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Secrecy Surrounds Fraud Allegations In New Mexico Mental Health Audit

In June, New Mexico’s Behavioral Health care system was thrown into chaos — the state abruptly froze Medicaid payments to more than a dozen mental health providers in the state after an audit allegedly found widespread fraud.  

Those providers served nearly 30,000 patients, but neither the public nor those accused have been able to see the actual audit because the state says an investigation continues.

Now a partial release of the audit’s findings have raised further questions about New Mexico’s decision to go after the clinics.  

Late last year, the New Mexico Human Services Department (HSD) was alerted to what it calls "aberrent billing practices" for 15 mental health agencies in the state. That alert came from OptumHealth, the company responsible for managing Medicaid money for the states mental health providers, and led to an audit of the agencies in question.

Based on the findings of that audit, HSD found there were “credible allegations of fraud”. However, a partial release of the audit last week may say otherwise. Here’s what the audit says: "PCG’s Case File Audit did not uncover what it would consider to be credible allegations of fraud, nor any significant concerns related to consumer safety."

Greg Williams is with the New Mexico Foundation for Open Government. Shortly after the freezing of Medicaid dollars, FOG sued the stateto get copies of the audit. To date, no one has seen the full report, and what was finally released last week — 58 pages of 400 — was heavily redacted. Williams is continuing the court fight to get the entire document released.

“It's so significant to the public, because of the federal funding, and because of the fact that it's healthcare to our citizens,” said Williams. “We take the position that it's very important for this information to be released.”

The line in the released materials that reads "did not uncover what it would consider to be credible allegations of fraud" seems to challenge the HSD claim that there were "credible allegations of fraud." However, department spokesman Matt Kennicott says otherwise.

“Well there's no discrepancy there,” said Kennicott. “The audit firm's role is not to find credible allegations of fraud. As you'll read in the federal regulations, only the state medicaid agency can determine if there are credible allegations of fraud.”

And they have done so, Kennicott says, on the basis of information in the audit, plus whistleblowers, and the earlier report by OptumHealth. But that OptumHealth report isn't public either — and there is widespread speculation about whether the company was equipped to even report fraud.

“Optum finding credible allegations of fraud is like your mother told you: the pot calling the kettle black,” said former state senator Dede Feldman.

Feldman said problems in the state’s mental health system began in 2009 when OptumHealth began managing providers. In short, they didn't pay their bills, provider invoices were returned, and the legislature had to step in. Feldman says it was a crisis, and Optum was eventually fined a million dollars due to its inadequate IT system.

“Optum told the providers that ‘we're just going to pay you every invoice that you ever sent us. We're just going to pay it in full, and then we'll reconcile it later,'" Feldman said.

Feldman says shortly after the first crisis passed, Optum was sanctioned again, and constant monitoring had to be put in place to ensure the company didn't screw up any more. HSD says "aberrent billing practices" detected by Optum lasted over a three year period — including times Optum itself had trouble managing the system.   

“Are we now to believe that they've corrected every flaw in their system and are now able to judge these providers as, not just inadequate, but fraudulent?” said Feldman. “I don't think so.”

As of now, the 15 mental health providers accused of fraud have effectively closed down and their clinics are currently being managed by five Arizona companies.  

The management takeover has left 30,000 patients — many with schizophrenia, severe drug and alcohol addictions, and other serious disorders — struggling to find help in a mental health system undergoing disruption and transition.

According to the Human Services Department the allegations of fraud are under investigation by the U.S. Attorney, the FBI and New Mexico Attorney General Gary King.

King says his office is still working to determine whether there is a criminal case or not.

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