IOLA – The executive director of the Association of Community Mental Health Centers of Kansas says the ill-fated financial trajectory of the Southeast Kansas Mental Health Center that brought about the firing of controversial CEO Nathan Fawson last week provides a warning to Kansas community mental health providers.
Still, parallels between the center’s pot-of-gold Medicaid acquisition which funded its massive attempted expansion and other examples of apparently legal, but questionably abusive, tapping of the federal welfare program seem too blatant to ignore.
SEKMHC was expected to release a formal statement regarding Fawson’s dismissal after his January suspension this week, but as of press time no release had been made.
In a written response to questions from The Kansas Informer regarding SEK, CMHCK Director Kyle Kessler described the center as an “outlier” among Kansas community mental health centers and certified community behavioral health clinics, particularly in its pursuit of expanded healthcare operations and executive compensation.
“Of the 25 community mental health centers (CMHCs) which are also certified community behavioral health clinics (CCBHCs), none of them have attempted to pursue the model of becoming a federally qualified health center (FQHC) or look-alike clinic the way that SEK CMHC had,” Kessler told the Kansas Informer. “Furthermore, none of them have pursued the significant increase in executive team salaries. SEK was an outlier in this regard.”
Those salary and benefit packages for executives – topping $889,000 at one point for Fawson according to 2024 IRS 990 filings and approved by the organization’s former board of trustees – brought a firestorm of criticism from community members and the county commissioners who contributed annual tax funding. Those county commissions ceased that funding during last year’s budget season and all recalled at least of one of their two member appointments to the SEK trustees board, replacing each with a respective county commissioner.
SEK’s meteoric expansion into primary care with the purchase of Ashley Clinic and Yates Center Dental and the explosive compensation packages that outpaced every other mental health district in the state became indicative of national concerns over the bilking of federal Medicaid dollars and agency regulations that seemed to encourage abuse if not fraud. Speaking to the Anderson County Commission late last year on the issue, county trustees representative Dana Spencer described the CCBHC certification for SEK as a windfall of “life changing money” that enabled the growth, staff expansion, and advent of massive executive salaries. Under those cost-based Medicaid guidelines, the higher SEK’s expenses, the higher the reimbursement for which it qualified.
At the same time, Kessler defended the organization’s recent course correction under current leadership brought on by media attention and the interdiction of member county commissions.
“I believe that Southeast Kansas Mental Health Center, under the current leadership of Dr. Doug Wright and its board of directions, has worked hard to realign itself with the mission of providing timely access to high quality mental health services and make that their major focus,” Kessler wrote.
Kessler’s comments provide one of the clearest public acknowledgements yet from the state CMHC association that SEK pursued a path significantly different from other Kansas behavioral-health providers during its rapid expansion into primary care and dental services.
The federal CCBHC system was created to expand access to mental-health and addiction treatment services through a more comprehensive Medicaid reimbursement structure. The Centers for Medicare & Medicaid Services says CCBHCs are reimbursed through prospective payment systems designed to reflect the actual cost of providing required behavioral-health services, crisis care and care coordination. CMS has described the model as an effort to improve access to care while standardizing quality reporting and accountability requirements.
Supporters argue the model has dramatically improved access to treatment. Kessler pointed to what he described as measurable statewide successes.
“The CCBHC model has seen great outcomes in its connection to substantial reduction in waiting lists for youths awaiting admission to psychiatric residential treatment facilities and reducing deaths by suicide along with fewer people presenting to hospital emergency rooms with suicidal thoughts or ideation,” he wrote.
But one of the recurring public-policy questions surrounding CCBHCs nationally has been the sharp increase in Medicaid reimbursement flowing into behavioral-health systems operating under cost-based payment formulas. That structure has parallels to several other Medicaid and Medicare reimbursement controversies now drawing national attention. Federal investigators and lawmakers increasingly warn that modern government healthcare reimbursement systems can create incentives for organizations to maximize diagnoses, expand qualifying services and aggressively document costs in order to increase reimbursement, even when providers technically remain within legal billing frameworks.
One of the clearest examples involves Medicare Advantage “risk adjustment” payments. Earlier this year, U.S. Sen. Chuck Grassley released findings alleging UnitedHealth Group appeared to be “gaming the system” by maximizing diagnosis coding to increase federal reimbursements. Grassley said insurers can use “resources and strategies to capture a higher number of diagnoses and diagnosis codes,” generating larger taxpayer-funded payments.
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Another rapidly expanding area of concern has involved Medicaid-funded Applied Behavioral Analysis autism services, where federal and congressional investigators have scrutinized allegations involving inflated service hours, inadequate documentation and weak oversight tied to fast-growing reimbursement streams.
Federal officials have repeatedly described Medicaid oversight itself as a “pay-and-chase” system in which claims are often paid first and audited later. CMS recently announced a broader healthcare fraud crackdown focused on identifying improper payments, unsupported billing and program-integrity weaknesses across federal healthcare systems.
Though massively expensive on a national scale, those concerns do not necessarily equate to criminal fraud. Instead, many federal audits focus on what regulators call “improper payments,” unsupported costs or inadequate documentation rather than outright false claims.
In November 2025, the U.S. Department of Health and Human Services Office of Inspector General announced a national audit titled “Audit of Certified Community Behavioral Health Clinics Medicaid Reimbursement and Compliance With Demonstration Requirements.” Federal auditors said they would examine whether CCBHC Medicaid payments complied with federal requirements and whether clinics provided the services necessary to justify enhanced reimbursement.
The federal review does not specifically target SEK or Kansas, but it reflects growing national concern over rapidly increasing Medicaid behavioral-health expenditures and whether oversight systems have kept pace.
In recent audits involving other Medicaid behavioral-health systems around the country, the Office of Inspector General identified hundreds of millions of dollars in improper or unsupported payments tied to documentation failures and noncompliance issues in several states. Kessler appeared to acknowledge that organizations operating with public dollars face increasing scrutiny.
“I have mentioned several times that if organizations receive tax dollars, we believe they must embrace accountability and scrutiny to maintain the public trust, and that commitment remains,” he wrote. He also suggested SEK’s experience may serve as a warning to other safety-net providers attempting rapid expansion.
“I think if there is a cautionary tale to what SEK tried to pursue, it is that going too far, too fast in the health care safety net arena can produce substantial backlash without making sure that there is buy-in from not only community partners, but all licensure and certification entities at the county, state, and federal levels,” Kessler wrote.
Expansion of Kansas’ Medicaid program KANCARE was a political flashpoint between Democrat Governor Laura Kelly and the Republican-controlled Kansas Legislature since early in Kelly’s first term. Her expansion proposal would have allowed more people onto the government-paid health plan. Republicans repeatedly blocked the move saying its added expenses would far outpace projections.
Dane Hicks is a graduate of the University of Missouri School of Journalism and the United States Marine Corps Officer Candidate School at Quantico, VA. He is the author of novels "The Skinning Tree" and "A Whisper For Help." As publisher of the Anderson County Review in Garnett, KS., he is a recipient of the Kansas Press Association's Boyd Community Service Award as well as more than 60 awards for excellence in news, editorial and photography.
