ST. LOUIS — Not long after federal agents raided Great Circle on Feb. 2, Paula Fleming, chief executive of the behavioral health organization, sent a message to staff, thanking them for their “outstanding” response to the “surprising situation.”
“We simply don’t know much about this investigation,” she told them.
Yet two weeks before the raid by the FBI and U.S. Department of Health and Human Services Office of the Inspector General, a quieter alarm also went off at Great Circle headquarters, 330 North Gore Avenue, in Webster Groves. A letter from the Missouri Department of Social Services told the nonprofit that an audit of Medicaid claims for services paid through the state to Great Circle identified $1,992,157 in “improper billing.”
The Jan. 20 letter said if the amount wasn’t repaid in full, or an agreement made, “immediate” action would be taken to recover the funds. Great Circle, which has state contracts to provide an array of services for troubled youths across Missouri, many of whom have autism or are in foster care, appealed the audit findings to the Administrative Hearing Commission on Feb. 18.
“The alleged overpayments are not based on any finding that the services for which (Great Circle) was paid were not actually provided, or any finding that they were not medically necessary,” Elizabeth Blackwell, an attorney for the nonprofit, argued in the original petition.
The case signals Great Circle is fighting on two main fronts. One involves several former employees who allegedly harmed clients. The other involves billing for services covered by Medicaid, the public insurance program funded by federal and state governments for people who are poor or have disabilities.
These struggles have surfaced in the wake of Great Circle becoming one of the biggest and fastest-growing child welfare organizations in the state. Formed in 2009 by the merger of Edgewood Children’s Center and Boys and Girls Town of Missouri, its annual budget climbed to $85 million from $30 million. Much of that growth was guided by former Great Circle CEO Vincent D. Hillyer, who, in 2019, was charged with more than a dozen felonies in St. Louis County that accuse him of child endangerment and abuse of a health care recipient.
In recent months, many low-level employees have been charged for similar crimes, also stemming from incidents at the Webster Groves campus, which recently announced that it is laying off dozens of staff and shutting down its residential treatment program. The state suspended placements at the residential treatment facility in Webster Groves on Jan. 22.
The suspension notice was dated two days after the letter claiming Great Circle overbilled the state Medicaid program nearly $2 million. According to records on file in Great Circle’s appeal, the audit was prompted by “data analysis that suggests possible over-utilization of therapy services.”
The audit reviewed a sample of Great Circle payment claims with service dates between Jan. 1, 2016, and Oct. 30, 2018. Because of the volume of services that Great Circle provides, the audit analyzed a “review group” of 90 claims during that period, according to state records. It found that 72.3% of services reviewed had missing or inadequate documentation. Through a statistical formula, the audit used that information to extrapolate nearly $2 million in losses to the Medicaid program during the time period in question.
Auditors requested supporting medical records and other documentation from Great Circle as early as Aug. 13, 2019, with an initial findings report provided to the organization on July 8, 2020, according to public records.
“No service is deemed to have been performed if the documentation requirements have not been met,” Ian Hauptli, an assistant attorney general, argued in court records.
As an example, Hauptli argued that each group therapy service shall include the number of clients present, as well as a description of the “immediate issue addressed in therapy, identification of underlying roles, conflicts or patterns, and description of therapist intervention and progress toward goals.”
In its original petition for the appeal, Great Circle argued that “many of the findings of documentation errors” in the audit were incorrect. It argued that the extrapolation of losses based on 90 reviewed claims, when there was a pool of 69,155 total claims during the period in question, “was improper and unreliable.”
But on March 9, Great Circle submitted a check for 60% of the overpayment amount, or $1,195,294, DSS confirmed Tuesday. A department spokesperson said by email that the Missouri Medicaid Audit and Compliance Unit and Great Circle are finalizing a repayment agreement for the remaining $796,863 to be paid to MO HealthNet.
Great Circle said Tuesday that additional amounts will be withheld from ongoing state reimbursements to Great Circle until the appeal is fully resolved. The next hearing is scheduled for June 29.
Great Circle said in a prepared statement that it was unaware of “any connection” between the state audit and the federal raids on Feb. 2 at the organization’s headquarters in Webster Groves and its 442-acre campus near St. James. “However, we will continue to fully cooperate with authorities as they request information.”
Asked last week about the abrupt change of events in recent months, Great Circle said in prepared remarks: “Our focus remains on serving children and families across Missouri.”