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Medicaid cut, fraud investigation lead to closure of Mat-Su center for disabled

  • Author: Zaz Hollander
  • Updated: September 28, 2016
  • Published June 6, 2014

WASILLA -- A Wasilla company that serves developmentally disabled clients is shutting down amid a fraud investigation that led the state to suspend Medicaid payments this week.

Mat-Su Activity and Respite Center serves 29 people, all Medicaid recipients, most with some form of intellectual disability, authorities say. The center offers numerous services including supported employment, daily activities and respite for caregivers.

The state Department of Health and Social Services announced the suspension to other providers on Thursday. Officials at that agency and at the state Department of Law declined to provide additional information about the specifics leading to the Medicaid suspension, citing the ongoing investigation.

The state's action is temporary, pending the resolution of the investigation, according to Lynne Keilman-Cruz, chief of quality assurance for the state's senior and disabilities service division.

More than 100 people worked at the center, located near Wasilla next to the school bus barn along the Palmer-Wasilla Highway. Several employees posted messages on Facebook saying they'd lost their jobs. A small group of people stood outside the building late Friday morning, talking and exchanging hugs.

The center's executive director, Laura Sasseen, who owns the limited liability corporation that runs the center, blamed financial problems linked to the state's glitch-plagued Medicaid payment system for leaving her unable to stay open while the state resolves the investigation. She said the state still owes her business $300,000 in Medicaid payments.

"The state can pretty much do anything they want; they can do a temporary suspension of Medicaid," she said. "Now, for us, that's permanent because of the financial situation."

Numerous other providers have complained of unpaid payments and other problems with the state's new Medicaid system. Many aired their grievances at a February legislative hearing.

But state officials, while not giving any specifics, made it clear they had enough reliable information about potential fraud at Mat-Su Activity & Respite to pursue the investigation.

The state suspended Medicaid payments due to "credible allegations of fraud," said Duane Mayes, director of the state's Senior and Disabilities Services division. The center has 30 days to appeal the suspension.

The state has found other providers to serve the displaced clients, officials say. State-funded care coordinators are working to keep services uninterrupted, Keilman-Cruz said.

"We're laying out the facts to recipients and guardians and allowing them to choose a new provider," she said, emphasizing the department's mission to "get the right services to the right people at the right time."

Though the investigation reportedly started months ago, Sasseen said the state suspension happened too suddenly to allow for a smooth transition. One client is headed to an Anchorage homeless shelter, she said. "There was no planning."

The state Medicaid Fraud Control Unit, part of the Attorney General's office, doesn't actively seek out crimes, unit director Andrew Peterson said. Instead, the unit takes referrals from other agencies or citizens. Most come from the state Department of Health and Social Services, Peterson said.

In this case, the unit accepted a claim against Mat-Su Activity & Respite, then notified state health officials, who determined the allegation of fraud was credible, he said.

That's when they suspended Medicaid payments.

Under Medicaid, the federal government pays about half on claims and the state covers the other half. If the state continued paying for services despite "credible allegations of fraud" that lead to criminal charges, Peterson said, the state could be on the hook for 100 percent of the costs.

Reach Zaz Hollander at or 257-4317.


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