Lawmakers quiz officials on audit of school Medicaid program


LITTLE ROCK — State education and human services officials appeared before a legislative panel Friday to answer questions about an audit that found Arkansas school districts participating in the Medicaid in the Schools Program have not complied with all Medicaid rules.

According to a report by the state Division of Legislative Audit, a review of six districts found that the districts did not maintain adequate documentation to support reimbursement requests and that the state Department of Human Services did not monitor the districts to ensure compliance with all record-keeping requirements.

Auditors also said the districts did not request reimbursement from insurance companies for children covered by private policies, which they said may conflict with the “free care” principle. That principle precludes Medicaid from paying for services that are available free to all students, so Arkansas could be at risk of being asked to repay the federal Medicaid program for those claims, according to the report.

The Medicaid in the Schools Program was created in 2006 to provide medical assistance such as speech and language therapy to students. It is administered by the Southeast Arkansas Education Service Cooperative, also known as SEARK, in Monticello.

The audit also found that a former SEARK employee, Tony Boaz, who served as director of the Medicaid in the Schools Program until resigning in January 2013, was simultaneously associated with Innovative Solutions for Educational Partnerships, a nonprofit organization that submits Medicaid claims for schools. The relationship may have been in conflict with state ethical guidelines, auditors said.

ISEP collected an 8 percent administrative fee — until October 2013, when the fee was reduced to 4 percent — and split it with SEARK, according to the report. SEARK’s share of the fee was $195,696 for the 2012 fiscal year and $190,530 for the 2013 fiscal year.

Rep. Kim Hammer, R-Benton, asked who is responsible for training schools on Medicaid rules.

“If the buck had to stop on somebody’s desk, ultimately whose desk is it going to stop on?” he asked.

Education Department attorney Courtney Salas-Ford said the Education Department and DHS work together to train and monitor the schools, “but as a provider for Medicaid, (the schools) take responsibility for being knowledgeable about all regulations and complying with all of those regulations.”

Hammer said, “What I see is, schools are becoming heavily dependent on those Medicaid dollars, and if this report is correct, what I perceive happening is there’s either going to be a cutback in the services that they’re going to be offering to them, or there certainly is being an enlightening that the system as it’s currently taking place is not right.”

DHS Chief Attorney Mike White responded, “The free care principle does not have the force of law. … In 1987, they put this into a technical assistance guide they published for schools, and they repeated it in 2003 in another technical assistance guide. Both of those guides state very clearly that they are not intended to be law, they do not supplant anything that is law or regulation.”

White said the federal Medicaid program sought to deny reimbursement to Oklahoma for violating the free care principle, but Oklahoma appealed, and the U.S. Department of Health and Human Services’ appeals board ruled for the state, finding that the principle does not have the force of law.

Hammer asked if Arkansas could still be held liable for failing to comply with documentation requirements. White said that if the matter were litigated, he believed Arkansas would prevail.

Sen. Linda Chesterfield, D-Little Rock, asked why Boaz’s relationship with ISEP did not raise any red flags.

Norman Hill, financial consultant for SEARK, said he believed Boaz received no compensation for his work with ISEP.

“We do not consider it an ethical violation to be a member or a board member of a nonprofit if you’re not receiving any compensation,” Hill said.