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Harsh measures in NM: 10 lessons providers can apply now

July 24, 2013
by Patrick Gauthier
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State’s unprecedented response to alleged fraud highlights broader healthcare divide and new vulnerability of providers


What’s happened in New Mexico is very unfortunate. This type or degree of action on the part of auditors and regulators is something we have been warning the field about for years. The impact of Recovery Audit Contractors (RACs) and the Deficit Reduction Act (DRA) have macro and micro facets to them and it might be helpful to reflect on both.

At a time of tremendous change (health care reform) and historic deficits, opposing factions want to pull the health care system apart. One faction wants expanded coverage and benefits (“increase access to health care for all”). Another faction is pulling the system in the opposite direction (“only if you can bend the cost curve that we suspect is at least 1/3 waste, fraud and abuse, especially among the sickest of the sick and poorest of the poor). This macro tension pervades just about every institution and conversation in America today. It is real and it is a very powerful force acting on us all the time.

We’ve known for some time that RACs operate in an assertive if not aggressive manner and their “wins” are celebrated in the newspapers and on nightly news regularly (Headline: “CMS recoups billions of taxpayer dollars from criminal providers!”) Whether we agree with it or not, there isn’t anything surprising about that motive and drive nor is there anything really new about the tension between the two camps.

We have also known that the MH and SUD provider community – particularly CMHCs – have been in the crosshairs of eager auditors for some time now. RACs have found and celebrated high levels of waste in CMHCs in the past and have made it clear that the BH system is a target. The same scenario is taking shape in the commercial market. The Health Care Cost Institute produced two reports last year illustrating the rapid increase in MH/SUD inpatient admissions and the increase in year-over-year spending in MH/SUD. Both BH indicators lead all health care and medical sectors, placing the field under a microscope. HCCI concludes one such report by making it clear that they will be watching MH and SUD very closely to better understand why spending is high and expanding. Can we expect similar cases arising more rapidly around the country? If we are paying attention to the macro signals, yes.

Why might utilization and spending be experiencing an 8% compound growth rate? Why and how did spending in MH and SUD double to $240 billion in the past decade (2003-2013)? There are many answers and none of them stands alone:

  • Reduced stigma is a factor.
  • Better and more accessible medications are a factor.
  • The Mental Health Parity and Addiction Equity Act is a factor.
  • Better understanding of the impact of childhood trauma is a factor.
  • Better screening and diagnosis is a factor.
  • The end of two decade-long wars and the return of Veterans with unprecedented rates of PTSD, TBI and suicidal ideation is a factor.
  • Obesity and diabetes epidemics are a factor driving ever higher rates of depression.
  • The Great Recession, unemployment, and the housing bust are factors.

The list is long. People need MH and SUD treatment and as the barriers begin to fall and they have access to services and coverage – most for the first time at levels that are humane and consistent with civil rights and a free society – utilization and spending goes up. It’s natural, not nefarious.

At the more micro level, there are at least two scenarios that need to be kept in mind as we await facts in this unfortunate New Mexico case:

  • In the first scenario, we might discover that the auditors – a consulting firm with an alleged history of overstating things – was overzealous in reaching its conclusions and time will tell that the State and CMS could have and should have drilled down into the data and charts and reached a level of validity and reliability that would have supported a more credible conclusion. Regulators, we will all decide, should have acted very differently and we’ll decry the pain they inflicted on these providers and the people and communities they serve.
  • In the second scenario, the auditors and regulators could and would be found to be correct in their analysis and the consequences they’ve imposed. This scenario suggests there are many facts we aren’t privy to today. Like I said, time and facts will tell.

However, it is not too soon to feel as though these providers are being punished unfairly and to feel deeply the pain of the people in those communities who may now have no other option for treatment. Those feelings are real and understandable and I share them. Without judging the case one way or the other, it appears that the State of New Mexico acted in haste and might have benefited from a cooling off period.  I remain curious: What do they know that we don’t know?

All that said, I believe the early lessons in this case include:

1. We must better understand the macro political and economic forces acting on the system

2. We must better appreciate the micro forces acting from within the system

3. Clinical documentation is critically important