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In report, NM Auditor slams HSD's handling of Medicaid fraud suspensions

March 6, 2014
by By Dennis Grantham, Editor in Chief
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New Mexico HSD officials face questions as more details of Medicaid freeze emerge

The tale behind the Medicaid payment freeze imposed by New Mexico's Human Services Department in June on 15 major providers of mental health services in the state continues to unfold, most recently with news from State Auditor Hector Balderas that HSD failed to follow its own policies and has mismanaged millions in state and federal dollars.  

This news results from a routine FY 2013 audit of HSD that was commissioned by Baldera's office. Specifically, the audit alleges that HSD officials:

  • violated state contracts by paying over $620,000 to out-of-state behavioral health contractors for services that had not yet been performed;
  • approved duplicate per-diem payments for activities related to the Public Consulting Group's 2013 audit of the behavioral health providers;
  • circumvented the process required for investigation of alleged fraud by the state's  Public Integrity Unit; and, 
  • mismanaged the accounting and collection of over $60 million in federal Medicaid reimbursement funds.

HSD is refuting the charges, as expected, but the revelations only build on recent developments that indicate intensifying scrutiny of HSD's June decision to suspend payments to 15 behavioral health providers, then replace them, over the findings of a Public Consulting Group audit from early 2013. Though PCG concluded within its audit that it could find no evidence of deliberate fraud by the providers, HSD officials removed that judgment and proceeded to suspend, then replace, the providers anyway based on its own judgment that credible allegations of fraud existed involving $36 million in provider claims over a multi-year period.   

Since December, HSD officials have had to deal with a string of news related to their Medicaid "freeze" decision, including: 

  • the resignation of the CEO of New Mexico's Behavioral Health Collaborative, Diana McWilliams, who was joined by PCG officials in visits to out-of-state behavioral health contractors, potential replacements for the suspended providers, before the PCG audit even began;
  • a report from the New Mexico Attorney General that its own investigation of the first of the suspended providers found no evidence of fraud and a subsequent report that suggested the findings of PCG's original provider audit may have been flawed; and,
  • an announcement by the federal Department of Health and Human Services' Office of Inspector General that its 2014 work plan will include reviews of state Medicaid payment suspensions to ensure that proper processes are followed.

 

 
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