New Mexico AG clears first of 12 behavioral health providers in Medicaid fraud probe | Behavioral Healthcare Executive Skip to content Skip to navigation

New Mexico AG clears first of 12 behavioral health providers in Medicaid fraud probe

January 17, 2014
by Dennis Grantham, Editor-in-Chief
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Closed after state's Medicaid freeze in June, reprieve comes too late for The Counseling Center

In his first statement about an ongoing investigation of 12 behavioral health providers whose Medicaid reimbursements were frozen in June due to “credible allegations of fraud,” New Mexico Attorney General Gary King said that his office has found “insufficient evidence to support allegations of fraud after an in-depth investigation” of the Counseling Center of Alamogordo, NM. 

Though the AG’s report cleared the Counseling Center of fraud, spokesman Phil Sisneros said that the investigation did find that the Counseling Center had “overbilled” Medicaid for $19,023 – an amount subject to recovery by HSD or to voluntary repayment by the provider under Medicaid compliance rules.  This amount, he said, was a fraction of the hundreds of thousands of dollars of potentially fraudulent payments suggested in a 2013 audit commissioned by New Mexico's Human Services Department (HSD). The amounts claimed by HSD, he said, were based on extrapolated figures, not actual findings.

The Associated Press reported that former Counseling Center CEO Jim Kerlin has disputed the overpayments and said that he would continue to fight to collect payments withheld by the state totaling some $400,000 in the period before the Center’s closure last summer. He said that the Center has no plans to reopen.

The Counseling Center was one of 15 New Mexico provider organizations whose funds were frozen by the state’s Human Services Department (HSD) based on the results of a controversial, $3 million audit that it commissioned in early 2013. On June 25, HSD officials announced the Medicaid payment freeze, pointing to the audit as evidence that the providers – who then served 85 percent of seriously mentally ill individuals in the state - had defrauded the state of $37.5 million in Medicaid funds. However, in November, after obtaining the secret audit results via court order, New Mexico State Auditor Hector Balderas said that HSD officials had edited the original audit findings to omit the auditor’s own statement that it found no clear evidence of provider fraud.

Since HSD froze reimbursements to the 15 providers in June, one was cleared by HSD and reinstated last fall, while two more agreed to cash settlements with the state and were reinstated later in 2013. As reported by Behavioral Healthcare, the remaining 12 providers, cut off from funds and facing bankruptcy, were compelled by HSD to shutter their operations and “transition” their personnel and patients during July, August, and September to new entities headed by five Arizona-based provider organizations.  Of these, the Counseling Center is the first to be cleared following an AG investigation or the audit and related fraud allegations referred to it by HSD in June.

In testimony before state officials in September, Thomas Aldridge, a principal of the auditing firm Public Consulting Group, disclosed that he accompanied Diana McWilliams, the former head of New Mexico’s Behavioral Health Collaborative, and others on visits to potential “replacement” agencies in Arizona as early as January 2013, even before the PCG’s $3 million provider audit had begun. The disclosure led one state legislator to allege that this constituted a conflict of interest that compromised the integrity of the PCG audit.

In December, a report by the New Mexico’s Legislative Finance Committee was critical of HSD’s handling of the suspended providers. It noted that HSD’s past contracts gave providers no due process rights in the face of fraud allegations, and that its contracts with the Arizona providers contain insufficient fraud-monitoring provisions and leave the state's citizens open to further behavioral health service disruptions. The same report questioned the viability of the state’s Behavioral Health Collaborative, a body formed by former Governor Bill Richardson to improve resource sharing among the state’s behavioral health agencies. In late December, Collaborative CEO Diana McWilliams resigned to head a behavioral health organization located in the Philadelphia area. 




Absolutely Amazing!
At least some of the providers affected by this were apparently correct when they said this was politically motivated and not because of rampant fraud as we were lead to believe when this unfolded last summer. It is also apparent that at least in the case of the Counseling Center of Alamogordo, they were not the perpetrators of fraud but were definitely the victims of a huge fraud that was perpetrated by representatives of the State of New Mexico. I have wondered how many persons with mental illness went without needed services, at least temporarily, while all of this played out. My heart goes out to them and to those employees and Board members of the provider organization who were defamed by the State of New Mexico and branded in the press by these now obviously false allegations.

Maybe now we know why it took a court order for the State Auditor to get the "secret" audit results and why the state refuses to allow other accused providers to see the results of their organizations audits.

If a private citizen or private company did anything like this there could be major legal and financial consequences. Unfortunately it will probably take legal action against the State of New Mexico and their individual employees and any companies involved in this to shed light on why this happened. As painful and expensive as this would be it will be absolutely necessary if trust is to be restored to the government of the State of New Mexico.

And some wonder why the public has little faith or trust in government. Hmmmm.

Clearly, there are vastly different definitions of what constitutes rampant fraud and abuse. The fact that the state took irrevocable action--essentially forcing the closure of the providers--instead of enabling them to remain viable during the investigation in case they were cleared (or there was a mistake) is a decision that demands further investigation. This publication will provide it.

Dennis Grantham