Big news: The state Human Services Department and the Office of Medicaid Inspector General have suspended Preferred Family Healthcare from the Medicaid program in the wake of former employee Robin Raveendran’s arrest this morning.

The suspension is effective today, DHS announced. PFH received about $33 million in Medicaid funds in 2016.


In addition to cutting off the flow of Medicaid money — most of which comes from the federal government — DHS said it also notified the behavioral health provider that it will exercise termination clauses in its contracts with Preferred Family Healthcare for other, non-Medicaid services around the state, including substance abuse treatment, youth services and therapeutic foster care. Those contracts total some $7.4 million, a spreadsheet provided by DHS indicated.

Preferred Family Healthcare, a nonprofit based in Springfield, Missouri, became a giant player in Arkansas in recent years as it has acquired several other providers. (It also operates in four five other states.)* The nonprofit has come under intense scrutiny recently as a wave of federal plea deals have revealed extensive bribery allegations involving PFH executives and multiple Arkansas legislators of both parties. DHS has continued to work with the provider until today’s news broke about Raveendran — who formerly worked as the Medicaid Program Integrity director at DHS. (The agency’s Program Integrity Unit later became the Office of Medicaid Inspector General.)


Today’s news finally led DHS and OMIG to show Preferred Family Healthcare the door, but it also creates a major headache for the state. PFH operates 47 sites around the state, many of them in rural communities with few other provider options, and it employs some 700 4,000 people statewide.* DHS must find a way to disentangle PFH from its network of providers while also attempting to avoid gaps in essential services in rural Arkansas, from mental health care to substance abuse treatment. DHS said it’s been quietly working for months to find providers that can replace PFH.

“In most locations, providers have been identified who can expand services into these areas, and it is DHS’s intent to work with those providers to transition existing beneficiaries. DHS anticipates that the transition of services and termination of current PFH contracts will be completed within a 30-60 day time period,” DHS said.


The agency said it may allow certain PFH sites to keep receiving Medicaid reimbursements “for a short-term limited duration” n  certain geographic areas in which PFH is the only provider.

Earlier today, the Arkansas Times asked the office of Arkansas Attorney General Leslie Rutledge why the AG didn’t uncover the fraud allegedly committed by PFH officials until the FBI requested it to investigate in late 2016. (That detail was supplied in the affidavit in Raveendran’s arrest this morning.) The AG’s Medicaid Fraud Control Unit is tasked specifically with investigating the embezzlement of funds from Medicaid, yet it’s mostly yielded relatively minor plea deals. AG spokesperson Jessica Ray responded in an email this afternoon:

The Attorney General’s Office has been aggressively investigating the involvement of Rusty Cranford, Robin Raveendran and others in the Arkansas Medicaid Program since 2016. This investigation required the review of thousands of individual claims resulting in the determination that there were 20,109 illegally billed mental health services for a total of $2,277,816.05 from January 1, 2015 to October 19, 2017. The FBI’s investigation of these same individuals is regarding public corruption whereas this investigation and arrest was based on Medicaid Fraud.

Here’s the news release from the state announcing Preferred Family Healthcare’s suspension from Medicaid:

Today the Office of Medicaid Inspector General (OMIG) notified the Department of Human Services (DHS) it has determined there is a credible allegation of fraud against Preferred Family Health (PFH) and its former employee Robin Raveendran based on an affidavit for Raveendran’s arrest. OMIG has notified PFH and Raveendran they are temporarily suspending both PFH and Raveendren for payment for services provided to Medicaid beneficiaries.

“When a credible allegation of Medicaid fraud exists, suspension of Medicaid payments is required by federal law,” said Medicaid Inspector General Elizabeth Smith. “I am carrying out my responsibilities as Medicaid Inspector General to protect the integrity of the Arkansas Medicaid program by issuing these suspensions.”

The Department of Human Services is implementing the suspension of Medicaid payments of both PFH and Raveendran today. DHS will review the Medicaid provider network to determine if a very limited geographical hardship exception is needed in certain areas where PFH is the only behavioral health provider to ensure client access to services. Any such exception will be for a short-term, limited duration as alternative providers are certified to offer services in that geographic area.

Additionally, DHS will be notifying Preferred Family Health of our intention to exercise contract termination clauses in existing contracts for the state-funded mental health, substance abuse, and other services they provide. For the last several months, DHS has been working to identify alternative service providers to step in for PFH if necessary. In most locations, providers have been identified who can expand services into these areas, and it is DHS’s intent to work with those providers to transition existing beneficiaries. DHS anticipates that the transition of services and termination of current PFH contracts will be completed within a 30-60 day time period.

“We appreciate Attorney General Leslie Rutledge and the important work of her Medicaid Fraud Control Unit,” said DHS Director Cindy Gillespie. “We take their investigative findings seriously and are taking the steps necessary to implement the suspension and to ensure that Medicaid beneficiaries and Arkansans receiving services through DHS have long-term access to behavioral health and substance abuse services.”

*Correction: An earlier version of this post mistakenly said that PFH employs 4,000 employees in Arkansas alone and that the nonprofit operates in five states besides Arkansas. PFH operates in four other states (Oklahoma, Kansas, Missouri and Illinois) and employs 700 people in Arkansas. The larger figure is for PFH’s total workforce across all states.