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Behavioral Health Audit Firm Didn’t Follow Normal Practice

audit screen shot

A Massachusetts firm that audited 15 health organizations in New Mexico last year normally gives companies it’s scrutinizing a chance to respond before issuing official findings.

It is a common practice for auditors. Running the findings by staff gives organizations the opportunity to refute findings or address misunderstandings. It’s a way of ensuring the accuracy of an audit, among other things.

But the 15 New Mexico health organizations Public Consulting Group Inc. (PCG) audited last year didn’t get that opportunity, and the results have been catastrophic for many. Accused of overbilling and potential fraud, their Medicaid funding frozen, many of the organizations closed. Others are barely hanging on.

Meanwhile, tens of thousands of their clients – some of the most vulnerable New Mexicans, needing treatment for issues such as suicide attempts, depression and drug addiction – found themselves caught up in a chaotic transition as the state brought in companies from Arizona to try to fill the void created when New Mexico organizations shut their doors.

The question is why didn’t PCG follow its standard practice and allow the 15 organizations to review the audit’s findings and submit documents and records that could have refuted or changed its conclusions. Based in part on PCG’s findings the state’s Human Services Department (HSD), which paid for the audit, froze Medicaid funding for the organizations and asked the attorney general and other law enforcement agencies to investigate.

Officials aren’t saying much. But a PGC spokesperson confirmed Friday that it’s the company’s “standard operating procedure to give providers the opportunity to compile and deliver supporting documentation.” Alison Gibbs wouldn’t comment, however, on why the New Mexico organizations were prevented from providing feedback on the audit.

Federal regulations point to HSD

On Tuesday, an HSD spokesperson was blaming the attorney general. Spokesperson Matt Kennicott said the AG accepted HSD’s request for investigation of the 15 health organizations too quickly in June 2013 – before PCG could seek feedback from the audited health providers.

“Once they were under criminal investigation, we were unable to have further conversations with the providers,” Kennicott wrote in an e-mail.

Federal regulations appear to be clear, however: It is a state's Medicaid agency – in this case HSD – that must find a “credible allegation of fraud” before asking a law enforcement agency to launch an investigation. In other words, a decision by HSD, not the AG, triggered the entire process.

It is unclear whether Kennicott misunderstands federal law or is playing in election-year politics. Democrat Attorney General Gary King is running for governor against Republican incumbent Susana Martinez, who oversees HSD.

Through a spokesperson, King responded to Kennicott’s statement late Tuesday by saying HSD was attempting to tar his agency as a “scapegoat.”

“HSD made the initial determination of fraud,” King said. “Once allegations of fraud are made to our office by HSD, as the State's Medicaid Fraud Unit we are obligated to investigate.”

Yet another question about audit

That PCG didn’t follow its normal auditing practice in New Mexico raises yet another question about how the state of New Mexico went about auditing the 15 health organizations last year. Questions first surfaced earlier this year when the Attorney General’s Office cleared two of the 15 health care organizations.

In both cases, a later review of records by the Attorney General’s Office located documents PCG said were missing. That apparently cleared up misunderstandings that might have been resolved had meetings between PCG and the organizations happened.

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 in a random sample only $375 in questionable claims — not $1,800, as PCG found in the same sample.

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.

Recently, officials from a third organization audited by PCG, Presbyterian Medical Services, told New Mexico state lawmakers that they found documentation in the fall of 2013, after the audit was complete, that they believed refuted the Massachusetts firm’s findings. Presbyterian attempted to present its documentation to PCG and HSD. While PCG was open to reviewing the documentation, HSD was not, the officials said.

HSD’s decision to not look at the documents left Presbyterian with little choice but to settle with the state in a case seeking recovery of overbilled Medicaid funds. Presbyterian Medical Services agreed to a $4 million repayment because it needed its Medicaid funding restored to continue operating, officials say.

Proposed legislation

It is situations like this that caused one of New Mexico’s top state lawmakers to recently propose legislation that would protect health organizations accused of wrongdoing.

If passed and signed into law by the governor, the legislation, sponsored by Sen. President Pro Tem Sen. Mary Kay Papen, D-Las Cruces, would require the state to prove Medicaid fraud or overbilling – not just allege it – before cutting off government dollars to health-care organizations. It also would give health providers the power to challenge the accuracy of audit findings.

“The purpose of my legislation is to make sure that people are able to present evidence to defend themselves, and that it will be considered,” Papen said this week.

Jennings, NMID’s executive director, can be reached at trip@nmindepth.com or on Twitter at @trip_44.

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