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.
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.