“The FBI announced its investigation of Kentucky-based treatment provider Addiction Recovery Care (ARC) for potential Medicaid billing fraud in the summer of 2024, but in the ensuing 18 months, there was little indication of what the large and influential company was accused of doing,” Joe Sonka reports for Kentucky Public Radio.

However, Sonka reports that a new federal lawsuit against ARC and a new federal database that tracks monthly Medicaid payments have changed this.

A KPR’s review of the court filing found that” federal prosecutors are likely targeting an extraordinary spike in Medicaid payments the company received for performing ‘psychoeducation’ services, which a whistleblower alleges was fraudulently billed,” Sonka reports.

“A review of the new federal database also shows ARC was paid $70 million from Medicaid for this psychoeducation service in 2023 and 2024 — which accounted for 20% of all Medicaid payments under that billing code in the entire country for this two-year period,” he writes.

Sonka explains that “psychoeducation is a non-clinical service that provides general information about the recovery process, but is separate from actual addiction treatment provided by licensed psychotherapists and certified social workers.”

And while this service is not usually paid for by Medicaid in most states in Kentucky’s region, Soka reports that “payments to addiction treatment providers in Kentucky for psychoeducation absolutely exploded in recent years — quadrupling to $34.7 million from 2020 to 2023, and then quadrupling again in 2024 alone to $165.6 million.”

Sonka then takes a deep dive into the situation in a nearly 4,000-word story, including warnings to state officials in August 2024 that provider spending for non-clinical psychoeducation was skyrocketing, urging them to stop payment for these services, and a whistleblower lawsuit.

He also notes that the chair of the Kentucky Medicaid Oversight and Advisory Board, Ken Fleming of Louisville, has called this situation “a direct failure of the administration not overseeing and managing taxpayers’ money.”

Meanwhile, Sonka points to several Medicaid bills that have been filed, including one that ends all Medicaid payments for psychoeducation services in Kentucky.