The Truth In Arkansas Politics

I don’t know if anyone read a story in the DemGaz (SEE BELOW) on May 30^th that talked about a tax-exempt Arkansas health-care organization under scrutiny by the U.S. Senate Finance Committee, but the we decided to do further investigations. The Truth ran a check of Mike Beebe’s contribution reports because we all know how he likes to receive unethical contributions. Low and behold what do you think we found? Mike Beebe received a $250 contribution from Michael Moody the Chief Medical Officer of Arkansas Foundation for Medical Care. Mike Beebe continues to accept contributions from entities that he regulates, entities that have their ethics in question (like Mr. Beebe), special interests and convicted felons. Mike Beebe seems to think that this behavior is quite alright for an individual running for Arkansas’ highest office. Mike Beebe continues to show a disregard for ethics, a disregard for honesty and a disregard for the average Arkansan. We encourage you to contact Mike and tell him you are tired of his special interest dealings, his disregard for ethics and his Hollywood elite pandering. Mike if you truly “Believed in Arkansas” you would stop all of this unethical behavior…

Here are the specifics from the article: “A tax-exempt Arkansas health-care organization under scrutiny by the U.S. Senate Finance Committee paid for Little Rock apartments and cars for its top executives, held board retreats in Lake Tahoe, Nev., and Half Moon Bay, Calif., and awarded a $16,500-pe-rmonth contract to a business owned by an officer's wife and daughter.

These and other spending practices of the nonprofit Arkansas Foundation for Medical Care were detailed in its response to questions from Finance Committee leaders Sen. Charles Grassley, R-Iowa, and Sen. Max Baucus, D-Mont.

The committee is examining the finances and effectiveness of the foundation along with those of more than 50 similar agencies around the country, known as quality improvement organizations. The foundation released to the Arkansas Democrat-Gazette its nine-page response, along with more than 600 pages of supporting documents.

A spokesman for the Senate Finance Committee declined to discuss details about its inquiry into the Arkansas Foundation for Medical Care.

However, Grassley and Baucus have written that they are investigating the "financial improprieties by the [quality improvement organizations], including but not limited to, questionable travel and conference expenses, possible mis- use of rental property, and loans executed to subsidiaries." Their findings could result in legislative or regulatory changes for the organizations, a spokesman said.

Officials with the Arkansas Foundation for Medical Care declined to discuss the Finance Committee's inquiries. Spokesman Nikki Thornton said the organization doesn't want to "pre-empt" an interview the committee has requested with the organization's chief financial officer.

In an April 4 letter to the foundation, the Finance Committee requested information regarding the use of corporate apartments and business contracts with foundation employees' family members.

The foundation, which had an $18 million budget in 2004, contracts with Medicare and Medicaid to examine the state's health-care services and make recommendations.

It is one of the nation's 53 quality improvement organizations, which collectively receive about $367 million in federal funds annually to handle complaints about treatment paid for by Medicare and to review Medicare payment errors. Arkansas' Medicaid program also pays the organization about $12 million annually to determine the medical necessity of some services billed to Medicaid and perform retrospective reviews of other services.

APARTMENTS AND CARS

The documents sent to the Finance Committee outlined and defended the foundation's spending on items such as housing and vehicles for employees.

The foundation, located in Fort Smith and Little Rock, has paid for three Little Rock apartments for top officers, according to the documents. The properties include a $995 a month 1,060-square-foot Riverfront Drive apartment for chief medical officer Dr. Michael Moody and a $470 a month 556-square foot west Little Rock apartment used by Chief Operating Officer Gary O'Neal in 2002.

In response to a committee question, the foundation acknowledged that "[f]rom time to time," family and friends stayed in the apartments, including times when family members of unidentified executives stayed on "an extended basis." On those occasions, according to the response, the executive paid "at least 40 percent" of the lease.

The foundation's response said the apartments were an economical way for the executives to do business in Little Rock, where they spent, on average, three days per week. Using the apartments saved $5,000 to $10,000 annually, according to the foundation's analysis. The response did not indicate why the executives weren't required to move to Little Rock.

A 2003 audit of the foundation noted that the apartment leases were "expressly unallowable," particularly the $11,380 paid in 2002 for Moody, whose wife and daughter were listed on the lease.

The audit, conducted by the U.S. Defense Contract Audit Agency, which audits contracts for some governmental agencies, also took exception to $15,241 paid for car leases - a 2000 Toyota for Chief Executive Russell Brasher and a 2002 Cadillac for Moody. Attempts to reach Moody and Brasher for comment were unsuccessful.

"Because AFMC does not identify and segregate personal and business travel mileage, we have no way to substantiate and measure business use," the audit said.

The cars and apartments were in addition to salaries.

An audit the following year noted that Moody was paid $206,298 for 60 percent of his time. That's significantly higher than the $182,457 paid by a similarly sized quality improvement organization for a full-time position, according to the audit. Auditors also questioned a $22,539 bonus Brasher received in 2004. His total compensation that year topped $285,000, not including benefits.

