A state agency citing potential Medicaid fraud refused to consider documents that could have cleared a health care provider of allegations that it had overcharged the government by as much as $4.3 million, the organization’s officials said this week.
After the New Mexico Human Services Department’s decision to not consider the documents, the health care provider, Presbyterian Medical Services (PMS), faced a difficult choice: settle with the state or fight and possibly run out of money, Steve Hansen, PMS’ president and CEO, told the Legislature’s Behavioral Health subcommittee in Albuquerque on Wednesday.
The health care provider chose to settle. It paid the state $4 million in the fall of 2013 all the while objecting to findings in a state-ordered audit that it had overbilled Medicaid, the government’s health insurance program for the low-income.
Presbyterian is one of two health care providers to have settled with the state since the Human Services Department (HSD) accused it and 14 other New Mexico health organizations of “credible allegations of fraud” in June 2013.
Hansen and the other Presbyterian officials spoke for the first time publicly this week about last year’s settlement negotiations with HSD following the end of a one-year non-disclosure agreement that went into effect Sept. 4, 2013.
In the late summer of 2013, Presbyterian officials thought a third option existed: presenting evidence to refute the audit’s findings. That alternative appeared when the health care provider discovered documents they believed contradicted the conclusions in an audit performed by Public Consulting Group Inc. (PCG) of Massachusetts.
A factor in the state-ordered audit’s conclusion that Presbyterian had overbilled Medicaid by $4.3 million over 3.5 years were ‘missing documents’ the audit firm reviewing the health care provider’s files couldn’t find such as employee credentials and training records. Those records could have proved Presbyterian hadn’t improperly billed Medicaid.
Presbyterian found the ‘missing documents’ when reviewing its files during negotiations for a settlement with the Human Services Department, Don Daniel, PMS’ vice president of Business Development & General Counsel, told lawmakers. Presbyterian tried to give the files to the auditing firm, PCG, and the HSD as proof that they had properly billed Medicaid for payment.
The audit firm said it would review the documentation if directed to by HSD, Daniel told lawmakers. The state agency “did not want to accept those records,” he said.
“We believe there is a strong argument that nothing was owed back to HSD,” Daniel said.
Even giving “the most generous interpretation” of Public Consulting Group’s methodology in conducting the audit, the most Presbyterian owed was significantly less than $1 million over a period of 3.5 years in which the health care provider charged Medicaid $40 million for behavioral health services based on its own review, Daniel said.
HSD’s decision to not look at the documents left the health care provider with little choice but to settle with the state, Hansen said. Presbyterian Medical Services agreed to the repayment because it needed its Medicaid funding restored. Since HSD’s decision in June 2013 to freeze Medicaid funds to the health care provider, Presbyterian had relied on financial reserves to cover patient services, such as drug addiction treatment and suicide counseling.
In addition to covering those expenses, the health care provider was accumulating legal expenses related to the Human Services Department’s allegations. As of this month, the health care provider has spent around $300,000 on outside legal expenses and another $1 million in internal costs “working through this process,” Daniel said.
The health care provider would have folded within a few weeks had it not negotiated the agreement, Hansen said.
Asked by state lawmakers why the company agreed to such a hefty settlement if it objected to the audit findings, Presbyterian officials said HSD refused to agree to a settlement below $4 million.
While PMS officials told lawmakers the documentation could have led to a reduction in the estimate of Medicaid overbilling and potentially cleared the health care provider of allegations, Matt Kennicott, an HSD spokesperson, said Presbyterian had “voluntarily agreed” to the $4 million settlement.
“They did not have to agree to a settlement in paying back taxpayers for services that were overbilled,” he wrote in a Wednesday email. “They were informed of their options and chose to settle.”
Hansen and the other Presbyterian officials had no corroborating documentation to give the lawmakers or media during this week’s testimony because, according to the non-disclosure agreement, the health care provider had to return all documents the Human Services Department had given it, including a portion of the state-ordered audit pertaining to Presbyterian. It also had to destroy all related documents it produced, including its internal review and analysis of the state-ordered audit.
Even though they weren’t armed with documents, however, what Hansen, Daniel and other PMS officials described to lawmakers Wednesday seems to match what happened to two other health organizations PCG audited: The audit firm identified Medicaid payments as potential overbillings due to reasons including missing documentation.
In the other two cases, a later review of records by the Attorney General’s Office located documents PCG said were missing.
In January, the attorney general cleared The Counseling Center of Alamogordo after investigators resolved some of the issues the PCG audit flagged. Rather than relying solely on the audit, that office reviewed records and interviewed staff, finding only $375 — not $1,800, as PCG found — in questionable claims.
In another case involving Northern New Mexico’s Easter Seals El Mirador, PCG’s random examination of 150 claims found 20, worth $1,990, that were suspicious. Investigators for the Attorney General’s Office examining the same records found only four claims worth $368 in billings suspicious.
HSD has since sent the Easter Seals case back to the AG’s office for further investigation.
While Hansen and the other PMS officials told state lawmakers they want to move past this situation, a criminal investigation still looms over the organization.
When HSD accused PMS and 14 other health organizations of “credible allegations of fraud” last year, it asked the AG and other law enforcement agencies to investigate.
As of Wednesday, more than 15 months later, PMS had not heard from any law enforcement agency, including the Attorney General’s office, Hansen told state lawmakers.
Democratic Attorney General Gary King is running against Republican Gov. Susana Martinez, who oversees HSD. King has said publicly it could take his agency 6.5 years to investigate all 15 organizations.
“We are making our way through these providers as methodically as we can,” AG spokesperson Lynn Southard said Wednesday. “We don’t have a lot of staff, not a lot of resources.”