The Minnesota Department of Human Services (DHS) has taken action to stop payments to Refocus Recovery, an addiction recovery nonprofit, following an investigation into Medicaid billing irregularities. In a letter dated Sept. 6, DHS cited “a credible allegation of fraud” as its reason for withholding all new payments.
The nonprofit, alongside its for-profit partner Kyros, had been permitted to continue billing Medicaid for peer services until now, despite ongoing investigations. The DHS Inspector General announced an investigation into the two organizations back in February. Despite the investigation, clients like Holly Malecek reported that false billing continued.
Holly noticed suspicious bills from Refocus Recovery to her Medicaid insurance provider, UCare, for thousands of dollars in peer services she never received. “No, did not happen,” Holly said, stating that the billed services were blatantly fictitious. She reported the suspected fraud to her insurance company.
Reports revealed how both Kyros and Refocus Recovery had introduced irregularities in Medicaid billing. Former clients and employees reported that the partnerships often billed taxpayers for services that were not provided. In some cases, employees were instructed to bill for services that state law does not allow.
Kyros had been found sponsoring taxpayer-funded events and even running contests to bill Medicaid the most.
Fraud suspends Refocus Recovery payments
Former clients detailed numerous instances of fraudulent billing.
An investigation led to both state and federal inquiries. Despite these inquiries, over $5.5 million in payments were made to Refocus Recovery during the first half of 2024. On Sept.
6, DHS ordered a halt to these payments, citing credible evidence that Refocus Recovery had billed for services not provided, submitted claims not entitled to reimbursement, and failed to provide necessary supervision. The organization has the right to appeal the decision. Payments will remain suspended until there is insufficient evidence of fraud or until legal proceedings are completed.
Records shared by Holly Malecek exemplify how questionable billing persisted despite the investigations. One notable instance showed that Refocus Recovery billed Medicaid for peer services on dates when Holly was not in the claimed location. Neither Kyros nor Refocus Recovery responded to interview requests, although they have previously denied deliberate wrongdoing.
Kyros’s current CEO, Kristin Landry, asserted in a June email that they prioritize accuracy and integrity and will uphold industry-leading compliance policies. While Refocus can no longer bill Medicaid, Kyros has begun sending emails to clients asking them to sign waivers allowing them to bill under a different nonprofit, Twin Cities Recovery Project (TCRP). However, TCRP’s President LaTricia Tate informed that the partnership “cannot move forward.”
