Preferred Family Healthcare, the scandal-plagued behavioral health provider suspended from the Arkansas Medicaid program in June, has withdrawn itself from one of the state’s new provider-led managed care organizations for certain high-cost Medicaid enrollees.

That organization, Empower Healthcare Solutions, notified the Arkansas Insurance Department earlier this week that PFH had voluntarily withdrawn as an equity member “and in all other respects” effective July 26. Empower is one of four recently created companies in the state known as PASSEs (Provider-led Arkansas Shared Savings Entities), which are intended to lower Medicaid costs and coordinate services for those beneficiaries with the most intensive behavioral health needs and/or severe developmental disabilities. (About 30,000 individuals fall in this category.)


PFH had a roughly 14 percent stake in Empower, as David Ramsey reported in July for the Arkansas Nonprofit News Network. Empower’s remaining co-owners are Beacon Health Options, the Arkansas Healthcare Alliance, Stratera, Woodruff Health Group, Independent Case Management and the Arkansas Community Health Network.

Those entities will divvy up PFH’s share of equity, AID spokesman Ryan James said.


Arkansas announced June 29 it was suspending PFH from the state’s Medicaid program — thereby halting reimbursements to the nonprofit — and the state Department of Human Services said it would terminate its contracts with PFH. That move came following the arrest of Robin Raveendran, a former PFH executive (and onetime DHS “program integrity” official) accused of masterminding a multimillion-dollar scheme to defraud Medicaid through improper billing practices. Another former PFH executive, Rusty Cranford, was previously accused of bribing multiple Arkansas legislators and — along with other leaders of PFH — embezzling vast sums of money from the Missour-based nonprofit. A federal investigation into those allegations appears to be ongoing.

Before its fall from grace, PFH was the largest behavioral health provider in Arkansas, with 47 service sites statewide. It also does business under the names Dayspring, Health Resources of Arkansas and Decision Point. Its many sites remain open for now, but their future is uncertain, and PFH has indicated it’s searching for a buyer for its Arkansas assets.


On Friday afternoon, DHS also announced that it had finalized plans to transition certain PFH services to three other behavioral health providers in the wake of the state agency’s cancellation of its contracts with PFH. (Those contracts are distinct from Medicaid reimbursements.) Among the many other services it provided in Arkansas, PFH was the designated community mental health center for a large swathe of rural counties in the north-central part of the state. CMHCs are intended to be the “single-point-of-entry to the public mental health system” in a given region, according to DHS’ website. (Here’s a map of the state’s 13 “catchment areas” for CMHCs.) Operating as Health Resources of Arkansas, PFH contracted with DHS to provide counseling, mental health and substance abuse treatment in this area.

In a press release, DHS provided the following information about the three other CHMCs carving up the region once served by PFH:

Counseling Associates, Inc. will now be the state-contracted community mental health center for Cleburne, Searcy, Stone and Van Buren counties and will provide counseling, mental health, and substance abuse services in those counties. If people have questions, they can call 1-501-336-8300.

Northeast Arkansas Community Mental Health Center, Inc., (also called MidSouth Health Systems) will now be the state contracted community mental health center for Fulton, Independence, Izard, Jackson, Sharp, White, and Woodruff counties and will provide counseling, mental health, and substance abuse services in those counties. If people have questions, they can call 1-870-972-4000.

Ozark Guidance Center, Inc. will now be the state-contracted community mental health center for all services in Baxter, Boone, Marion, and Newton counties. They will also add contracted substance abuse services in their four existing counties of Benton, Carroll, Madison, and Washington. If people have questions, they can call 1-800-234-7052.

Though Raveendran’s arrest in June prompted the state to shut off Medicaid reimbursements with PFH and terminate its contracts with the provider, DHS did not appear to take immediate steps to distance itself from Empower (or to force Empower to distance itself from PFH). When David Ramsey asked DHS officials about the issue in July, they indicated the agency was still considering how best to proceed, considering PASSEs are a new type of entity.

“PFH is not Empower. PFH is part of Empower, but they’re not the whole of Empower,” Paula Stone, deputy director of DHS’s Division of Medical Services, said at the time.


Empower dominates the newly created PASSE landscape, much as Preferred Family Healthcare had grown to dominate Arkansas’s behavioral health landscape. A slide from a quarterly report on “Medicaid transformation” released by DHS earlier this week shows that more than one in three people enrolled in a PASSE were assigned to Empower:

(That’s no coincidence. As Ramsey reported last month, beneficiaries were assigned to a PASSE by DHS by a formula that took into account their main care providers. Thus, patients who received care at a Preferred Family Healthcare location were more likely to be “attributed” to Empower.)

Under the 2017 law that created PASSEs such as Empower, these organizations are required to have a behavioral health provider as a part of their ownership structure. Nicole May, the interim executive director of Empower, said that Empower is still in compliance following PFH’s exit, because other entities with part ownership in the PASSE are also behavioral health providers.

However, as Ramsey wrote:

PFH is not the only corporate member of Empower that has links to Arkansas officials accused of corruption. The Arkansas Healthcare Alliance is a group of 22 behavioral health and developmental disabilities providers that was affiliated with Raveendran — the former PFH executive and DHS staffer who was recently arrested on fraud charges. This LLC was formed specifically to participate in the PASSE. As of Thursday, its webpage listed Raveendran and Bess Ginty — currently the Alliance president — as contacts. By Friday, Raveendran’s name had been removed. (According to a recent Arkansas Business profile, Ginty also served as president of a different group of providers — the Alliance for Health Improvement — for which Raveendran was executive director.)