State and organization clash over significance of renewed inquiry

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The Santa Fe nonprofit Easter Seals El Mirador has sued the New Mexico Human Services Department in state court, accusing the agency of acting in bad faith by withholding more than half a million dollars in Medicaid funds.

Bryant Furlow/New Mexico In Depth

The Santa Fe nonprofit Easter Seals El Mirador has sued the New Mexico Human Services Department in state court, accusing the agency of acting in bad faith by withholding more than half a million dollars in Medicaid funds.

What standard should state investigators use to scrutinize payments the government made to a local health organization for helping children– usually those with behavioral and emotional problems – adjust to certain types of public settings, usually school classrooms?

At issue is whether Easter Seals El Mirador – recently cleared of fraud by state Attorney General Gary King’s office – can bill the government for providing those services or not.

That question appears to lie at the center of the Democratic Attorney General’s decision to re-open an investigation of the northern New Mexico health organization, which his office cleared of fraud in late April.

The state’s Human Services Department believes investigators in King’s office applied the wrong standard and, in doing so, missed hundreds of thousands of dollars in possible fraud. As such, the state agency has asked King’s investigators to interview a witness who can say definitively whether or not Easter Seals El Mirador was supposed to bill for those services.

The chief financial officer of Easter Seals El Mirador on Wednesday, however, wondered why New Mexico is suddenly raising the issue when her organization has been certified by the state for years to provide and bill for such services.

“It’s a red herring,” Patsy Romero said of the state’s latest accusation against Easter Seals El Mirador.

Easter Seals El Mirador is one of 15 health organizations the state Human Services Department accused of “credible allegations of fraud” in June 2013. King, who is the Democratic candidate for governor and hopes to unseat Republican Gov. Susana Martinez in November, cleared Easter Seals of fraud this spring but found $34,000 in potential overbillings.

Martinez’s Human Services Department, however, is challenging the AG’s finding that there is “insufficient evidence … to support a finding of fraudulent activity.”

According to a June 25 letter HSD sent to King’s office, HSD believes King’s investigators used the incorrect criteria to determine if Easter Seals El Mirador’s billings around the services were possibly fraudulent.

The letter goes on to say that early on in its inquiry the Attorney General’s office informed the Human Services Department that “preliminary indications” suggested evidence of Medicaid fraud by Easter Seals El Mirador “in excess of $1 million.”

But, later, the Attorney General’s investigators determined the billings associated with the services in question were legitimate after utilizing “certain criteria checklists,” the letter says.

It is those criteria used by the AG’s investigators that are in question.

HSD spokesman Matt Kennicott said in a statement that the AG’s initial findings “showed significant overpayment and likely fraud” that was “later reduced only after an incorrect standard for approval of Medicaid billings was applied.”

Romero says the state’s action doesn’t make sense because New Mexico should have flagged such claims years ago if her organization was billing them incorrectly.

The state’s overseer of proper billing practices until this year, Optum Health New Mexico, could have flagged the claims, but it didn’t, Romero said.

Instead, when Optum audited Easter Seals El Mirador in April 2012, the organization received a 93 percent compliance rate, meaning it was adhering to the vast majority of regulations, Romero said.

King’s spokesman, Phil Sisneros, would not say whom investigators have been asked to interview. In an e-mail Wednesday to New Mexico In Depth, Sisneros wrote that HSD “asked that we talk to one more witness to determine what knowledge Easter
Seals had about the manner in which they had been billing (and gave us the name of a specific individual who had had dealings with Easter Seals on the issue) and so we agreed to follow up on that.”

The agency is “proceeding with the investigation with those very limited parameters,” Sisneros wrote.

Meanwhile, because Easter Seals El Mirador remains under investigation, the state of New Mexico is refusing to release money that it froze in June 2013 when it accused the health organization of “credible allegations of fraud.” Easter Seals El Mirador officials received a certified letter dated July 2 from HSD informing them that the money would remain frozen.

4 thoughts on “State and organization clash over significance of renewed inquiry

  1. HSD has their very own interpretation of the “standards” which they direct the AG’s office to use. The very “standard” that is provided by OptumHealth to the BH Providers is interpreted in a very different way. Perhaps HSD should be delivering Billing Trainings to the BH Providers with written guidance other than a Service Definition that is left up to several interpretations, specifically, OptumHealth’s. Further, where is the responsibility of OptumHealth in this debacle? OptumHealth is supposed to offer billing & coding training for the providers, audit the providers, and guide them with respect to services, how to bill for the services provided, and how to correct any misinformation. Finally, It is absurd that the State HSD placed confidence in the information that OptumHealth provided in regards to “fraud” due to the fact that OptumHealth could not even pay claims for the first 6 months of the contract term. Not to mention, OptumHealth being fined a million dollars for their inabilities.

  2. Ok, let’s take a giant leap and assume that HSD is correct about the standards that should be used on billing. Given that Easter Seals seems to be using the same standards as the AG, the discrepancy would be a paperwork dispute, not fraud. It’s the allegation of deliberate falsification of records that I find to be not credible.

    • It is more about what the federal regulations authorize not whether the AG or HSD standards being used is correct. Although again Optum Health appears to have been falsifying records also so it could be that Easter Seals was a victim or coordinated for improper payments. That is the crux of using the correct standard from the feds and what was/was not coordinated between the two agencies.

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