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Newsroom SRS signs contract with KHS that includes new oversight and protections

The Kansas Department of Social and Rehabilitation Services (SRS) has reached an agreement with Kansas Health Solutions (KHS) that will allow KHS to continue to manage mental health care programs for the State of Kansas in a way that protects public resources. SRS and KHS signed the contract Tuesday, in the wake of the departure of KHS’ former Chief Financial Officer amid allegations of improper conduct.


KHS is a subsidiary of the Association of Community Mental Health Centers in Kansas. The association is comprised of 27 mental health clinics with a provider network extending into all 105 Kansas counties.

“This contract incorporates additional safeguards and accountability measures while ensuring the continued delivery of services to vulnerable Kansans,” SRS Secretary Rob Siedlecki said.


The contract includes new management oversight and financial control provisions designed to immediately improve accounting and internal control functions at KHS, as well as bring new leadership to the operation of KHS, all within existing resources.


“This will ensure that KHS operates in a fraud-free and accountable manner,” Secretary Siedlecki said. “We believe the new arrangement will make KHS more effective and efficient, and improve the service we all are working to provide mental health clients in Kansas.”


This new agreement with the state establishes KHS as an “at risk” provider, in keeping with its proposal to the Kansas Legislature to reduce program administrative expenses in FY 2012 by $17 million while continuing to provide the same level of service. It creates a financial incentive for KHS to meet its overall budget targets or else be directly at risk for cost overruns. Previously KHS was reimbursed by the state for the cost of patient services provided, plus an allowance for its administrative functions.


SRS is requiring KHS to contract with an independent outside management and accounting firm, to be approved by SRS, to administer and oversee its fiscal accounting and internal financial control functions under the terms of the contract.


SRS also is requiring KHS to contract with an outside attorney or legal firm, approved by SRS, to review and guide all aspects of KHS’ business arrangements, ensure that all sub-contracts are appropriately written and implement all other appropriate accountability safeguards for those dealings.


KHS is required by the contract to install proven, competent leadership, approved by SRS, to be in place this week so that KHS operates in a fraud-free and efficient manner.


Mike Hammond, executive director of KHS’ parent association, said, “KHS has entered into a management services agreement with ValueOptions®, a national behavioral health and wellness company with operations in Topeka. We have maintained a strong partnership with ValueOptions since they became the Prepaid Inpatient Health Plan (PIHP) provider in 2007, and we believe this agreement will add great value to KHS.”


“ValueOptions has agreed to provide chief executive and financial officer leadership, both of which are already under way,” Hammond said. “The transition of this leadership to include Kansas Health Solutions has been well-planned and seamless, offering a strong foundation for continued success.”


The new CEO of KHS will be Myron Unruh and its new CFO will be Anita Stefanich.


The contract gives SRS the right to “immediate termination of the contract if any criminal charge is filed by state or federal prosecutors” against any KHS officer or employee other than the firm’s former chief financial officer of the last four years.