The state made its case against the 15 organizations it accused of possible fraud sound like a slam dunk in June 2013.
The New Mexico Human Services Department’s announced that it had found nearly $36 million in potential over-billing and possible Medicaid fraud based on an audit and other reports.
It made for good headlines, and the state handed off the cases to the New Mexico Attorney General’s office to look into the state agency’s finding of ‘credible allegations of fraud.’ The Human Services Department, meanwhile, shut off Medicaid dollars to most of the accused organizations, forcing many of them to eventually close their doors and disrupt care to tens of thousands of vulnerable New Mexicans. Medicaid is the government’s health insurance program for low-income populations.
The state’s actions came under scrutiny early on, however.
Based on a reading of federal guidelines and regulations New Mexico In Depth found that the state’s Human Services Department did not have to withhold Medicaid dollars from the 15 organizations it had accused of fraud, although the state has repeatedly maintained it had no other option.
The state, meanwhile, repeatedly refused to turn over a more-than-400-page audit it had used to find ‘credible allegations of fraud,’ leading New Mexico In Depth, along with media partner Las Cruces Sun-News, to unsuccessfully sue the state to turn it over. The accused organizations also were not allowed to see the findings, except for two organizations that settled with the state.
It wasn’t until Attorney General Hector Balderas took office in January 2015 that the audit became public.
What few knew at the time of the June 2013 announcement was that the HSD had removed a sentence on page 22 of draft audit report by a Massachusetts firm commissioned to review the 15 organizations’ billing that it had found no “credible allegations of fraud.”
According to the final audit report, nearly $34 million of the $36 million in potential over-billing and possible Medicaid fraud started with only $42,500 in questionable claims Public Consulting Group Inc. (PCG) of Massachusetts had flagged upon a review of all 15 organizations over a three-and-a-half-year period.
The $42,500 was based on a review of thousands of cases, a very small fraction of all the claims submitted by the 15 organizations over that three-and-a-half year period.
Using a statistical formula, PCG predicted the potential over-billing and possible fraud of the millions of claims the organizations had submitted based on the rate of suspicious claims it had found in the documents it reviewed.
What was unknown at the time was the Human Services Department (HSD) had directed PCG to not follow its normal practice of allowing audited organizations to review preliminary findings to ensure they were accurate.
That means the accused organizations were never able to see if PCG’s findings squared with their own internal processes, a common practice among auditors. As a result, in early investigations that cleared some of the organizations of fraud allegations, AG investigators found documentation the PCG audit described as missing. In other cases, they found individuals who the audit flagged as improperly providing services because of a lack of credentials to have the proper accreditation for their jobs.
It also meant the estimates of potential over-billing and possible fraud in the audit weren’t accurate.
In one case, Presbyterian Medical Services, one of the 15 organizations accused of fraud, found documents that its officers believed refuted the audit’s findings, but the state Human Services Department refused to consider the documents
That put Presbyterian Medical Services (PMS) in a bind: it could settle the case the state had made against it or fight it and possibly run out of money.
The health care provider chose to settle and paid the state $4 million in the fall of 2013 all the while objecting to findings in a state-ordered audit that it had over-billed Medicaid.
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.
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 more than a year ago.
See a timeline of events here.