Health professionals worry clients will suffer

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N.M. Legislative Finance Committee members listen as HSD Secretary Sidonie Squier defended her suspension of Medicaid payments to 15 behavioral health providers last month. The committee meets again today and will again discuss the Medicaid freeze.

Bryant Furlow/New Mexico In Depth

N.M. Legislative Finance Committee members listen as HSD Secretary Sidonie Squier defended her suspension of Medicaid payments to 15 behavioral health providers last month. The committee meets again today and will again discuss the Medicaid freeze.

When the N.M. Human Services Department announced last month it would suspend Medicaid payments to 15 behavioral health providers, Joe Frechen was worried.

For nearly 20 years, Frechen has worked as psychiatrist in southern New Mexico with some of the most vulnerable patients in the region.

“I know when something’s going wrong,” Frechen said. “I know what’s happening in the family — I know all the various trials and tribulations they’ve been through, I know about the progression of their medical problems. I feel a link with the people I treat.”

With the state pulling Medicaid payments to behavioral health providers, like the community health centers Frechen contracts with, many worry that some of the 30,000 behavioral health patients served by the agencies might see lapses in care or a loss of services altogether.

Several providers are preparing to hand over patient files, grant access to computers, and turn over the management of the clinics to five Arizona behavioral health providers, N.M. Human Services Department spokesman Matt Kennicott said Thursday.

“At this point there are three to four in progress, with others likely happening in the near future,” Kennicott said.

One of the affected providers, Southwest Counseling Center in Las Cruces, is handing over Medicaid-funded services to Arizona’s La Frontera Inc. this weekend.

“Anybody who thinks this is going to be a smooth transition doesn’t know what they’re talking about,” said Roque Garcia, CEO of Southwest Counseling Center.

‘A credible allegation of fraud’

On June 24, HSD released a memo that included this paragraph:

“The Program Policy & Integrity Bureau has been notified that there is a credible allegation of fraud for which an investigation is pending. Therefore, PPIB requests that ALL Medicaid payments be suspended this includes any claims that are pending or in queue to be processed for the following Providers and ALL associated Tax Identification Numbers.”

There are approximately 1,500 behavioral health providers currently operating in New Mexico. However, the 15 providers pegged for possible fraud by the state serve nearly 35 percent of New Mexico’s behavioral health population, according to Kennicott.

The Arizona behavioral health firms will take over management of the audited N.M. organizations on a “case by case basis,” Kennicott said.

Through an emergency, no-bid procurement process, Arizona companies Agave Health Inc., Valle Del Sol, La Frontera Inc., Southwest Network Inc., and Turquoise Health and Wellness, Inc., will take over New Mexico behavioral health organizations for a combined price tag of $17.85 million. That amount is for providing services through Dec. 31.

Beyond the “three or four” providers Kennicott said are already in transition to Arizona management, it’s not clear whether, or when, other providers will do so.

“It depends on whether or not it needs to be,” Kennicott said. “Does it need to be new management? Do we need more intensive oversight of billing practices? Do we need more technical assistance? We’re looking at all of the things that have to be done to base on what actions we’re going to take here.”

The allegation of fraud stemmed from an audit conducted by Public Consulting Group (PCG) and paid for by HSD.

PCG’s audit looked at 150 randomly sampled billing claims from each of the 15 providers. From those random claims, PCG estimated there may have been nearly $33.8 million in total overpayments to those organizations.

PCG found that the total estimated overcharges from sampled claims ranged from a low of $7,856 for one provider to a high of $9.2 million at another.

Auditors also found the following:

“The provider’s records indicate ‘NO’ was marked for conducting a safety assessment with the consumer. After 6 different clinical sessions – each of which indicated that the provider had failed to follow up with the primary care provider either for treatment, or to conduct any assessments on the consumer – the consumer committed suicide by hanging himself at his grandmother’s home.”

The auditors also recommended changes in how HSD oversees billing and regulation.

A choice to suspend payments

However, neither the state nor PCG have released their audit methodology, and providers say they’re unable to defend themselves because they don’t know which allegations apply to them, or how exactly PCG arrived at its numbers.

HSD has also resisted turning over the full audit to reporters. The reason? It’s been turned over to the state’s attorney general for investigation. Under state public records law, certain investigative records don’t have to be turned over to the public.

But the New Mexico Foundation for Open Government says that exemption doesn’t apply to the HSD audit.

“A financial audit isn’t a typical law enforcement record, like a police report. Just because the HSD handed their audit over to the AG, that doesn’t automatically convert it into a law enforcement record,” said Terry Schleder, the foundation’s executive director.

Then there are the questions about why the state abruptly halted all Medicaid funding for all 15 providers. When HSD decided to suspend Medicaid payments to providers, it claimed federal regulations left no choice. From the relevant federal regulation:

“The state Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the medicaid program against an individual or entity.”

But if you read a little further, you’ll find this:

“…unless the agency has good cause to not suspend payments or to suspend payment only in part.”

In other words, HSD had some discretion on whether or not to cut off providers — for example, if there was a real threat that halting payments could disrupt services. However, the official line from HSD – that it had no choice – doesn’t seem to match up to HSD’s own documents.

A June 28 memo authored by Larry Heyeck, deputy general counsel to HSD, stated the following:

“There are several circumstances that, under the final rule, could constitute ‘good cause’ for a State Medicaid agency to determine not to suspend payments or to discontinue an existing payment suspension, in whole or in part, to an individual or entity despite a pending criminal investigation.”

‘I know the people’

There’s nothing illegal about the state’s decision to suspend payments. Federal regulations give HSD the authority to suspend payment when it suspects fraud and to send those cases to the AG’s office for investigation. The question is if the state agency analyzed whether any of the providers qualified for a good-cause exemption before it suspended payments.

Behavioral health providers, like psychiatrist Joe Frechen, say officials should have exercised discretion before cutting funding to support New Mexico’s most vulnerable populations.

“I know the people I have who are at risk,” Frechen said. “You have to know the person pretty intimately to know when they’ll be a suicide risk or not, and the other ones at risk. I just don’t see how people who are unfamiliar with the patient will be able to know this about these people.”

This article was produced in collaboration with NPR’s Fronteras Desk, a New Mexico In Depth partner. Tristan Ahtone is a Fronteras Desk reporter. Deborah Martinez of KUNM-FM, another NMID partner, also assisted with this reporting. 

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