in our intensive review as well as our staff who were part of the review process. We also would like to acknowledge our sister agencies and the general public for the support the past two years, and specifically in the past two weeks as our journey with the settlement was finalized in April.

The board of directors at The Arc of Anchorage would also like to clarify that the settlement amount was paid by funds out of The Arc Foundation account that included investments and savings. No donor dollars or operational funds were used to pay the settlement amount. The board took this matter very seriously, and worked closely with the state to make sure The Arc of Anchorage can continue to do what it does best, serving Alaskans who experience disabilities and their families.

We understand that some in the community may have not had a chance to fully understand the situation and some may have additional questions. We invite you to review our updated list of questions related to the Medicaid settlement that we’ve received from community members over the past two weeks. Answers to these questions can be accessed below.


Medicaid Investigation and Settlement Q&A


Provided by: Wes Clubb, President of the Board for The Arc of Anchorage

What did The Arc do that prompted state officials to launch an investigation and when did the investigation first begin?

In May of 2016, The Arc received formal notice that an investigation was underway. The rules and regulations governing Medicaid are very complex and subject to interpretation by service provider organizations like ours. Mistakes The Arc made include billing Medicaid for certain services provided to clients that were not reimbursable under the rules and billing overlapping services with the same provider.

Does the Arc have the money to pay the fines and penalties? Will this affect the organization’s ability to continue operating?

Yes and The Arc completed payment to the State in April. The Arc had funds available from past savings and surpluses to pay the fines and penalties out of a separate foundation account from The Arc Foundation. Late last year, the Board approved an initial repayment of $250,000 to demonstrate to the state that we were acting in good faith.

No, the payment of the fines and penalties will not negatively impact The Arc’s ability to provide services and programs to the individuals and families we serve or the agency’s general operations.  In addition and for clarity, no individual, corporate, foundation donor dollars or operation funds were used to pay the settlement, including fines and penalties, for the Medicaid billing errors.

The board chose to utilize funds from The Arc Foundation to ensure that services and operations at The Arc of Anchorage would not be impacted. The state also highlighted in their statement that they supported The Arc as a valuable service organization in Alaska, and entered into the settlement agreement to “keep The Arc in business” (quote provided by Attorney General Jahna Lindemith). To read the state’s full press release, click here.

The investigation was conducted by the state’s Medicaid Fraud Control Unit. Does that mean fraud was committed by employees or management at The Arc? If so, what rules or procedures were violated?

Service provider agencies like The Arc undergo yearly routine Medicaid audits; there is a standard process that these reviews take. Audits with findings and recommendations for changes are not uncommon. However, this specific investigation by the state went far beyond a normal audit because it identified serious irregularities in The Arc’s billing practices at that time. The review involved a very in-depth look at our operations and
included on-site visits to evaluate our billing practices and talk to our staff.

The Arc acknowledges past billing errors that violated rules and procedures. The Arc would also like to make it clear that there was never any deliberate attempt to defraud the state by submitting information we knew to be inaccurate. Part of our corrective actions that have already been implemented at our agency include more training for staff, better financial monitoring and bringing on highly-trained managers to oversee billing procedures to mitigate future billing errors.

In addition, The Arc would like to clarify that the settlement agreement was a process in which The Arc worked with the state. The settlement agreement with the state means that the situation of incorrectly submitted Medicaid billings by The Arc were not, and will not be, pursued by the state as a criminal case. The Arc, in agreement with the state to improve its billing practices and to ensure success, also entered into a Corporate Integrity
Agreement. This information is available to the public on the state’s website here.

This investigation dates back several years, so what took so long to determine there was a problem?

It took an extensive period of time to assess the problems after they were identified in early 2016. There was a lengthy review period with negotiations between the state and The Arc’s attorney. Because of the serious nature of the issues involved, a deliberate process was followed to make sure that the examination of our operations was accurate and complete. The Arc has fully cooperated with the investigation from day one, we have done our due diligence and have gone above and beyond what the state asked of us to correct our billing processes. The Arc continues to do everything that is asked of us by the state. This has been a difficult period for our organization and we are glad to have it resolved so we can move forward and continue to meet the needs of our clients.

How was the amount of the fine and penalties determined?

The State of Alaska has a process in place to determine factors such as what was over-billed in error as well as fines and penalties in relation to those errors. That amount is then determined between the state and federal agencies. The Arc of Anchorage was prepared to pay the fines and penalties as part of the settlement agreement. The Arc has put in place policies and procedures to elevate standards for its billing practices to ensure accuracy and has taken knowledge gained from the investigation to enforce better overall financial reporting agency wide.

What has the Arc done to ensure this will not happen again?

The Arc’s Board of Directors and leadership team have taken this situation very seriously and agreed in 2016 that changes had to be made to our billing practices. Since then, The Arc has identified issues in the previously used billing practice. With that knowledge, and the feedback our staff and board received from the state, The Arc has made positive operational changes to our billing system to improve accuracy and transparency. The Arc has also hired new staff who are highly-skilled in providing oversight of our billing system, and also increased training of existing staff.

The Arc has used the valuable things learned during the intensive review process by the state to better its operations and practices. One of The Arc’s core values is integrity and our board and staff are working hard to maintain that value as we are entrusted to provide care to amazing Alaskans 365 days a year. This core value also directs our current and future efforts to continue accuracy and efficiency in our Medicaid billing practices.