FAMILY BUSINESS

The Senate Finance Committee also asked about the foundation's relationship with Graphic Impressions Inc., a company hired to develop "communication messages and materials" and implement a media strategy.

The company was a family business, owned and operated by the daughter and wife of Larry Martin, the foundation's vice president of communications, according to the foundation. The company, which had no other employees, was paid $16,500 a month, or $198,000 annually, not including expenses.

In 2004, federal auditors questioned Martin's relationship to the business. Martin had been a principal of Graphic Impressions and even signed its contract with the foundation in 2001. When he was hired by the foundation in May 2003, he turned the business over to his daughter. Federal guidelines for organizations receiving grants prohibit organization employees from receiving consulting fees at the same time.

The foundation maintains Martin never owned the business and that his title as principal was a "marketing title." But in 2004, federal auditors concluded "Mr. Martin's association with Graphic Impressions continues to materially exhibit the behaviors of ownership." "Moreover, our review disclosed numerous deviations from normal and established internal control policies and procedures regarding contract award, approval of invoices, payment of invoices, and inadequate disclosure of related party transactions," auditors wrote.

The audit also notes that Graphic Impressions rented an apartment in Little Rock, where Martin lived, and began charging the foundation $100 per day for lodging and $50 daily for meals.

In his response to the audit, chief executive Brasher wrote that "there is not a shred of evidence to support" the assertion that Martin "continued to gain financially from AFMC's business with Graphic Impressions" after the foundation hired him.

Graphic Impressions received $220,845 in fiscal 2003, the largest consulting fee the organization paid a single entity. Its contract ended Feb. 1, 2005. There is no phone listing for that business, or for Artisan Communications, as it was renamed in 2004.

BOARD RETREATS

The Senate Finance Committee did not ask for the foundation's travel expenses, but the issue arose in inquiries into other organizations.

According to a Dec. 8, 2005, letter from Grassley, the board of directors of a New Jersey quality improvement organization traveled to the Cayman Islands and California for annual retreats, trips with a combined cost of more than $100,000.

"[I]t is difficult to understand why an entire board would need to travel from New Jersey to the Grand Cayman to discuss improving quality of care for beneficiaries," Grassley wrote.

The last two retreats for the Arkansas Foundation for Medical Care's board members were held in Lake Tahoe and Half Moon Bay, outside San Francisco.

At least 23 people traveled on the four-night Lake Tahoe excursion and stayed in a $262-per-night hotel, according to travel vouchers obtained by the Arkansas Democrat-Gazette. At least 26 people traveled to Half Moon Bay in 2005, staying in a hotel where Brasher's room cost $436 per night.

Other trips taken by the Arkansas foundation's board members included visits to New Orleans and San Francisco, where the organization paid for dinner for the wives of some board members, according to a travel voucher.

"The retreat is an educational training time that offers continuing education hours," Thornton said in a May 19 interview. "It also is a time for strategic planning. Beyond that, it's an opportunity for the board to develop their own capabilities of a governing body and to plan for the future of the organization." Auditors haven't always seen it that way.

A Defense Contract Audit Agency review of the foundation's 2000 expenses took exception to $61,010 in travel costs associated with a board retreat in Coeur d'Alene, Idaho. Eighteen employees and 16 board members attended that event.

The next year, auditors again questioned $67,469 spent on a retreat in Jackson Hole, Wyo., attended by 34 people.

"There is no business and/or technical reason to hold meetings attended only by AFMC employees and Board members, who are all located in Arkansas, in locations requiring significant travel and hotel expenditures," the audit said. "Likewise, five hours of meeting time do not require four days of resort accommodations."

In an August 2002 response to that audit, Brasher acknowledged that the "travel expenses related to the annual Board of Directors retreat ... do not pass the test as a reasonable cost."

HIGH PAY

In addition to travel expenses and corporate apartments, Grassley has also questioned the compensation paid to board members by quality improvement organizations.

The Arkansas Foundation for Medical Care's 25 board members - most of whom are doctors - received a total of $150,114, according to the group's 2004 tax filing. Two board members received more than $10,000 each in compensation for serving in what is typically a voluntary role for nonprofit organizations.

Julie Munsell, spokesman for the Arkansas Department of Health and Human Services, said the Medicaid program's approximately $12 million in annual contracts with the foundation have been "heavily scrutinized" to ensure the price of services is appropriate.

"We will let the monitoring processes that are in place deal with any potential issues of AFMC's business practices," Munsell said. "Much like other entities we contract with [hospitals, for example] we aren't involved in administrative decisions."

In addition to monitoring Medicare and Medicaid billing and services, the foundation investigated 23 consumer complaints from August 2004 through April 2005. It confirmed that a "quality concern" existed in four of the complaints.

In a March 7 press release, the Senate Finance Committee noted that Grassley was concerned about "the seeming lack of effectiveness and accountability" of the quality improvement organizations generally.

An Institute of Medicine report released in March found that while the quality of health care received by Medicare beneficiaries has improved nationally, it is unclear how much the program of quality improvement organizations contributed to that improvement.