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.