Addiction Recovery Care has cut almost a quarter of its workforce

Kentucky's largest provider of drug and alcohol treatment is continuing to cut staff and expenses, citing "significant reimbursement cuts" by some private insurance companies that manage state Medicaid payments.

Addiction Recovery Care, or ARC, recently reduced its workforce by 105 employees, Matt Brown, ARC chief administration officer said in an email Nov. 3. Another 300 staff members "received adjustments to compensation, job duties or both," Brown said.

Two previous rounds of employee cuts in September and October bring to 323 the number of workers let go — nearly a quarter of its former workforce of 1,350 statewide, Brown said.

The cutbacks come as ARC, founded by CEO Tim Robinson, remains the focus of an FBI probe into possible health care fraud. ARC has said it stands by its services and is cooperating with the investigation.

Meanwhile, the Louisa-based for-profit company also has closed some programs and facilities and reorganized others to cope with what it described as cuts of up to 30% from some of the insurers known as managed care organizations, or MCOs that contract with Kentucky to manage its $16-billion-a-year Medicaid program.

"This reduction in force and staff realignment is a direct result of multiple layers of significant reimbursement cuts for addiction and mental health service providers like ARC," Brown said. "The reduction in force is not a decision that was made lightly, but one that was made out of necessity."

Under their contracts with the state, the MCOs are paid a fixed rate for each member enrolled in their health plans. In turn, they have wide latitude in setting rates they agree to pay health providers.

Brown did not identify the MCOs making the cuts, but other providers have identified one of them as Wellcare, the largest of the six MCOs. Wellcare oversees care for about 418,000 Kentuckians.

Wellcare has not responded to requests for comment.

A spokesman for the Kentucky Association of Health Plans, an industry group, said in a statement last month, that insurers are committed to working with "quality, trustworthy providers of behavioral health and substance use disorder treatment services. … Health plans use many tools to monitor outcomes so that they are rewarding high-performing providers who are delivering strong results."

Medicaid is a major source of funds for addiction treatment in Kentucky, last year spending about $1.2 billion. ARC took in about $130 million in Medicaid funds.

Robinson, a lawyer and recovering alcoholic, started the company that became ARC in 2008 with a single halfway house for women affected with alcoholism. It has grown into the state's largest single provider with Robinson and his companies emerging as well-connected, prolific political donors — contributing around $570,000 over the past decade.

The Lantern reported that the donations have been divided among Republican political causes and those of Kentucky Gov. Andy Beshear, a Democrat who has praised Robinson's company for its work in addiction treatment.

While ARC has been forced to cut costs, it remains committed to its mission of providing treatment for alcohol and drug addiction, Brown said.

"We are still very committed to our nearly 1,900 patients and our remaining employees," he said.