Governor signs into law legislation to prevent another behavioral health scandal

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Bryant Furlow/New Mexico In Depth

Former Attorney General Gary King and former HSD Secretary Sidonie Squier under Gov. Susana Martinez review behavioral health audit findings before Squier’s testimony to a legislative committee in the summer of 2013.

Gov. Michelle Lujan Grisham signed into law this week a bill (SB41) that ensures service providers accused of overbilling or defrauding Medicaid can review and respond to allegations of wrongdoing before state action is taken.  

It’s a response to the bombshell announcement the administration of Gov. Susana Martinez made in June 2013. That summer, the Human Services Department publicly accused 15 organizations treating New Mexicans for addiction and mental illness of overbilling Medicaid by up to $36 million.

There was even a chance, the agency said, the organizations had defrauded the government’s health insurance program for low-income people.

The organizations weren’t allowed to review or respond to audit findings that led to the allegations – a break with normal auditing practices – or dispute the state Human Services Department’s decision to cut off Medicaid funding to a dozen or so of the 15 providers.

Nearly eight months after the bombshell announcement, James Kerlin of the Counseling Center of Alamogordo, seemed to sum up the bewilderment many accused providers were feeling.

“I … still don’t know what it was that we supposedly did wrong,”  Kerlin told New Mexico In Depth in late February 2014.

Nearly six years on, bewilderment seems an appropriate response. No fraud was ever found at any of the providers and the Medicaid overbilling discovered is a fraction of the estimates announced in June 2013. In one egregious example, the state settled its case against a Las Cruces provider for less than $500 after accusing it of $2.8 million in Medicaid overbilling in 2013.

The secretive, troubled process by which the Martinez administration built its case against the providers, meanwhile, has come into greater light. Martinez’s Human Services Department refused to consider documents one provider tried to hand over to prove its innocence. And the founder of another accused organization had proof of his organization’s clean bill of health covering three-quarters of the period that just months later would be audited by the Martinez administration. The agreement released it from any liability, civil or criminal, for the period in question.

Even the Massachusetts firm that conducted the controversial audit on which the state’s “credible allegations of fraud” were based acknowledged it veered from its normal practice. It usually gives companies a chance to respond before issuing official findings, something it was not allowed to do in 2013.

SB41, sponsored by Sen. President Pro Tem Mary Kay Papen, D-Las Cruces, who has carried similar bills in the past, ensures that the state can’t just presume a provider’s guilt in Medicaid overbilling or fraud but must give the accused a chance to respond to the allegations first.

“This is a good day for New Mexico,” Patsy Romero, the chief executive officer for Easter Seals El Mirador, one of the 15 organizations accused of fraud, wrote in an email Thursday morning to New Mexico In Depth, which covered the fallout from the Martinez administration’s rush to judgment from the beginning.

SB41’s passage culminates a campaign by the providers and their legislative allies nearly six years after the bombshell announcement of 2013, but it doesn’t address the fall out still reverberating through New Mexico..

Many of the 15 behavioral health providers eventually closed, unable to continue without the flow of Medicaid dollars the Martinez administration cut off. Those closures led to layoffs of hundreds of workers and tens of thousands of New Mexicans going without treatment for mental illness and addiction for varying periods of time.

Meanwhile, three of five Arizona companies the Martinez administration brought in to New Mexico to take over addiction and mental health services offered by the accused organizations have departed, unable to make a go of it in the state.

Nearly six years on, the story of the behavioral health scandal has transcended news coverage. A documentary film that explores the fallout will air at NMPBS and two other New Mexico public TV stations this fall. The National Hispanic Cultural Center is hosting a screening of the hourlong film this Saturday, followed by a panel discussion.