At the end of June, 15 New Mexico behavioral health agencies had their Medicaid funding frozen by the state’s Human Services Department due to “credible allegations of fraud.”
The agencies provide services to approximately 30,000 patients, many who seek help for mental health issues ranging from substance abuse treatment to schizophrenia.
The reason for the freeze, according to HSD, was an audit that was conducted after OptumHealth — the company tasked with managing Medicaid dollars for the state’s behavioral health entities — found problems with billing by the agencies in question, and then a second audit by Boston-based Public Consulting Group.
Since then, five Arizona companies have taken over management of many of the 15 New Mexico providers. However, to this day, the controversial audit has not been released to the public, or the agencies of accused of fraud.
The story begins toward the end of 2012.
“The end of November, the first of December – around that timeframe,” said Dan Ranieri, CEO of La Frontera, one of five Arizona providers now managing agencies in New Mexico. “Right around the time that they knew something was wrong.”
According to Ranieri, La Frontera and OptumHealth worked together in Arizona. Because of this relationship, it made sense that OptumHealth would call La Frontera.
“They said ‘we may have some problems, we can’t tell you much about it, but if we need help would you be willing to consider that,'” Ranieri said of OptumHealth.
From there, Ranieri said La Frontera started having “preliminary” discussions with New Mexico at the end of January or early February, and said the state wanted information to essentially vet them.
“They actually came out and visited us to see our operations and talk to a lot of people,” Raneri said. “Some of those discussions went on back and forth, probably into May or so, and then they said ‘well, if something happens, we would like to consider this if you’re willing to.'”
“This” referred to taking over for some of New Mexico’s behavioral health providers.
Ranieri said there were no “hard negotiations” between the state and La Frontera until right around the time the existence of the audits was made public.
“We didn’t really start the negotiations, per se, until we got into June,” Ranieri said.
Here’s the timeline from that point forward:
• June 24 – An audit paid for by the New Mexico Human Services Department and conducted by Public Consulting Group (PCG) finds that nearly $33.8 million in Medicaid overpayments were made to 15 behavioral health providers in the state.
• June 24 – New Mexico Human Services Department notifies the 15 behavioral health providers that there is a “credible allegation of fraud for which an investigation is pending,” and immediately suspends all Medicaid payments.
• June 25 – Officials with the New Mexico Human Services Department send initial contracts to five Arizona companies: Agave Health Inc., Valle Del Sol, La Frontera Inc., Southwest Network Inc., and Turqouise Health and Wellness, Inc., to temporarily take over New Mexico behavioral health organizations for a combined price tag of $17.85 million. It’s estimated the move will impact about 30,000 patients. From a July 18 email: “I am following up on the proposed contract between HSD and Open Skies Healthcare (affiliated with Southwest Network, located in Phoenix). On July 3, 2013, I responded to Larry’s [Heyeck, Deputy General Counsel for HSD] June 25 email concerning the contract…”
• July 17 — Eight agencies go to U.S. District Court to restore funding. They were unsuccessful.
• July 25 — A memo generated by one of the 15 affected providers, TeamBuilders, indicates it will stop taking new clients.
• July 25 — A state district judge turns the PCG audit over to New Mexico State Auditor Hector Balderas, and orders the audit protected from public disclosure.
• Aug. 21 — In a 15-1 vote New Mexico’s Legislative Finance Committee objects to the Human Services Department moving $10 million from it’s budget to pay Arizona agencies to take over New Mexico providers due to concerns over secrecy surrounding the process.
• Aug. 27 — New Mexico In Depth and the Las Cruces Sun-News file a lawsuit demanding the public release of the PCG audit.
• Aug. 28 — Federal officials hold conference call to hear about widespread disruptions to clients of behavioral health providers in transition.
• Aug. 29 — An Inspection of Public Records Act request filed by KUNM reveals contract communications between New Mexico Human Services Department officials and Arizona providers as early as May 29, a full month before the audit was released by Public Consulting Group.
• Sept. 3 — Public Consulting Group representative Thomas Aldridge tells the New Mexico Legislative Behavioral Health Subcommittee that he helped state officials vet at least one Arizona firm before it even began its audit of agencies in the state.
• Sept. 3 – Lawyer Knicole Emanuel testifies to ongoing problems with PCG audits conducted in North Carolina as well as lawsuits triggered by PCG activities. “In some of the PCG audits that I have encountered, PCG has said the Medicaid provider owes $700,000, $800,000, $1.5 million, these exorbitant amounts, and at the end of the day when they look at all the documents, it goes down to like $200 or $300.”
• Sept. 10 — The Santa Fe New Mexican reports that radio ads defending Gov. Susana Martinez have begun rolling out, framing the behavioral health takeover as a crackdown on Medicaid fraud.
• Sept. 11 — A radio ad criticizing Martinez begins airing, according to The New Mexican.
Ahtone works for KUNM News and NPR’s Fronteras Desk, both NMID media partners. This article was produced in collaboration with New Mexico In Depth, which contributed to it.
Here is the New York Times on this New Mexico scandal.
Interestingly in 2010 New Mexico State officials investigated allegations that OptumHealth New Mexico, the firm that oversaw state mental health programs, violated its state contract by using out-of-state and “overseas labor” to perform work in New Mexico.