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Investigation has resulted in 100 group homes in Prescott closing their doors

PRESCOTT – The head of an insurance-fraud investigative team made a strong case this week against the allegedly fraudulent practices of many of Prescott’s sober living homes.

Dan Kreitman, director of the special investigative unit for the Centene Corporation, told the city’s Ad Hoc Committee on Structured Sober Living Homes Wednesday, Aug. 10, that his team had uncovered widespread insurance fraud, theft, and waste in Prescott.


Dan Kreitman, director of the special investigations unit for Centene Corporation, talks to the Prescott Mayor’s Ad Hoc Committee on Structured Sober Living Homes Wednesday, Aug. 10, on the alleged insurance fraud at local group homes.

The investigation has led to changes in the way the company pays its claims, Kreitman said, which, in turn, has brought about a dramatic drop in the number of group homes operating in Prescott. Kreitman estimates that as many as 100 have closed their doors in the wake of the investigation.

Kreitman spent more than a half-hour Wednesday evening citing the instances of fraud, theft, and waste. Among his examples:

• Sober living homes that were routinely charging as much as $2,000 for daily urine drug screens – tests that Kreitman said should have cost about $29.

• Homes that were making claims for upwards of $5,000 a day for equine treatments – “to go out and pet a horse.”

• Clients remaining in treatment for 14 or 15 months, “with no end in sight.” Regularly, Kreitman said, “We’re finding sober home living facilities with no end game. What we’re finding is our members who are being shifted from facility to facility and who are testing positive for heroin from facility to facility.”

• Cases of brokers working with sober-living facilities “to bring members into your area for the sole purpose of making a dollar off of them – in our opinion not to help, but to hurt.”

All of the fraudulent practices apparently added up. Kreitman said group home insurance claims in Prescott and parts of California spiked by nearly 500 percent during 2015.

“That raised our flags,” Kreitman said after the meeting.

Those red flags led the Centene Corporation, which recently acquired the previous major insurance provider Health Net, to send a team of investigators to Prescott twice in recent months.

Kreitman attended Wednesday’s ad hoc committee meeting as a part of an eight-member team of investigators.

That investigation is ongoing, and Kreitman told the committee: “We will be a presence in this town for the near future, which is something that probably we didn’t see from a Health Net perspective.”

After the meeting, he said, “We plan to stay as long as it takes.”

During the course of the investigation, Kreitman said Centene changed the “payment methodology” for sober living facilities, adding, “Since we have made those changes, I believe over 100 facilities in the Prescott area have closed their doors.”

While the City of Prescott had long estimated its total group homes at about 170, officials recently adjusted that to about 110. City Attorney Jon Paladini said Wednesday that the number likely is even lower now, based on the information from Kreitman.

“It’s probably under 100 now,” Paladini said.

Along the way, Kreitman said Centene had obtained enough evidence to approach the offending facilities, and some of those facilities are now assisting the investigation to help determine “how this fraud was perpetrated in your area – the brokers involved in this fraud.”

As the insurance company acquires that information, Kreitman said, “We will either give it to the Prescott Police Department or the FBI.”

While several of the ad hoc committee members commended Kreitman for his team’s investigative work, committee member Doug Dolan, who operates licensed facility Recovery in the Pines as well as a sober-living component, voiced several concerns as well.

“First off, thank you for cleaning up the ones that are abusing the system,” Dolan told Kreitman. “I believe there is fraud, theft, and waste that needs to be cleaned up.”

For instance, he said, “If somebody’s taking an instant (urine) test read, and they’re charging $2,000, that’s asinine. And if somebody’s charging you $5,000 for some kind of equine treatment, I’ll tell you as a treatment center owner, that’s asinine.”

But Dolan said he believes urine drug screens are a “medical necessity,” and that there are different levels of testing available. While an instant-read test is one of those options, he said, “That’s not as reliable as sending it to a lab, (where there are different levels of testing). $29 won’t cover that cost.”

Dolan said his concerns center on the fact that “at the end of day, hopefully what we’re talking about is the quality of care for the patient.”

He added that Centene’s investigation had resulted in a delay in claim payments industry-wide. “There are some good programs not getting their insurance claims paid, and they’re struggling because they’re not getting paid,” he said.

Allowing that some sober living homes will take on any insured client with the attitude “let’s give it a shot, and take the money,” Dolan said others, such as his own Recovery in the Pines, take on clients based on whether they are ready to undergo treatment.

Kreitman responded: “I feel like you are in the very small minority in this area. It’s very unfortunate that people in this area have taken advantage of people who need help and have dragged your industry down the gutters.”

Meanwhile, Kreitman said Centene had resumed paying its claims under a restructured payment process that is a “Medicare-based payment structure.”

After the meeting, Kreitman said he believes Prescott is unique in the amount of fraud, theft, and waste. “It is worse here than other places we have been,” he said. Although he was uncertain about the reason, Kreitman said the fraud likely stemmed in part from the fact that “there is not a lot of regulation.”

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